[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Notices]
[Pages 19755-19761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10545]
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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
[Docket No. AS96-1]
Appraisal Subcommittee; Appraisal Policy; Temporary Practice and
Reciprocity
AGENCY: Appraisal Subcommittee, Federal Financial Institutions
Examination Council.
ACTION: Adoption of amended policy statements.
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SUMMARY: The Appraisal Subcommittee (``ASC'') of the Federal Financial
Institutions Examination Council is amending Statements 5 and 6 of the
ASC's August 4, 1993Policy Statements Regarding State Certification and
Licensing of Real Estate Appraisers which, respectively, discussed
temporary practice and reciprocity. Amended Statements 5 and 6
implement section 315 of the Riegle Community Development and
Regulatory Improvement Act of 1994 (``CDRIA'').
EFFECTIVE DATE: Immediately.
FOR FURTHER INFORMATION CONTACT: Ben Henson, Executive Director, or
Marc L. Weinberg, General Counsel, at (202) 634-6520, via Internet e-
mail at benh1@asc.gov and marcw1@asc.gov, respectively, or by U.S. Mail
at Appraisal Subcommittee, 2100 Pennsylvania Avenue, N.W., Suite 200,
Washington, D.C. 20037.
SUPPLEMENTARY INFORMATION:
I. Statutory basis
Since January 1, 1993, Title XI of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (``Title XI''), as
amended,\1\ has required all federally regulated financial institutions
to use State licensed or certified real estate appraisers, as
appropriate, to perform appraisals in federally related
transactions.See Sec. 1119(a) of Title XI, 12 U.S.C. 3348(a). In
response to Title XI, each State, territory and the District of
Columbia (``State'') has established a regulatory program for
certifying, licensing and supervising real estate appraisers. In turn,
the ASC has been monitoring State programs to ensure their compliance
with Title XI.
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\1\ Pub. L. 101-73, 103 Stat. 183 (1989), as amended by Pub. L.
102-233, 105 Stat. 1792 (1991), Pub. L. 102-242, 105 Stat. 2386
(1991), Pub. L. 102-550, 106 Stat. 3672 (1992), Pub. L. 102-485, 106
Stat. 2771 (1992), Pub. L. 103-325, 108 Stat. 2222 (1994); and Pub.
L. 104-208, 110 Stat. 2009 (1996).
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While Title XI authorizes each State to certify, license and
supervise real estate appraisers within its jurisdiction, the Title
also provides a means for appraisers licensed or certified in one State
to practice on a temporary basis in another State. Section 1122(a)(1)
of Title XI, 12 U.S.C. 3351(a)(1), specifically requires ``[a] State
appraiser certifying or licensing agency [(``State agency'') to]
recognize on a temporary basis the certification or license of an
appraiser issued by another State if--(A) the property to be appraised
is part of a federally related transaction, (B) the appraiser's
business is of a temporary nature, and (C) the appraiser registers with
the appraiser certifying or licensing agency in the State of temporary
practice.''
Reciprocity provides appraisers certified or licensed in one State
with a means to practice in another State on a permanent basis. While
Title XI, until recently, did not specifically mention reciprocity, the
ASC encouraged States to enter into reciprocal appraiser licensing and
certification agreements and arrangements.
In September 1994, Section 315 of CDRIA, Pub. L. 103-325, 108 Stat.
2160, 2222 (1994), amended Section 1122(a) of Title XI by adding new
subparagraph (2) (12 U.S.C. 3351(a)(2)) pertaining to temporary
practice and new paragraph (b) (12 U.S.C. 3351(b)) regarding
reciprocity:
(2) Fees for temporary practice. A State appraiser certifying or
licensing agency shall not impose excessive fees or burdensome
requirements, as determined by the Appraisal Subcommittee, for
temporary practice under this subsection.
* * * * *
(b) Reciprocity. The Appraisal Subcommittee shall encourage the
States to develop reciprocity agreements that readily authorize
appraisers who are licensed or certified in one State (and who are in
good standing with their State appraiser certifying or licensing
agency) to perform appraisals in other States.
The Senate Report to accompany S. 1275, issued on October 28, 1994,
by the
[[Page 19756]]
Senate Committee on Banking, Housing, and Urban Affairs, said:
The Committee's intent is to enable qualified appraisers to
practice in a number of States without anticompetitive restrictions. S.
Rep. No. 103-169, 103d Cong., 2d Sess. 53 (1994), reprinted in 1994
U.S. Code Cong. & Admin. News 1937.
Using this statement and the wording of the amendments, we can
define the ambiguous terms, ``excessive fees'' or ``burdensome
requirements,'' in new Sec. 1122(a)(2) and can interpret how they fit
into the ASC's existing enforcement powers in Title XI. We also may
determine the meaning and application of new paragraph (b) regarding
reciprocity. The paragraph's language, however, limits the ASC's range
of interpretation because it only requires us to ``encourage'' the
States to develop reciprocity agreements.
II. Prior ASC Implementation Actions
A. The September 1995 Notice Soliciting Comment
On September 12, 1995, the ASC published a notice in the Federal
Register soliciting public comments on how it should implement Sec. 315
of CDRIA. See 60 FR 47365. This notice, among other things, described
Statements 5 and 6 of the ASC's August 4, 1993 Policy Statements
Regarding State Certification and Licensing of Real Estate Appraisers
(``1993 Policies''), which respectively discussed temporary practice
and reciprocity, described the then-current status of temporary
practice and reciprocity and presented several alternatives for
discussion and comment. Temporary practice and reciprocity alternatives
included the ``universal drivers license.'' For details regarding the
alternatives, see 60 FR 47365 (September 12, 1995). We additionally
requested comments on all aspects of implementing the new legislation
and welcomed variations or combinations of the discussed alternatives
or other alternatives. Finally, we asked the following questions.
(1) In your view, what are the most serious impediments to
temporary practice or reciprocity? Please provide your best estimates
of their costs in time and money, if possible.
(2) Do you believe that these impediments warrant ASC action?
(3) Are any of the alternatives presented * * * especially well
suited to removing the impediments, and what are your reasons for your
choice?
(4) Do other alternatives exist? If so, please describe them.
We received 46 comment letters in response to the Notice: 24 from
individual appraisers; eight from trade associations; six from State
agencies; five from financial institutions; two from individual real
estate professionals; and one from a Federal agency.
The commenters agreed that serious impediments to temporary
practice and reciprocity exist, and that those impediments warrant our
action. In connection with temporary practice, the comments noted that
the most significant impediments were: the need for an out-of-State
appraiser to obtain, and pay for, a ``letter of good standing''; the
need for States to obtain from out-of-State appraisers signed consent
to local service forms; short time limits on the length of permits; the
inability to receive extensions of time on permits; the granting of
permits on a per property or time basis, rather than on a per
assignment basis; and a general ``protectionist'' attitude on the part
of some State agencies. Respecting reciprocity, the commenters pointed
to the widespread lack of uniformity in State agency-approved education
courses for initial certification or licensing and for continuing
education purposes and the significant length of time often needed by
States to process applications for certification or licensing by
reciprocity.
Most commenters supported adoption of the drivers license approach
to temporary practice and reciprocity. Adopting this approach, however,
would necessarily require us to pre-empt conflicting State statutes,
regulations and practices. We concluded that pre-emption would be
inappropriate.
B. The October 21, 1996 Proposed Policy Statement (``Proposal'')
The ASC published for public comment a proposed policy statement
entitled, Policy Statement Respecting Temporary Practice and
Reciprocity, in the October 21, 1996 edition of the Federal Register
(61 FR 54645). In connection with temporary practice, the Proposal
stated that we may consider the following fees, acts and practices of
the State of temporary practice to be ``excessive fees'' or
``burdensome requirements'' under Sec. 1122(b)(2) of Title XI (12
U.S.C. 3351(b)):
Prohibiting temporary practice;
Requiring temporary practitioners to obtain a permanent
certification or license in the State of temporary practice;
Taking more than five business days to issue a temporary
practice permit (if issuance is required under State law) or to provide
effective notice to the out-of-State appraiser regarding his or her
temporary practice request;
Requiring out-of-State appraisers requesting temporary
practice to satisfy the host State's appraiser qualification
requirements for certification which exceed the minimum required
criteria for certification adopted by the Appraiser Qualifications
Board (``AQB'');
Imposing a time frame on out-of-State certified
appraisers to complete an appraisal assignment in a federally related
transaction;
Limiting out-of-State certified appraisers to a single
temporary practice permit per calendar year;
Requiring temporary practitioners to affiliate with an
in-State certified or licensed appraiser;
Failing to take regulatory responsibility for a visiting
appraiser's unethical, incompetent or fraudulent practices performed
while within the State; and
Charging temporary practice fees that impede temporary
practice. The ASC will consider fees of $150 or less as reasonable. The
ASC may ask State agencies to justify temporary practice fees.
We also stated that we may consider fees, acts and practices of the
certified or licensed appraiser's home State to be ``excessive fees''
or ``burdensome requirements'' if the home State delays, or otherwise
impedes, an appraiser from obtaining a temporary practice permit in
another State. For example, the practice of delaying the issuance of a
written ``letter of good standing'' or similar document for more than
five business days after the home State agency's receipt of the related
request could be a ``burdensome requirement.''
Finally, we indicated that the above listing would not be
exclusive. The ASC may find other excessive fees or burdensome
practices while performing its State agency monitoring functions.
To help avoid such an occurrence, we presented for discussion a
``post card'' temporary practice registration form which would: (1)
identify the appraiser requesting temporary practice; (2) provide the
starting date the appraiser will be ``in-State''; (3) obtain
affirmations that the appraiser currently is not subject to any
appraiser certification or licensure disciplinary proceeding in any
State, and that his or her license or certificate is fully valid; and
(4) obtain the appraiser's consent to service in the State of temporary
practice. For details, see 61 FR at 54647.
Regarding reciprocity, we noted that, pursuant to Sec. 1122(b) of
Title XI, 12 U.S.C. 3347(b), each State should work expeditiously and
conscientiously with
[[Page 19757]]
other States with a view toward satisfying the purposes of the
statutory language. We stated our intention to monitor each State's
progress and encourage States to work out issues and difficulties
whenever appropriate. We also specifically encouraged States to enter
into reciprocal agreements that, at a minimum, contain the following
features:
Accomplish reciprocity with at least all contiguous
States. For States not sharing geographically contiguous borders with
any other State, such as Alaska and Hawaii, those States should enter
into reciprocity agreements with States that certify or license
appraisers who perform a significant number of appraisals in the non-
contiguous States;
Eliminate the use of letters of good standing or similar
documents;
Readily accept other States' certifications and licenses
without reexamining applicants' underlying education and experience,
provided that the other State: (1) has appraiser qualification criteria
that meet the minimum standards for certification and licensure as
adopted by the AQB; and (2) uses appraiser certification or licensing
examinations that are AQB endorsed;
Eliminate retesting, provided that the applicant has
passed the appropriate AQB-endorsed appraiser certification and
licensing examinations in the appraiser's home State;
Recognize and accept successfully completed continuing
education courses taken to qualify for license or certification renewal
in the appraiser's home State; and
Establish reciprocal licensing or certification fees
identical in amount to the corresponding fees for in-State appraisers.
We stated that, if adopted, the Proposal would amend and supersede
our earlier guidance respecting temporary practice and reciprocity in
``Policy Statements 5 and 6 of the 1993 Policies.''
III. Analysis of Comments Received
Twenty-four comments were received from ten individual States
agencies; an association of State agencies; two individual real estate
appraisers; two appraiser professional associations; four individual
financial institutions; one financial institutions trade association;
one national accounting firm; and three individual appraisers from one
Federal agency.
All commenters agreed in principle with the overall goals of Title
XI to remove excessive temporary practice fees and burdensome
requirements and to encourage reciprocity. Indeed, no one disagreed
that the following were burdens on temporary practice: prohibiting
temporary practice; requiring temporary practitioners to obtain a
permanent certification or license in the State of temporary practice;
requiring temporary practitioners to affiliate with an in-State
certified or licensed appraiser; limiting out-of-State certified
appraisers to a single temporary practice permit per calendar year; and
failing to take regulatory responsibility for a visiting appraiser's
unethical, incompetent or fraudulent practices performed while within
the State. In addition, the commenters agreed with our proposals to
encourage reciprocity, except with respect to the proposal to eliminate
the use of letters of good standing or similar documents, as discussed
below.
The commenters fell into two broad camps. The State agencies
emphasized their duties to protect the public from illegal fraudulent
and negligent professional practitioners and argued for more
flexibility in administering their temporary practice and reciprocity
programs. On the other hand, financial institutions, their trade
associations, the appraisers and their professional organizations and
the other commenters generally desired the removal of all State
restrictions on temporary practice and reciprocity. Most stated their
continuing support of the drivers license approach, even though we
clearly rejected that alternative in the Proposal.
A. Proposal to Eliminate the Use of Letters of Good Standing
Commenters clearly stated their opinion that the use of letters of
good standing or similar documents must be allowed for reciprocity
purposes, at least until we provide State agencies, financial
institutions and other interested members of the public with an easy,
reliable method of verifying State certification and licensure, such as
placing the ASC's National Registry of State Certified and Licensed
Appraisers (``Registry'') on the Internet. The State agencies noted
their responsibility to protect the public by insuring that appraisers
with suspended or revoked licenses, or who have been disciplined in
other States, are not permitted to cross State lines and continue to
practice. Therefore, the proposal to eliminate letters of good standing
for reciprocity purposes is being dropped from immediate consideration.
The ASC currently is working towards placing the Registry on the
Internet. Once that is accomplished, we will revisit this issue.
B. ``Postcard'' Temporary Practice Registration Procedure
State agency commenters unanimously opposed the suggested postcard
temporary practice registration procedure. They noted that such a
procedure will result in administrative difficulties and would be a
major obstacle to taking regulatory responsibility for visiting
certified or licensed appraisers. The self-affirmation aspect of the
suggested procedure would be especially troublesome because appraisers
who are currently the subject of disciplinary action would not be the
best source of information concerning their certification or licensure
status. Upon further consideration, we agree with the commenters and
withdraw our suggestion.
C. Taking More Than Five Business Days to Issue a Temporary Practice
Permit or to Provide Effective Notice to the Out-of-State Appraiser
Regarding His or Her Temporary Practice Request
Most of the State agencies commented that five business days would
seem to be an acceptable time frame for processing temporary practice
requests. Many of those commenters noted, however, that the time frame
should start running only after the requesting appraiser has completed
the submission of his or her paperwork to the State agency. We agree
with these comments and have modified the adopted policy accordingly.
One State agency noted that it probably could not meet such a short
processing deadline in all cases because of limited staff resources and
the State law requirement that it check every request for a license or
permit against another in-State department's database of persons
failing to make child support payments. The commenter suggested that we
analyze each State's temporary practice processing times, determine
medians and 95% probability intervals nationwide and target States
whose response times fall outside of the 95% range.
We remind State agencies that the five-day processing time period
is a policy, i.e., a guideline for measuring compliance; it is not law.
We will be applying this policy, as well as the others, in a flexible
manner, taking into consideration all pertinent facts. For example, if
a State agency receives a complete request for a temporary practice
permit and makes a good faith effort to process the request within five
business days, but cannot because of a delay resulting from the need to
comply with other provisions of State law, then we would view the State
agency in
[[Page 19758]]
substantial compliance with the five business day processing policy.
The State agency also will need to take appropriate steps to inform the
requesting appraiser about the delay and to provide the appraiser with
a realistic estimate of when processing will be completed.
D. Imposing a Time Frame on Out-of-State Certified Appraisers to
Complete an Appraisal Assignment in a Federally Related Transaction
Several commenters did not understand why setting a deadline for
completing an appraisal assignment would be burdensome because most
assignments are completed in less than a month. They indicated that, to
regulate appraisers effectively, State agencies must have the
flexibility to set their own policies concerning temporary practice
either using realistic time limits or by the listing of appraisal
assignments or properties.
We agree in part with this statement in that States must have the
flexibility to set their own policies concerning temporary practice.
And, we understand State agencies' concerns about administering and
justifying to resident appraisers a temporary practice program which
issues temporary practice permits for an indefinite duration. On the
other hand, the need for State agency flexibility is offset by Title
XI, which not only created the right to temporary practice, but also
required the ASC to ensure that the right to temporary practice not be
unreasonably hindered by excessive fees or burdensome requirements.
We have learned through our State agency oversight program that
many State agencies limit the time frame of their temporary practice
permits and provide temporary practitioners with a method of extending
permit periods. We have not objected to these features, provided that
the period limitation is not less than six-months and the method of
extending a permit's time frame is easy. We, therefore, are adopting
policy language consistent with these comments. The new policy
prohibits State agencies from limiting temporary practice permits to
less than six months. It also prohibits State agencies from failing to
provide temporary practitioners with at least one extension of time,
sufficient to complete the assignment, which will be effective upon
receipt of a written request by the State agency, provided that the
request includes the appraiser's reasons for the extension.
The new policy does not conflict with our previous policies
regarding the meaning of the terms, ``temporary'' and ``assignment,''
as used in Title XI. In industry practice, an assignment means a
contractual obligation to appraise one or more specific parcels of real
estate. And, an assignment, by its very nature, is of finite duration
and, therefore, ``temporary.'' Therefore, even if a temporary practice
permit is valid for six months after issuance, its validity ends when
the assignment is completed or at the end of the six month period
(including any extension period), whichever occurs first.
We also recognize that, at some point, an appraiser may be abusing
his or her right to temporary practice to the detriment of the State
agency's ability to regulate its appraiser population effectively and
fairly. For example, a State agency could determine that an assignment
to appraise all commercial properties within a county or other
significant political subdivision within the State could be an abusive
practice and refuse to issue a temporary practice permit to the
requesting appraiser. In this case, a State agency could determine that
the proposed appraisal activity does not qualify as ``temporary,'' as
that term is commonly understood and used in Title XI.
E. Requiring Out-of-State Appraisers Requesting Temporary Practice to
Satisfy Host State Appraiser Qualification Requirements for
Certification That Exceed AQB Qualification Criteria
Some commenters recommended that out-of-State appraisers seeking to
exercise their temporary practice rights should be treated in exactly
the same manner as resident appraisers, and, if the State has adopted
higher minimum requirements for appraiser licensing or certification,
then the out-of-State appraisers should meet the State's higher
requirements. Any other result would be unfair to the State's resident
appraisers.
While we understand the commenters' concerns, we disagree. Title
XI's specific right to temporary practice for all certified or licensed
appraisers when performing appraisals in connection with federally
related transactions was intended by Congress to ensure that users of
appraisal services have quick access to needed appraisal expertise,
even if the expert is located out-of-State. Title XI's temporary
practice provision struck a balance between the desirability of
maintaining a free flow of appraisal expertise across State lines and
the legitimate need for State appraiser regulators to oversee appraisal
activity within their respective States. To require out-of-State
appraisers requesting temporary practice to comply with unique State
qualification requirements clearly would be inconsistent with the
intent of Congress.
F. Failing To Take Regulatory Responsibility for A Visiting Appraiser's
Unethical, Incompetent or Fraudulent Practices Performed While Within
the State
Two comments were received regarding this proposal. The first
commenter noted that it was not aware of any instance where a host
State failed to take appropriate action and suggested that we initiate
Federal legislation to provide for Federal investigation and
prosecution. The commenter also stated that investigatory and
disciplinary actions that can be taken in temporary practice situations
are limited.
In exercising its oversight responsibility over State agencies, the
ASC has become aware of instances where host States either failed to
take regulatory responsibility for the actions of temporary
practitioners or were confused about their regulatory obligations in
those circumstances. In response, we issued Statement 10: Enforcement
in our 1993 Policies. This policy, in part, stated that the State
agency in the State of temporary practice needs to follow up on any
complaints regarding the temporary practicing appraiser's appraisal
activities within the State. If appropriate, the host State agency
should begin a disciplinary proceeding against the appraiser for
violations occurring in its jurisdiction and should not just forward
the complaint for follow up to the State agency in the appraiser's home
State. We also stated our expectations that the home State agency would
honor the findings and judgment of the State agency in the State of
temporary practice and would take appropriate disciplinary action
against the appraiser.
We understand that the State of temporary practice is somewhat
limited in responding to unlawful activity of temporary practitioners.
We continue to expect that the appraiser's home State agency will grant
full faith and credit to any findings and orders from disciplinary
proceedings in the host State and will take appropriate action.
The second commenter suggested adding language to further clarify
State agency regulatory obligations. The new language would require a
host State agency to forward copies of available evidence and
disciplinary actions against a visiting appraiser acting under a
temporary practice permit to the appraiser's home State agency and
would require the home State agency to
[[Page 19759]]
take appropriate disciplinary action when one of its certified or
licensed appraisers are disciplined by another State for improper
practice under a temporary practice permit. We agree that these
clarifications will assist users of appraisal services, State agencies
and appraisers by spelling out the roles of each State agency in cases
of shared interests. Therefore, we are adopting them.
G. Charging Temporary Practice Fees That Impede Temporary Practice
The ASC will consider fees of $150 or less as reasonable. The ASC
may ask State agencies to justify temporary practice fees.
We received three comments regarding temporary practice fees. The
first commenter suggested that temporary practitioners should
compensate the State agency on the same basis as the in-State
appraisers. The commenter saw no reason why an appraiser should work
from three months to a year within a State, cause the State to incur
processing and monitoring costs, and possibly responding to complaints,
without paying their fair share of fees. In sum, in-State appraisers
should not subsidize out-of-State temporary appraisers. The second
commenter noted that $150 is little enough to begin an investigation
and falls far short of paying the investigator, let alone fees for an
expert witness and prosecuting attorney. The commenter concluded that
the temporary practice fee should be no less than the fee paid by
resident appraisers. The final commenter suggested changes in the
policy's wording which did not significantly affect the policy's
substance.
We agree that temporary practitioners should be required to pay a
fair fee to exercise their temporary practice rights, and that the fee
generally should be based on costs. We believe, however, that, as
discussed above, temporary practitioners have special status under
Title XI which requires them to be treated somewhat differently than
home State appraisers. Provided that an appraiser's certificate or
license is in good standing in his or her home State and the appraiser
pays the appropriate fee, a host State agency essentially is required
by Title XI to issue the temporary practice permit. The State agency
does not review the appraiser's appraisal education or experience, and
no significant staff resources are expended.
In addition, we disagree with the commenter's statements regarding
relative compliance costs. Temporary practitioners are within the State
for a relatively short amount of time and are authorized to perform
only a limited number of appraisal assignments. In addition, we
understand that the number of appraisals performed by out-of-State
certified and licensed appraisers under temporary practice permits is
very small when compared to the number of appraisals performed by
resident State certified and licensed appraisers. To force temporary
practitioners to share a State agency's costs on the same basis as
resident appraisers, in all likelihood, would cause temporary practice
fees to jump to prohibitory levels, which would be unacceptable under
Title XI. And, while a $150 or less temporary practice fee will do
little to offset the costs of taking disciplinary action against a
temporary practitioner, the same would be true, perhaps to a slightly
lesser degree, with respect to application and renewal fees submitted
by resident appraisers. In the end, because every State must provide
the right to temporary practice and must comply with Title XI
compliance requirements, temporary practice compliance costs should
even out.
We note that the proposed policy essentially incorporated an
existing ASC policy that has been applied consistently during the ASC's
State agency on-site review program. In numerous field review letters
to State agencies during the last three years, we have noted when
States were charging $100 or more for a temporary practice permit and
have requested them to justify the fee level. We are increasing this
threshold to over $150, on the basis of empirical data gathered in our
State agency oversight program.
We, therefore, are adopting the policy as proposed.
IV. Form of Policy Amendments
Rather than issuing a separate, new policy statement, both amending
and superseding Policy Statements 5 and 6 of the 1993 Policies, we
decided to restate and amend Statements 5 and 6. Retaining the original
format and keeping all ASC guidance regarding temporary practice and
reciprocity in one place should facilitate the readability and
comprehension of the amended policies.
V. Effective Date
We are adopting amended Statements 5 and 6 effective immediately.
We, however, recognize that a number of States and their State agencies
may require additional time to comply with them. The ASC expects those
States and State agencies to attain full compliance within one year
from the date this document is published in the Federal Register. If a
State or State agency believes that it cannot meet this deadline, it
must notify the ASC immediately. The notification must be in writing
and must include the specific reasons for the request, the period of
time requested and a definitive plan to accomplish compliance within
the requested extension period. We will consider each request on a
case-by-case basis.
VI. Conclusion
On the basis of the foregoing, the ASC adopts the Amended Policy
Statements Respecting Temporary Practice and Reciprocity, attached as
Appendix A, to be effective immediately, subject to the conditions
discussed above.
Dated: April 16, 1997.
By the Appraisal Subcommittee.
Herbert S. Yolles,
Chairman.
Appendix A--Amended Policy Statements Respecting Temporary Practice and
Reciprocity
April 23, 1997.
This document amends Appraisal Subcommittee (``ASC'') Policy
Statements 5 and 6, which the ASC adopted in August 1993. The changes
to these Policy Statements implement amendments to Section 1122(a) of
Title XI of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989. The amendments added subparagraph (2) (12 U.S.C.
3351(a)(2)) pertaining to temporary practice and paragraph (b) (12
U.S.C. 3351(b)) regrading reciprocity, which state:
(2) Fees for temporary practice. A State appraiser certifying or
licensing agency shall not impose excessive fees or burdensome
requirements, as determined by the Appraisal Subcommittee, for
temporary practice under this subsection.
* * * * *
(b) Reciprocity. The Appraisal Subcommittee shall encourage the
States to develop reciprocity agreements that readily authorize
appraisers who are licensed or certified in one State (and who are in
good standing with their State appraiser certifying or licensing
agency) to perform appraisals in other States.
Policy Statements 5 and 6, as amended, follow:
Statement 5: Temporary Practice
Title XI requires a State agency to recognize on a temporary basis
the certification or license of an appraiser from another State
provided: (1) The property to be appraised is part of a
[[Page 19760]]
federally related transaction; (2) the appraiser's business is of a
temporary nature; and (3) the appraiser registers with the State
appraiser regulatory agency in the State of temporary practice. Thus, a
certified or licensed appraiser from State A, who has an assignment
concerning a federally related transaction in State B, has a statutory
right to enter State B, register with the State agency in State B and
perform the assignment. Title XI does not require State B to offer
temporary practice to persons who are not certified or licensed
appraisers, including appraiser assistants not under the direct
supervision of an appraiser certified or licensed in State A. An out-
of-State certified or licensed appraiser should register for temporary
practice before beginning to perform an appraisal assignment in
connection with a federally related transaction.
The ASC believes the ``temporary'' is best measured by one or more
specific appraisal assignments. For temporary practice purposes, the
ASC regards the term ``assignment'' as meaning one or more real estate
appraisals and written appraisal reports which are covered by a
contract to provide an appraisal.
Title XI also states that a State appraiser certifying or licensing
agency shall not impose excessive fees or burdensome requirements, as
determined by the ASC, for temporary practice. The ASC considers the
following fees, acts and practices of the State of temporary practice
to be ``excessive fees'' or ``burdensome requirements'':
Prohibiting temporary practice;
Requiring temporary practitioners to obtain a permanent
certification or license in the State of temporary practice;
Taking more than five business days (after receipt of a
complete temporary practice registration request) to issue a temporary
practice permit (if issuance is required under State law) or to provide
effective notice to the out-of-State appraiser regarding the status of
his or her temporary practice request;
Requiring out-of-State appraisers requesting temporary
practice to satisfy the host State's appraiser qualification
requirements for certification which exceed the minimum required
criteria for certification adopted by the Appraiser Qualifications
Board (``AQB'');
Limiting the valid time period of a temporary practice permit to
less than six months after its issuance date or not providing a
temporary practitioner with an effortless method of obtaining an
extension of the time period;
Limiting out-of-State certified appraisers to a single
temporary practice permit per calendar year;
Requiring temporary practitioners to affiliate with an in-
State certified or licensed appraiser;
Failing to take regulatory responsibility for a visiting
appraiser's unethical, incompetent or fraudulent practices performed
while within the State;
After taking disciplinary action against a visiting
appraiser, failing to forward copies of available evidence and final
disciplinary orders promptly to the appraiser's home State agency; and
Charging a temporary practice fee exceeding $150.
In addition, the ASC will consider the following fees, acts and
practices of the certified or licensed appraiser's home State to be
excessive or burdensome:
Delaying the issuance of a written ``letter of good
standing'' or similar document for more than five business days after
the home State agency's receipt of the related request; and
Failing to take appropriate disciplinary action when one
of its certified or licensed appraisers is disciplined by another State
agency for unethical, incompetent or fraudulent practices under a
temporary practice permit.
This listing is not exclusive. The ASC may find other excessive
fees or burdensome practices while performing its State agency
monitoring functions.
An out-of-State certified or licensed appraiser must comply with
the host State's real estate appraisal statutes and regulations. Each
appraiser who receives temporary practice registration is subject to
the State's full regulatory jurisdiction and is governed by the State's
statutes and regulations respecting appraiser certification or
licensing. However, the out-of-State appraiser should be treated like
any other appraiser within the State who wishes to perform an appraisal
in a federally related transaction.
A State agency may establish by statute or regulation a policy that
places reasonable limits on the number of times an out-of-State
certified or licensed appraiser may exercise his or her temporary
practice rights in a given year. If such an overall policy is not
established, a State agency may choose not to honor an out-of-State
certified or licensed appraiser's temporary practice rights if it has
made a determination that the appraiser is abusing his or her temporary
practice rights and is regularly engaging in real estate appraisal
within the State.
Finally, some State agencies have sought to require that an
appraiser register for temporary practice if the appraiser is certified
or licensed in another State, performs a technical review of an
appraisal in that other State and changes, or is authorized to change,
a value in the appraisal. The ASC, however, has concluded that for
federally related transactions the review appraiser need not register
for temporary practice or otherwise be subjected to the regulatory
jurisdiction of the State agency in which the appraisal was performed,
so long as the review appraiser does not perform the technical review
in the State within which the property is located.
* * * * *
Statement 6: Reciprocity
Many interested parties have commented that reciprocity is at least
as critical as temporary practice. Under reciprocal arrangements, an
appraiser who is certified or licensed in State A and is also
reciprocally certified or licensed in State B must comply with both
States' appraiser laws, including those requiring the payment of
certification, licensing and Federal registry fees and continuing
education. Indeed, the appraiser for all intents and purposes is
treated as if he or she were separately certified or licensed in each
of the States.
Methods for providing reciprocity vary from State to State. Some
States may implement formal agreements with other States, whereby a
certified or licensed appraiser in good standing from one State applies
for, and is granted, certification or licensing in the other States
upon submission to the other States of a copy of his or her
credentials, a statement of good standing, a consent for service of
suit and the payment of appropriate fees. Other States, without a
formal agreement, but with similar documentation requirements, may
grant the requested certificate or license upon the payment of the
second State's fee. Still other States may accept the examination of
other States, but require the remainder of the application to be
completed by the applicant and reviewed by the State agency.
Reciprocity's main benefit is that appraisers who qualify for
certification or licensing in one State may freely cross into another
State without needing to ``register'' for each appraisal assignment in
the other State. Therefore, a duly certified or licensed appraiser in
one State can be recognized as such in each of the other States in
which he or she is licensed or certified by reciprocity.
[[Page 19761]]
Section 1122(b) of Title XI, 12 U.S.C. 3347(b), states that the ASC
shall encourage the States to develop reciprocity agreements that
readily authorize appraisers who are licensed or certified in one State
(and who are in good standing with their State appraiser certifying or
licensing agency) to perform appraisals in other States. Each State
should work expeditiously and conscientiously with other States with a
view toward satisfying the purposes of the statutory language. The ASC
monitors each State's progress and encourages States to work out issues
and difficulties whenever appropriate.
The ASC encourages States to enter into reciprocal agreements that,
at a minimum, contain the following features:
Accomplish reciprocity with at least all contiguous
States. For States not sharing geographically contiguous borders with
any other State, such as Alaska and Puerto Rico, those States should
enter into reciprocity agreements with States that certify or license
appraisers who perform a significant number of appraisals in the non-
contiguous States;
Readily accept other States' certifications and licenses
without reexamining applicants' underlying education and experience,
provided that the other State: (1) has appraiser qualification criteria
that meet or exceed the minimum standards for certification and
licensure as adopted by the AQB; and (2) uses appraiser certification
or licensing examinations that are AQB endorsed;
Eliminate retesting, provided that the applicant has
passed the appropriate AQB-endorsed appraiser certification and
licensing examinations in the appraiser's home State;
Recognize and accept successfully completed continuing
education courses taken to qualify for license or certification renewal
in the appraiser's home State; and
Establish reciprocal licensing or certification fees
identical in amount to the corresponding fees for in-State appraisers.
* * * * *
[FR Doc. 97-10545 Filed 4-22-97; 8:45 am]
BILLING CODE 6201-01-M
