Proposed Rule2022-00342
Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver Requests
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Published
January 13, 2022
Issuing agencies
Federal Financial Institutions Examination Council
Abstract
The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) proposes to amend existing rules of practice and procedure governing temporary waiver proceedings, which were promulgated in 1992 pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (Title XI). The proposed amendments are intended to provide for greater transparency and clarity on temporary waiver proceedings.
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<title>Federal Register, Volume 87 Issue 9 (Thursday, January 13, 2022)</title>
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[Federal Register Volume 87, Number 9 (Thursday, January 13, 2022)]
[Proposed Rules]
[Pages 2079-2085]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-00342]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 9 / Thursday, January 13, 2022 /
Proposed Rules
[[Page 2079]]
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
12 CFR Part 1102
[Docket No. AS22-01]
Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver
Requests
AGENCY: Appraisal Subcommittee of the Federal Financial Institutions
Examination Council.
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial
Institutions Examination Council (FFIEC) proposes to amend existing
rules of practice and procedure governing temporary waiver proceedings,
which were promulgated in 1992 pursuant to Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, as amended
(Title XI). The proposed amendments are intended to provide for greater
transparency and clarity on temporary waiver proceedings.
DATES: Comments must be received on or before March 14, 2022.
ADDRESSES: Commenters are encouraged to submit comments by the Federal
eRulemaking Portal or email, if possible. You may submit comments,
identified by Docket Number AS22-01, by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments. Click on the
``Support'' button on the <a href="http://Regulations.gov">Regulations.gov</a> home page to get information
on using <a href="http://Regulations.gov">Regulations.gov</a>, including instructions for submitting public
comments.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#760113141b17050213043617051558111900"><span class="__cf_email__" data-cfemail="d3a4b6b1beb2a0a7b6a193b2a0b0fdb4bca5">[email protected]</span></a>. Include the docket number in the
subject line of the message.
<bullet> Mail: Address to Appraisal Subcommittee, Attn: Lori
Schuster, Management and Program Analyst, 1325 G Street NW, Suite 500,
Washington, DC 20005.
<bullet> Hand Delivery/Courier: 1325 G Street NW, Suite 500,
Washington, DC 20005.
In general, the ASC will enter all comments received into the
docket and publish those comments on the <a href="http://Regulations.gov">Regulations.gov</a> website
without change, including any business or personal information that you
provide, such as name and address information, email addresses, or
phone numbers. Comments received, including attachments and other
supporting materials, are part of the public record and subject to
public disclosure. Do not enclose any information in your comment or
supporting materials that you consider confidential or inappropriate
for public disclosure. At the close of the comment period, all public
comments will also be made available on the ASC's website at <a href="https://www.asc.gov">https://www.asc.gov</a> (follow link in ``What's New'') as submitted, unless
modified for technical reasons.
You may review comments and other related materials that pertain to
this rulemaking action by the following method:
<bullet> Viewing Comments Electronically: Go to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Enter ``Docket ID AS22-01'' in the Search box and
click ``Search.'' Click on the ``Support'' tab on the <a href="http://Regulations.gov">Regulations.gov</a>
home page to get information on using <a href="http://Regulations.gov">Regulations.gov</a>, including
instructions for viewing public comments, viewing other supporting and
related materials, and viewing the docket after the close of the
comment period.
FOR FURTHER INFORMATION CONTACT: Lori Schuster, Management and Program
Analyst, <a href="/cdn-cgi/l/email-protection#a3cfccd1cae3c2d0c08dc4ccd5"><span class="__cf_email__" data-cfemail="f09c9f8299b0918393de979f86">[email protected]</span></a>, (202) 595-7578, or Alice M. Ritter, General
Counsel, <a href="/cdn-cgi/l/email-protection#17767b7e74725776647439707861"><span class="__cf_email__" data-cfemail="fd9c91949e98bd9c8e9ed39a928b">[email protected]</span></a>, (202) 595-7577, ASC, 1325 G Street NW, Suite
500, Washington, DC 20005.
SUPPLEMENTARY INFORMATION:
I. Background
The purpose of Title XI \1\ is ``to provide that Federal financial
and public policy interests in real estate related transactions will be
protected by requiring that real estate appraisals utilized in
connection with federally related transactions [FRTs] are performed in
writing, in accordance with uniform standards, by individuals whose
competency has been demonstrated and whose professional conduct will be
subject to effective supervision.'' \2\
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\1\ The ASC was established by Title XI. The ASC Board consists
of seven members. Five members are designated by the heads of the
FFIEC federal member agencies (Board of Governors of the Federal
Reserve System [Board], Bureau of Consumer Financial Protection
[Bureau], Federal Deposit Insurance Corporation [FDIC], Office of
the Comptroller of the Currency [OCC], and National Credit Union
Administration [NCUA]). The other two members are designated by the
heads of the Department of Housing and Urban Development (HUD) and
the Federal Housing Finance Agency (FHFA).
\2\ Title XI Sec. 1101. See also, 12 U.S.C. 3331.
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Title XI requires that real property appraisals performed in
connection with FRTs be performed in accordance with the Uniform
Standards of Professional Appraisal Practice (USPAP) \3\ as promulgated
by the Appraisal Standards Board (ASB) of the Appraisal Foundation. The
Federal financial institutions regulatory agencies' appraisal
regulations require appraisals for FRTs to meet these minimum appraisal
standards as evidenced by USPAP.\4\ Title XI also requires that
certified and licensed appraisers meet the minimum qualification
criteria as set forth in The Real Property Appraiser Qualification
Criteria (AQB Criteria) issued by the Appraiser Qualifications Board
(AQB) of the Appraisal Foundation.\5\ The State appraiser regulatory
agencies enforce these federal minimum requirements for credentialed
appraisers in their respective States and are subject to federal
oversight by the ASC.\6\
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\3\ Title XI Sec. 1109(1). See also, 12 U.S.C. 3339(1).
\4\ Title XI Sec. 1121(4), 12 U.S.C. 3350, implemented by the
Office of the Comptroller of the Currency: 12 CFR 34.44; Federal
Reserve Board: 12 CFR 225.64; Federal Deposit Insurance Corporation:
12 CFR 323.4; and National Credit Union Administration: 12 CFR
722.4.
\5\ Title XI Sec. 1116(a) and (c). See also, 12 U.S.C. 3345(a)
and (c).
\6\ Title XI Sec. 1118. See also, 12 U.S.C. 3347. ``State
appraiser regulatory agencies'' are referred to in the proposed rule
as ``State Appraisal Agencies.''
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Section 1119(b) of Title XI authorizes the ASC to waive, on a
temporary basis, subject to approval of the FFIEC:
any requirement relating to certification or licensing of a person
to perform appraisals under [Title XI] if the [ASC] or a [State
appraiser regulatory agency] makes a written determination that
there is a scarcity of certified or licensed appraisers to perform
appraisals in connection with [FRTs] in a State, or in any
geographical political subdivision of a State, leading to
significant delays in the performance of such appraisals.
[[Page 2080]]
A waiver terminates when the [ASC] determines that such significant
delays have been eliminated.\7\
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\7\ Title XI Sec. 1119(b). See also, 12 U.S.C. 3348(b).
Congress intended that the ASC exercise this waiver authority
``cautiously.'' \8\
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\8\ House Comm. on Banking, Finance and Urban Affairs, Report
Together with Additional Supplemental, Minority, Individual, and
Dissenting Views, Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, H.R. Rep. No. 101-54 Part 1, 101st Cong.,
1st Sess., at 482-83.
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The ASC published rules of practice and procedure governing
temporary waiver proceedings in 1992.\9\ The ASC has ordered temporary
waiver relief on two occasions. The first was for the Commonwealth of
the Northern Mariana Islands in February 1993 (preceded by an interim
order for relief issued in December 1992). The second was in August
2019 for the State of North Dakota (which was extended in part for one
additional year in 2020).
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\9\ 12 CFR part 1102, subpart A.
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Under the existing rules of practice and procedure, when the ASC
receives a request from a State appraiser regulatory agency that meets
the requirements set forth in 12 CFR 1102.2, Requirements for requests,
including a written duly authorized determination that there is a
scarcity of certified or licensed appraisers leading to significant
delays in obtaining appraisals in FRTs, the request is published
promptly in the Federal Register for comment. In the absence of such a
written determination, the State appraiser regulatory agency must ask
the ASC for such a determination. When the ASC receives a submission
pursuant to 12 CFR 1102.3, Other requests and information submissions,
the ASC has the discretion to determine whether or not to initiate a
temporary waiver proceeding. If the ASC makes a determination to
initiate a temporary waiver proceeding, the ASC will promptly publish
notice of the proceeding in the Federal Register. Within 45 calendar
days of the date of publication in the Federal Register, the existing
rules provide that the ASC will grant or deny a waiver, in whole or in
part, by Order. The ASC must seek FFIEC approval if the waiver is
granted, and the waiver cannot take effect unless approved by the
FFIEC.
Application of the existing rules of practice and procedure in the
present day led the ASC to recognize there may be advantages in
proposing revisions to the existing rules to define terms and provide
greater clarity on the proceedings. The ASC also believes there may be
advantages in proposing revisions to the timeframes in the existing
rules of practice and procedure (as established in 1992 to accommodate
newly formed State appraiser regulatory agencies) to be more conducive
to deliberation by the ASC or FFIEC. Accordingly, the ASC proposes to
amend the existing rules of practice and procedure as set forth below.
The ASC created a flow chart for temporary waiver proceedings as set
forth in this notice of proposed rulemaking: <a href="https://www.asc.gov/Documents/FedralRegisterDocuments/Temporary%20Waiver%20Flow%20Chart%20for%20NPRM%20-%20Docket%20No.%20AS22-01.pdf">https://www.asc.gov/Documents/FedralRegisterDocuments/Temporary%20Waiver%20Flow%20Chart%20for%20NPRM%20-%20Docket%20No.%20AS22-01.pdf</a>.
The ASC is also proposing interpretations of several of the terms
used in Sec. 1119(b) of Title XI. These interpretations are proposed
to be included in the ``definitions'' section of the rule.
Though neither procedural rules nor published agency
interpretations of their statutory authority require notice and comment
under the Administrative Procedure Act (APA),\10\ the ASC is
voluntarily submitting this proposed rule and interpretations for
public comment in order to seek feedback from interested parties.
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\10\ 5 U.S.C. 553(b).
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II. The Proposed Rule
Authority, Purpose, and Scope
Proposed Sec. 1102.1 would clarify the purpose and scope of the
processes available for ASC consideration of temporary waiver relief by
making a clear distinction between: (1) A request from a State
appraiser regulatory agency accompanied by a written determination,
referred to in the proposed rule as a ``Request for Temporary Waiver'';
and (2) information received from other persons or entities (which
could include a State appraiser regulatory agency) referred to in the
proposed rule as a ``Petition.'' As subsequent sections in the proposed
amended rule clarify, the procedure followed varies depending on
whether the ASC has received a Request for Temporary Waiver or a
Petition requesting that the ASC initiate a temporary waiver
proceeding.
The basis for this distinction is in the statute itself. Section
1119(b) of Title XI authorizes the ASC to grant a temporary waiver only
when the ASC or a State appraiser regulatory agency has made the
statutorily required written determination that: (1) There is a
scarcity of certified or licensed appraisers to perform appraisals in
connection with FRTs in a State, or in any geographical political
subdivision of a State; and (2) such scarcity is leading to significant
delays in the performance of such appraisals for FRTs.\11\ Accordingly,
the proposed rules seek to clarify the procedural differences in
processing a Request for Temporary Waiver accompanied by a written
determination as compared to a Petition requesting the ASC exercise its
discretion to initiate a temporary waiver proceeding.
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\11\ Title XI Sec. 1119(b). See also, 12 U.S.C. 3348(b).
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Definitions
Proposed Sec. 1102.2 would establish definitions for the following
terms:
Federally related transaction (FRT). Proposed Sec. 1102.2(a)
proposes to define federally related transaction (FRT) to mean any real
estate-related financial transaction which: (a) A Federal financial
institutions regulatory agency engages in, contracts for, or regulates;
and (b) requires the services of an appraiser under the interagency
appraisal rules. [(Title XI Sec. 1121(4), 12 U.S.C. 3350), implemented
by the Office of the Comptroller of the Currency: 12 CFR 34.42(g) and
34.43(a); Federal Reserve Board: 12 CFR 225.62 and 225.63(a); Federal
Deposit Insurance Corporation: 12 CFR 323.2(f) and 323.3(a); and
National Credit Union Administration: 12 CFR 722.2(f) and 722.3(a)].
Performance of appraisals. Proposed Sec. 1102.2(b) proposes to
define performance of appraisals to mean that the appraisal service
requested of an appraiser has been provided to the lender or appraisal
management company (AMC).
Petition. Proposed Sec. 1102.2(c) proposes to define Petition to
mean information submitted to the ASC by the Federal financial
institutions regulatory agencies, their respective regulated financial
institutions, or other persons or institutions with a demonstrable
interest in appraiser regulation, including a State Appraisal Agency
(defined below), asking the ASC to exercise its discretionary authority
to initiate a temporary waiver proceeding, and that meets the
requirements, as determined by the ASC, set forth in proposed Sec.
1102.4.
Request for Temporary Waiver. Proposed Sec. 1102.2(d) proposes to
define Request for Temporary Waiver to mean information submitted to
the ASC with a written determination from a State Appraisal Agency
(defined below) requesting a temporary waiver that meets the
requirements, as determined by the ASC, set forth in proposed Sec.
1102.3.
Scarcity of certified or licensed appraisers. Proposed Sec.
1102.2(e) proposes to define scarcity of certified
[[Page 2081]]
or licensed appraisers to mean the number of active certified or
licensed appraisers within a State or a specified geographical
political subdivision is insufficient to meet the demand for appraisal
services and such appraisers are difficult to retain.
Significant delays in the performance of appraisals. Proposed Sec.
1102.2(f) proposes to define significant delays in the performance of
appraisals to mean delays that are substantially out of the ordinary
when compared to performance of appraisals for similarly situated
federally related transactions based on factors such as geographic
location (e.g., rural versus urban) and assignment type, and the delay
is not the result of intervening circumstances outside the appraiser's
control or brought about by the appraiser's client (e.g., inability to
access the subject property).
State Appraisal Agency. Proposed Sec. 1102.2(g) proposes to define
State Appraisal Agency to mean the State appraiser certifying and
licensing agency.\12\
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\12\ Title XI Sec. 1121(1). See also, 12 U.S.C. 3350(1).
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Temporary waiver. Proposed Sec. 1102.2(h) proposes to define
Temporary waiver to mean a waiver of any or all credentialing
requirements for persons eligible to perform appraisals for FRTs; if
granted, a temporary waiver does not waive the requirement for a USPAP-
compliant appraisal.\13\
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\13\ The regulations of the Federal financial institutions
regulatory agencies (agencies' appraisal regulations) require
appraisals for FRTs to meet minimum appraisal standards including
conformance to generally accepted appraisal standards as evidenced
by USPAP. The ASC cannot waive the requirement for USPAP-compliant
appraisals where applicable under the agencies' appraisal
regulations. Therefore, when a waiver is in effect, appraisals that
comply with the agencies' appraisal regulations (including
conformance with USPAP) would still be required when applicable
under those regulations, but they could be performed by persons who
are not credentialed. (See 12 CFR 34.44(a); 12 CFR 225.64(a); 12 CFR
323.4(a); and 12 CFR 722.4(a)).
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Request for Temporary Waiver
Proposed Sec. 1102.3 clarifies: Who can file a Request for
Temporary Waiver; what a Request for Temporary Waiver should contain;
ASC review of a Request for Temporary Waiver for purposes of
determining sufficiency of the document's content and receipt by the
ASC; and what is required in the event a Request for Temporary Waiver
is not deemed to be received, and thereby is either denied or referred
back to the State Appraisal Agency.
Proposed Sec. 1102.3(a) states that the State Appraisal Agency for
the State in which temporary waiver relief is sought may file a Request
for Temporary Waiver as distinguished from a Petition from other
persons or entities as proposed in Sec. 1102.4. A State Appraisal
Agency may alternatively submit a Petition as set forth in proposed
Sec. 1102.4. The ASC believes this is consistent with the intent of
the existing rules.\14\
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\14\ ``The rules provide persons other than the State appraisal
regulatory agencies (`State agencies') with the opportunity to
submit informational submissions to the ASC. They also may request
that the ASC exercise its discretionary authority to provide
temporary waiver relief. The ASC will consider such submissions and
requests in determining whether it should initiate a temporary
waiver proceeding.'' 57 Federal Register 10980 (April 1992).
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Proposed Sec. 1102.3(b) states that a Request for Temporary Waiver
will not be deemed to have been received by the ASC unless it fully and
accurately sets out:
(1) A written determination by the State Appraisal Agency that
there is a scarcity of certified or licensed appraisers leading to
significant delays in the performance of appraisals for FRTs or a
specified class of FRTs within either a portion of, or the entire
State;
(2) the requirement(s) of State law from which relief is being
sought;
(3) the nature of the scarcity of certified or licensed
appraisers (including supporting documentation, statistical or
otherwise verifiable);
(4) the extent of the delays anticipated or experienced in the
performance of appraisals by certified or licensed appraisers
(including supporting documentation, statistical or otherwise
verifiable);
(5) how complaints concerning appraisals by persons who are not
certified or licensed would be processed in the event a temporary
waiver is granted; and
(6) meaningful suggestions and recommendations for remedying the
situation.
The existing rules state that in the absence of a written
determination by the State Appraisal Agency, it must ask the ASC for
such a determination. That language is removed from this proposed
subsection for the reason that if the ASC were to make such a
determination when asked to do so by a State Appraisal Agency, it would
be processed as an ASC Order initiating a temporary waiver proceeding
pursuant to proposed Sec. 1102.5(a).
The proposed amendments to this subsection seek to provide clarity
on information that should be included in a Request for Temporary
Waiver and to remove redundancy from that information. For example, the
existing rules, in addition to the above, ask for ``[a] description of
all significant problems currently being encountered in efforts to
comply with [T]itle XI'' which would be captured in the information
sought in proposed Sec. 1102.3(b). The proposed amendments also modify
the requirement for a State Appraisal Agency to provide ``a specific
plan for expeditiously alleviating the scarcity and service delays'' to
``meaningful suggestions and recommendations for remedying the
situation'' recognizing that the situation creating scarcity and delay
may be completely outside the control of the State Appraisal Agency.
The proposed amendments include the phrase ``supporting
documentation, statistical or otherwise verifiable.'' This is intended
to provide clarification as to what a Request for Temporary Waiver
should include to support the existence of a scarcity of certified or
licensed appraisers leading to significant delays in the performance of
appraisals for FRTs or a specified class of FRTs for either a portion
of, or the entire State, and what the ASC will consider in determining
receipt (see proposed Sec. 1102.3(c) below). A Request for Temporary
Waiver should include clear and specific data to support a claim that
there is a scarcity of appraisers leading to significant delays in the
performance of covered appraisals. The data supporting such a claim may
vary from location to location and situation to situation. Information
about the following could assist the ASC in reviewing a Request for
Temporary Waiver:
1. Geography--location(s) of the scarcity leading to significant
delay.
2. Transactions--types of FRTs impacted (i.e., property and
transaction type(s) and transaction amount(s)).
3. Time--length of time for waiver requested.
Proposed Sec. 1102.3(b) includes that a Request for Temporary
Waiver address how complaints concerning appraisals by persons who are
not certified or licensed would be processed in the event a temporary
waiver is granted.
Proposed Sec. 1102.3(c) is intended to clarify that a Request for
Temporary Waiver shall be deemed received for purposes of publication
in the Federal Register for notice and comment if the ASC determines
that the information submitted meets the requirements of Sec.
1102.3(b).
Proposed Sec. 1102.3(d) sets forth what is required in the event a
Request for Temporary Waiver is not deemed to be received, and thereby
is either denied or referred back to the State Appraisal Agency. In
either case, written notice from the ASC would be required with an
explanation for such a determination.
[[Page 2082]]
Petition Requesting the ASC Initiate a Temporary Waiver Proceeding
Proposed Sec. 1102.4 clarifies: Who can file a Petition requesting
that the ASC exercise its discretionary authority to issue an Order,
thereby initiating a temporary waiver proceeding; what a Petition
should contain; the need to forward a copy of a Petition to the State
Appraisal Agency of the impacted State; what the ASC may review for
purposes of determining whether the Petition may be processed for
further action; what is required in the event a Petition does not meet
the requirements of Sec. 1102.4(b), Contents of a Petition, and
thereby is either denied or referred back to the petitioner; and what
further action may be taken.
Proposed Sec. 1102.4(a) states that a Petition may be filed by the
Federal financial institutions regulatory agencies, their respective
regulated financial institutions, and other persons or institutions
with a demonstrable interest in appraiser regulation, including a State
Appraisal Agency.
Proposed Sec. 1102.4(b) states that a Petition should include:
(1) Information (statistical or otherwise verifiable) to support
the existence of a scarcity of certified or licensed appraisers
leading to significant delays in the performance of appraisals for
FRTs or a specified class of FRTs for either a portion of, or the
entire State; and
(2) the extent of the delays anticipated or experienced in the
performance of appraisals by certified or licensed appraisers
(including supporting documentation, statistical or otherwise
verifiable).
A Petition may also include meaningful suggestions and recommendations
for remedying the situation.
The existing rules generally request the same information from
State Appraisal Agencies as they do from other persons or institutions
seeking consideration of temporary waiver relief (with the exception of
``a specific plan to alleviate scarcity and service delays'' which is
unique to State Appraisal Agencies). The proposed amendments to this
subsection seek to provide clarity on information that should be
included in a Petition while easing the expectation that a Petition
contain the specificity of a Request for Temporary Waiver from a State
Appraisal Agency.
The proposed amendments include the phrase ``supporting
documentation, statistical or otherwise verifiable.'' This is intended
to clarify what a Petition should include to support the existence of a
scarcity of certified or licensed appraisers leading to significant
delays in the performance of appraisals for FRTs or a specified class
of FRTs for either a portion of, or the entire State, and what the ASC
will consider in determining whether to process a Petition for further
action (see proposed Sec. 1102.4(d) below).
Proposed Sec. 1102.4(c) clarifies the existing requirement for a
petitioner to provide a copy of their Petition to the State Appraisal
Agency, unless the party filing the Petition is the State Appraisal
Agency.
Proposed Sec. 1102.4(d) provides that a Petition may be processed
for further action if the ASC determines that the information submitted
meets the requirements of proposed Sec. 1102.4(b) and that further
action should be taken to determine whether a scarcity of appraisers
exists and that the scarcity is leading to significant delays in the
performance of appraisals for FRTs or a specified class of FRTs within
either a portion of, or the entire State.
Proposed Sec. 1102.4(e) sets forth what is required in the event a
Petition does not meet the requirements of Sec. 1102.4(b), Contents of
a Petition, and thereby is either denied or referred back to the
petitioner. In either case, written notice from the ASC would be
required with an explanation for such a determination.
Proposed Sec. 1102.4(f) states that if a Petition is processed for
further action, the ASC may initially refer a Petition to the State
Appraisal Agency where temporary waiver relief is sought for evaluation
and further study, or the ASC may take further action without referring
a Petition to the State Appraisal Agency. Alternatively, a Petition may
be denied or referred back to the petitioner for further action.
Proposed Sec. 1102.4(g) states that in the event the State
Appraisal Agency opts to conduct evaluation and further study on a
Petition, the State Appraisal Agency may issue a written determination
that there is a scarcity of certified or licensed appraisers leading to
significant delays in the performance of appraisals for FRTs or a class
of FRTs within either a portion of, or the entire State. Assuming the
State Appraisal Agency has addressed the items that would be included
in a Request for Temporary Waiver as set forth in proposed Sec.
1102.3(b), the Petition would now be subject to the procedures and
requirements for a Request for Temporary Waiver.
The State Appraisal Agency could alternatively recommend that the
ASC take no further action on the Petition, or moreover decline to
conduct evaluation and further study on a Petition. In either case, the
ASC may exercise its discretion in determining whether to issue an
Order initiating a temporary waiver proceeding.
Proposed Sec. 1102.5 clarifies that an Order initiating a
temporary waiver proceeding may be in response to a Petition or may be
initiated by the ASC without a Petition having been submitted. In
either event, such an Order would include consideration of certain
items that would be addressed in a Request for Temporary Waiver. (See
e.g., Sec. 1102.3(b)(2)-(6), Contents and Receipt of a Request for
Temporary Waiver). If such an Order is issued, the ASC shall publish a
Federal Register notice in accordance with Sec. 1102.6(b). This is
consistent with the existing rules of practice and procedure.
Notice and Comment
Proposed Sec. 1102.6 does not vary in substance from the existing
rules of practice and procedure, Sec. 1102.4, Notice and comment,
which provides for a 30-day notice and comment period on either a
Request for Temporary Waiver or an Order initiating a temporary waiver
proceeding.
ASC Determination
Proposed Sec. 1102.7 would expand the existing 45-day deadline,
which commences on the date of publication above, for the ASC to make a
determination. With respect to recent requests for temporary waivers,
or other information submissions requesting the ASC initiate a
proceeding, the 45-day turnaround limited the time available to process
and evaluate information submitted, including comments received during
the notice and comment period.
The ASC believes that the 45-day time period was imposed in 1992
primarily because States were still in the process of setting up State
appraiser regulatory programs, and absent a temporary waiver, could
have been left without any means to provide appraisals for FRTs. That
is not the case today. Even absent a temporary waiver, a State would
likely be able to continue to provide appraisals, especially given the
use of temporary practice permits and reciprocity.
The ASC proposes to expand the timeframe for an ASC determination,
on either a Request for Temporary Waiver or an Order initiating a
temporary waiver proceeding, from 45 calendar days to 90 calendar days
from the date of publication in the Federal Register to allow
sufficient time for thorough processing and consideration. Proposed
Sec. 1102.7 also seeks to clarify that in the event the ASC issues an
Order approving a temporary waiver, which is only effective upon FFIEC
approval of the waiver, that the FFIEC consideration of the waiver
would not be subject to
[[Page 2083]]
the ASC's proposed 90-day timeframe for a determination.
The existing rules of practice and procedure allow the ASC to issue
an interim approval Order simultaneously with a publication for notice
and comment, and apply when the ASC determines that an emergency
exists. A waiver approved by such an Order also requires approval by
the FFIEC. For the reasons stated above, the ASC believes the existing
rules were intended to accommodate nascent State Programs, which is not
applicable today. States now have options to cope with an emergency
that were not available when the existing rules of practice and
procedure were finalized. Additionally, the ASC believes that notice
and comment is critical to thorough processing of a Request for
Temporary Waiver or a Petition. Therefore, as proposed, Sec. 1102.6
would eliminate the interim Order from the rules of practice and
procedure.
Waiver Extension
Proposed Sec. 1102.8 does not vary in substance from the existing
rules of practice and procedure, Sec. 1102.6, Waiver extension.
Waiver Termination
Proposed Sec. 1102.9 would clarify the distinction between
mandatory waiver termination versus discretionary waiver termination.
Section 1119(b) of Title XI states, ``[t]he waiver terminates when the
[ASC] determines that such significant delays have been eliminated.''
Therefore, proposed Sec. 1102.9 would require termination in the event
of such a finding by the ASC. Proposed Sec. 1102.9 would retain the
provision for a discretionary termination in the event the ASC finds
that the terms and conditions of the waiver Order are not being
satisfied and the procedure for the ASC's publication in the Federal
Register for notice and comment in the case of discretionary waiver
termination, which does not vary in substance from the existing rules
of practice and procedure, Sec. 1102.7, Waiver termination. In the
absence of further ASC action to the contrary, the finding of a
discretionary waiver termination automatically shall become final 21
calendar days after the close of the comment period.
III. Request for Comment
The ASC requests comment on all aspects of the proposed amendments
to the existing rules of practice and procedure governing temporary
waiver proceedings.
IV. Regulatory Requirements
The ASC has concluded that, if finalized, the proposed amendments
to the procedural rule would, like the current rule, constitute a rule
of agency organization, procedure, or practice, and that they would
therefore be exempt from the notice-and-comment rulemaking requirements
of the APA.\15\ For the same reason, the proposed amendments would not
be subject to the 30-day delayed effective date for substantive rules
under the APA.\16\ Moreover, agency interpretations of terms used in
their statutory authority are exempt from the notice and comment
requirement. Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\17\
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\15\ 5 U.S.C. 553(b).
\16\ 5 U.S.C. 553(d).
\17\ 5 U.S.C. 603(a) and 604(a).
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Paperwork Reduction Act
There is no collection of information that would be required by
this proposed rule that would be subject to the Paperwork Reduction Act
of 1995, 44 U.S.C. 3501 et seq. The Paperwork Reduction Act of 1995
\18\ (PRA) states that no agency may conduct or sponsor, nor is the
respondent required to respond to, an information collection unless it
displays a currently valid Office of Management and Budget (OMB)
control number. The ASC has reviewed this notice of proposed rulemaking
and determined that it does not contain any information collection
requirements subject to the PRA. Accordingly, no submissions to OMB
will be made with respect to this proposed rule.
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\18\ 44 U.S.C. 3501-3521.
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Unfunded Mandates Reform Act of 1995 Determination
This proposed rule if finalized would not have a significant or
unique effect on State, local, or tribal governments or the private
sector. The proposed rule would amend the existing rule to provide
definitions of terms and greater clarity on the proceedings for a
temporary waiver. A statement containing the information required by
the Unfunded Mandates Reform Act, 2 U.S.C. 1531 et seq. is not
required.
List of Subjects in 12 CFR Part 1102
Administrative practice and procedure, Appraisers, Appraisal
Management Company Registry Fees, Banks, Banking, Freedom of
information, Mortgages, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the preamble, the ASC proposes to
amend 12 CFR part 1102 as follows:
PART 1102--APPRAISER REGULATION
0
1. The authority citation for part 1102, subpart A continues to read as
follows:
Authority: 12 U.S.C. 3348(b).
0
2. Revise part 1102, subpart A to read as follows:
Subpart A--Temporary Waiver Requests
Sec.
1102.1 Authority, purpose, and scope.
1102.2 Definitions.
1102.3 Request for Temporary Waiver.
1102.4 Petition requesting the ASC initiate a temporary waiver
proceeding.
1102.5 Order initiating a temporary waiver proceeding.
1102.6 Notice and comment.
1102.7 ASC determination.
1102.8 Waiver extension.
1102.9 Waiver termination.
Sec. 1102.1 Authority, purpose and scope.
(a) Authority. This subpart is issued under Sec. 1119(b) of Title
XI of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (Title XI; 12 U.S.C. 3348(b)).
(b) Purpose and scope. This subpart prescribes rules of practice
and procedure governing temporary waiver proceedings under Sec.
1119(b) of Title XI (12 U.S.C. 3348(b)). These procedures apply
whenever a Request for Temporary Waiver is submitted to the Appraisal
Subcommittee (ASC) of the Federal Financial Institutions Examination
Council (FFIEC) for a temporary waiver of any requirement relating to
State certification or licensing (credentialing requirements) of
persons eligible to perform appraisals for federally related
transactions (FRTs) under Title XI. These procedures also apply in the
event the ASC receives a Petition requesting the ASC initiate a
temporary waiver proceeding. This subpart also contains the ASC's
interpretations of terms used in Sec. 1119(b) of Title XI.
Sec. 1102.2 Definitions.
For purposes of this subpart:
(a) Federally related transaction (FRT) means any real estate-
related financial transaction which: (a) A Federal financial
institutions regulatory agency engages in, contracts for, or regulates;
and (b) requires the services of an appraiser under the interagency
appraisal rules. [(Title XI Sec. 1121(4), 12 U.S.C. 3350), implemented
by the Office
[[Page 2084]]
of the Comptroller of the Currency: 12 CFR 34.42(g) and 34.43(a);
Federal Reserve Board: 12 CFR 225.62and 225.63(a); Federal Deposit
Insurance Corporation: 12 CFR 323.2(f) and 323.3(a); and National
Credit Union Administration: 12 CFR 722.2(f) and 722.3(a)].
(b) Performance of appraisals means the appraisal service requested
of an appraiser is provided to the lender or appraisal management
company (AMC).
(c) Petition means information submitted to the ASC by the Federal
financial institutions regulatory agencies, their respective regulated
financial institutions, or other persons or institutions with a
demonstrable interest in appraiser regulation, including a State
Appraisal Agency, asking the ASC to exercise its discretionary
authority to initiate a temporary waiver proceeding, and that meets the
requirements, as determined by the ASC, set forth in Sec. 1102.4.
(d) Request for Temporary Waiver means information submitted to the
ASC by a State Appraisal Agency with a written determination requesting
a temporary waiver that meets the requirements, as determined by the
ASC, set forth in Sec. 1102.3.
(e) Scarcity of certified or licensed appraisers means the number
of active certified or licensed appraisers within a State or a
specified geographical political subdivision is insufficient to meet
the demand for appraisal services and such appraisers are difficult to
retain.
(f) Significant delays in the performance of appraisals means
delays that are substantially out of the ordinary when compared to
performance of appraisals for similarly situated FRTs based on factors
such as geographic location (e.g., rural versus urban) and assignment
type, and the delay is not the result of intervening circumstances
outside the appraiser's control or brought about by the appraiser's
client (e.g., inability to access the subject property).
(g) State Appraisal Agency means the State appraiser certifying and
licensing agency.\19\
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\19\ Title XI Sec. 1121(1). See also, 12 U.S.C. 3350(1).
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(h) Temporary waiver means a waiver of any or all credentialing
requirements for persons eligible to perform appraisals for FRTs; if
granted, a temporary waiver does not waive the requirement for a
Uniform Standards of Professional Appraisal Practice (USPAP)-compliant
appraisal.
Sec. 1102.3 Request for Temporary Waiver.
(a) Who can file a Request for Temporary Waiver. The State
Appraisal Agency for the State in which the temporary waiver relief is
sought may file a Request for Temporary Waiver.
(b) Contents and Receipt of a Request for Temporary Waiver. A
Request for Temporary Waiver from a State Appraisal Agency will not be
deemed received by the ASC unless it fully and accurately sets out:
(1) A written determination by the State Appraisal Agency that
there is a scarcity of certified or licensed appraisers leading to
significant delays in the performance of appraisals for FRTs or a
specified class of FRTs within either a portion of, or the entire
State;
(2) The requirement(s) of State law from which relief is being
sought;
(3) The nature of the scarcity of certified or licensed appraisers
(including supporting documentation, statistical or otherwise
verifiable);
(4) The extent of the delays anticipated or experienced in the
performance of appraisals by certified or licensed appraisers
(including supporting documentation, statistical or otherwise
verifiable);
(5) How complaints concerning appraisals by persons who are not
certified or licensed would be processed in the event a temporary
waiver is granted; and
(6) Meaningful suggestions and recommendations for remedying the
situation.
(c) Receipt of a Request for Temporary Waiver. A Request for
Temporary Waiver shall be deemed received for purposes of publication
in the Federal Register for notice and comment if the ASC determines
that the information submitted meets the requirements of Sec.
1102.3(b), Contents and Receipt of a Request for Temporary Waiver, to
support that a scarcity of appraisers exists and that the scarcity is
leading to significant delays in the performance of appraisals for FRTs
or a specified class of FRTs within either a portion of, or the entire
State.
(d) Deny or Refer back. In the event the Request for Temporary
Waiver is not deemed received, it may be denied in its entirety or
referred back to the State Appraisal Agency for further action. In
either case, the ASC shall provide written notice to the State
Appraisal Agency providing an explanation for the determination.
Sec. 1102.4 Petition requesting the ASC initiate a temporary waiver
proceeding.
(a) Who can file a Petition requesting the ASC initiate a temporary
waiver proceeding. The Federal financial institutions regulatory
agencies, their respective regulated financial institutions, and other
persons or institutions with a demonstrable interest in appraiser
regulation, including a State Appraisal Agency, may petition the ASC to
exercise its discretionary authority to initiate a temporary waiver
proceeding.
(b) Contents of a Petition. (1) A Petition should include:
(i) Information (statistical or otherwise verifiable) to support
the existence of a scarcity of certified or licensed appraisers leading
to significant delays in the performance of appraisals for FRTs or a
specified class of FRTs for either a portion of, or the entire State;
and
(ii) The extent of the delays anticipated or experienced in the
performance of appraisals by certified or licensed appraisers
(including supporting documentation, statistical or otherwise
verifiable).
(2) A Petition may also include meaningful suggestions and
recommendations for remedying the situation.
(c) Copy of Petition to State Appraisal Agency. In the case of a
Petition from a party other than a State Appraisal Agency, the party
must promptly provide a copy of its Petition to the State Appraisal
Agency.
(d) ASC review of a Petition. A Petition may be processed for
further action if the ASC determines that the information submitted
meets the requirements of Sec. 1102.4(b), Contents of a Petition, and
that further action should be taken to determine whether a scarcity of
appraisers exists and that the scarcity is leading to significant
delays in the performance of appraisals for FRTs or a specified class
of FRTs within either a portion of, or the entire State.
(e) Deny or Refer back. In the event a Petition does not meet the
requirements of Sec. 1102.4(b), Contents of a Petition, it may be
denied in its entirety or referred back to the petitioner for further
action. In either event, the ASC shall provide written notice to the
petitioner providing an explanation for the determination.
(f) Further action on a Petition. If the ASC determines that a
Petition should be processed for further action, at its discretion the
ASC may:
(1) Refer a Petition to the State Appraisal Agency where temporary
waiver relief is sought for further evaluation and study, to include
items that would be addressed in a Request for Temporary Waiver (see
Sec. 1102.3(b), Contents and Receipt of a Request for Temporary
Waiver); or
[[Page 2085]]
(2) Take further action without referring the Petition to the State
Appraisal Agency.
(g) State Appraisal Agency Action.
(1) In the event the State Appraisal Agency opts to conduct further
evaluation and study on a Petition, the State Appraisal Agency may:
(i) Issue a written determination that there is a scarcity of
certified or licensed appraisers leading to significant delays in the
performance of appraisals for FRTs or a class of FRTs within either a
portion of, or the entire State (or request that the ASC issue such a
written determination), in which case, the procedures and requirements
of Sec. 1102.3 and 1102.6(a) shall apply; or
(ii) Recommend that the ASC take no further action.
(2) In the event the State Appraisal Agency either recommends no
further action or declines to conduct further evaluation and study on a
Petition, the ASC may exercise its discretion in determining whether to
issue an Order initiating a temporary waiver proceeding in accordance
with Sec. 1102.5(a).
Sec. 1102.5 Order initiating a temporary waiver proceeding.
The ASC may exercise discretion in determining whether to issue an
Order initiating a temporary waiver proceeding in response to a
Petition, or alternatively, the ASC may exercise discretion to initiate
a temporary waiver proceeding on its own initiative without a Petition
being submitted. In either event, such an Order would include
consideration of certain items that would be addressed in a Request for
Temporary Waiver. (See e.g., Sec. 1102.3(b)(2) through (6), Contents
and Receipt of a Request for Temporary Waiver). If such an Order is
issued, the ASC shall publish a Federal Register notice in accordance
with Sec. 1102.6(b).
Sec. 1102.6 Notice and comment.
The ASC shall publish promptly in the Federal Register a notice
respecting:
(a) A received Request for Temporary Waiver (see Sec. 1102.3(c));
or
(b) An ASC Order initiating a temporary waiver proceeding (see
Sec. 1102.5).
The notice of a received Request for Temporary Waiver or ASC Order
initiating a temporary waiver proceeding shall contain a concise
statement of the nature and basis for the action and shall give
interested persons 30 calendar days from its publication in which to
submit written data, views, and arguments.
Sec. 1102.7 ASC determination.
(a) Order by the ASC. Within 90 calendar days of the date of
publication of the notice in the Federal Register, the ASC, by Order,
shall either grant or deny a waiver, in whole or in part, and upon
specified terms and conditions, including provisions for waiver
termination. The Order shall be published in the Federal Register,
which in the case of an Order approving a waiver, shall only be
published after FFIEC approval of the waiver (see paragraph (b) of this
section). Such Order shall respond to comments received from interested
members of the public and shall provide the reasons for the ASC's
finding(s).
(b) Approval by the FFIEC. Any ASC Order approving a waiver shall
be effective only upon FFIEC approval of the waiver. FFIEC
consideration of a waiver is not subject to the ASC's 90-day timeframe
for a determination.
Sec. 1102.8 Waiver extension.
The ASC may initiate an extension of temporary waiver relief and
shall follow Sec. Sec. 1102.6, 1102.7 and 1102.9 of this subpart. A
State Appraisal Agency also may seek an extension of temporary waiver
relief by forwarding an additional written Request for Temporary Waiver
to the ASC. A request for an extension from a State Appraisal Agency
shall be subject to all the requirements of this subpart.
Sec. 1102.9 Waiver termination.
(a) Mandatory waiver termination. The ASC shall terminate a
temporary waiver Order when the ASC determines that significant delays
in the performance of appraisals by certified or licensed appraisers no
longer exist.
(b) Discretionary waiver termination. The ASC at any time may
terminate a waiver Order on the finding that the terms and conditions
of the waiver Order are not being satisfied. In the case of a
discretionary waiver termination, the ASC shall publish a finding of
waiver termination promptly in the Federal Register, giving interested
persons no less than 30 calendar days from publication in which to
submit written data, views, and arguments. In the absence of further
ASC action to the contrary, the finding of discretionary waiver
termination automatically shall become final 21 calendar days after the
close of the comment period.
By the Appraisal Subcommittee.
Dated: January 6, 2022.
Tim Segerson,
Chairman.
[FR Doc. 2022-00342 Filed 1-12-22; 8:45 am]
BILLING CODE 6700-01-P
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