Rule2022-21606
Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver Requests
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Published
October 7, 2022
Effective
December 6, 2022
Issuing agencies
Federal Financial Institutions Examination Council
Abstract
The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) is adopting a final rule to amend 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).
Full Text
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<title>Federal Register, Volume 87 Issue 194 (Friday, October 7, 2022)</title>
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[Federal Register Volume 87, Number 194 (Friday, October 7, 2022)]
[Rules and Regulations]
[Pages 60870-60877]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-21606]
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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
12 CFR Part 1102
[Docket No. AS22-06]
Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver
Requests
AGENCY: Appraisal Subcommittee of the Federal Financial Institutions
Examination Council.
ACTION: Final rule.
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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial
Institutions Examination Council (FFIEC) is adopting a final rule to
amend 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).
DATES: This final rule is effective on December 6, 2022.
FOR FURTHER INFORMATION CONTACT: Lori Schuster, Management and Program
Analyst, <a href="/cdn-cgi/l/email-protection#600c0f1209200113034e070f16"><span class="__cf_email__" data-cfemail="177b78657e5776647439707861">[email protected]</span></a>, or Alice M. Ritter, General Counsel,
<a href="/cdn-cgi/l/email-protection#81e0ede8e2e4c1e0f2e2afe6eef7"><span class="__cf_email__" data-cfemail="01606d686264416072622f666e77">[email protected]</span></a>, 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\ Title XI established the ASC. 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 section 1101. See also, 12 U.S.C. 3331.
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As directed by Title XI, the Federal financial institutions
regulatory agencies' appraisal regulations require appraisals for FRTs
to meet minimum appraisal standards as evidenced by the Uniform
Standards of Professional Appraisal Practice (USPAP) promulgated by the
Appraisal Standards Board (ASB) of the Appraisal Foundation.\3\ 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.\4\ 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.\5\
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\3\ Title XI section 1110, 12 U.S.C. 3339, 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.
\4\ Title XI section 1116(a) and (c). See also, 12 U.S.C.
3345(a) and (c).
\5\ Title XI section 1118. See also, 12 U.S.C. 3347. ``State
appraiser regulatory agencies'' are referred to in the final 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. A waiver terminates when the ASC determines that such
significant delays have been eliminated.\6\
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\6\ Title XI section 1119(b). See also, 12 U.S.C. 3348(b).
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Congress intended that the ASC exercise this waiver authority
``cautiously.'' \7\
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\7\ 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.\8\ The ASC has ordered temporary
waiver relief on two occasions. The first was for the Commonwealth of
the Northern Mariana
[[Page 60871]]
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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\8\ 12 CFR part 1102, subpart A.
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Application of the rules of practice and procedure in the present
day have led the ASC to recognize advantages to revising the rules to
provide greater clarity, define certain terms and amend timeframes in
the procedural process to be more conducive to deliberation by the ASC,
and in the event of approval, deliberation by the FFIEC. The ASC is
also adopting interpretations of several terms used in section 1119(b)
of Title XI. These interpretations are included in the ``definitions''
section of the final rule.
Though neither procedural rules nor published agency
interpretations of their statutory authority require notice and comment
under the Administrative Procedure Act (APA),\9\ the ASC voluntarily
submitted the proposed rule and interpretations for public comment in
order to seek feedback from interested parties. On January 13, 2022,
the ASC published a proposed rule to amend the rules of practice and
procedure governing temporary waiver proceedings with a 60-day public
comment period.\10\
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\9\ 5 U.S.C. 553(b).
\10\ 87 FR 2079.
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II. The Final Rule
The final rule amends rules of practice and procedure governing
temporary waiver proceedings which were promulgated in 1992 pursuant to
section 1119(b) of Title XI.\11\ For the reasons discussed in section
III of this SUPPLEMENTARY INFORMATION, the final rule adopts and amends
the rules of practice and procedure substantially as proposed, with the
following modifications:
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\11\ The flow chart included in the preamble of the proposed
rule also applies to the final rule and can be accessed here:
<a href="https://www.asc.gov/Documents/FedralRegisterDocuments/2022.07.25%20Temporary%20Waiver%20Flow%20Chart%20for%20Final.pdf">https://www.asc.gov/Documents/FedralRegisterDocuments/2022.07.25%20Temporary%20Waiver%20Flow%20Chart%20for%20Final.pdf</a>.
This is for reference purposes only and is not part of this final
rule.
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(1) definition of ``Petition'' to include State financial
institutions regulatory agencies as potential petitioners; and
(2) clarification that either a mandatory or discretionary waiver
termination requires publication in the Federal Register, and that a
discretionary waiver termination requires such publication with a 30-
day comment period.
III. The Final Rule and Public Comments on the Proposed Rule
The following is a section-by-section review and discussion of the
public comments received by the ASC concerning the proposal. The ASC
requested comment on all aspects of the proposed amendments to the
rules of practice and procedure governing temporary waiver proceedings.
The ASC received four comment letters in response to the published
proposal. These comment letters were received from appraiser trade
associations, a state department of financial institutions, a national
advocacy association for the credit union system and a national
association of state bank supervisors.
A. Section 1102.1: Authority, Purpose, and Scope
Section 1102.1 finalizes proposed Sec. 1102.1 without change and
clarifies the distinction between: (1) a request from a State appraiser
regulatory agency, 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.'' The procedures set
forth in the final rule for ASC's consideration of a temporary waiver
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.
One commenter asserted that Title XI's temporary waiver provision
was meant to support implementation of State program requirements
enacted by Congress rather than to provide regulatory relief, which has
caused confusion in the marketplace. The commenter did indicate general
support for the proposed actions regarding the temporary waiver process
but expressed concern over negative consequences and continued
confusion. Although the ASC acknowledges this comment, there is no
provision in Title XI that sunsets the temporary waiver provision.
Another commenter stated that the process is cumbersome,
bureaucratic and did not offer any real assistance, and added that the
proposed revisions to the rule are seemingly designed to ensure the
process is burdensome to the point applications are not received or
will be deemed incomplete. While the current rule and this final rule
seek to obtain appropriate information to inform the ASC in potentially
exercising this waiver authority which Congress intended that the ASC
exercise cautiously,\12\ the final rule clarifies the information to be
submitted and the procedures to be followed to the extent the ASC can
exercise such authority in a procedural rulemaking.
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\12\ Supra note 7.
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B. Section 1102.2: Definitions
Section 1102.2 finalizes proposed Sec. 1102.2 with modification to
the definition of ``Petition'' as discussed below. The following is a
discussion of those definitions on which the ASC received public
comment. Definitions on which the ASC did not receive comment are not
discussed below.
One commenter noted that the proposed definition of ``Petition''
identified Federal financial institution regulators but failed to
include State financial institution regulators. The ASC agrees, and
therefore proposed Sec. 1102.2(c) is adopted with modification to the
definition of ``Petition'' to include State financial institutions
regulatory agencies as a potential petitioner.
Several commenters asked for reconsideration of the proposed
definitions of ``scarcity'' and ``delay'' to be measured or objectively
determined as recommended in the report released in December 2021 by
the Government Accountability Office (GAO).\13\ The ASC appreciates the
commenters' request for more precise definitions of these terms. The
ASC has considered these comments and determined that ``scarcity'' and
``delay'' are best understood in the context of the individual State or
geographical political subdivision of a State waiver applicant.
Further, more precise definitions would limit the ASC's flexibility in
making waiver determinations. However, the ASC has included new or
revised definitions and interpretations of terms in the final rule in
order to provide more clarity on the processing of a Request or
Petition.
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\13\ <a href="https://www.gao.gov/products/gao-22-104472">https://www.gao.gov/products/gao-22-104472</a>.
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Another commenter asserted that having geographic location as a
factor to consider in determining if a delay is out of the ordinary and
opens the door to government-sanctioned discrimination. The
acknowledgement of geographic location is built into the statute in
section 1119(b) of Title XI, which references a finding of 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. The language in the current rule and this final rule
reflects that language and recognizes varying circumstances in
political subdivisions
[[Page 60872]]
within a State. The ASC agrees it should not be applied to deprive
anyone of equal access to credit.
C. Section 1102.3: Request for Temporary Waiver
Section 1102.3 finalizes proposed Sec. 1102.3 without change.
Section 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. Section 1102.3(b) provides that a Request for
Temporary Waiver will not be deemed to have been received by the ASC
unless it fully and accurately sets out:
<bullet> 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;
<bullet> the requirement(s) of State law from which relief is being
sought;
<bullet> the nature of the scarcity of certified or licensed
appraisers (including supporting documentation, statistical or
otherwise verifiable);
<bullet> 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);
<bullet> how complaints concerning appraisals by persons who are
not certified or licensed would be processed in the event a temporary
waiver is granted; and
<bullet> meaningful suggestions and recommendations for remedying
the situation.
The amendments to paragraph (b) provide clarity on information that
should be included in a Request for Temporary Waiver. The 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 amendments include the phrase ``supporting documentation,
statistical or otherwise verifiable.'' 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 appraisals for FRTs, or a specified class of FRTs, for
either a portion of, or the entire State. 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.
Section 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. Section 1102.3(c) clarifies that a Request for
Temporary Waiver will 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).
Section 1102.3(d) sets forth what the process is in the event a Request
for Temporary Waiver is not deemed to be received; written notice from
the ASC would be required with an explanation for such a determination.
One commenter expressed concern over the requirement for a Request
for Temporary Waiver to include ``the extent of the delays anticipated
or experienced in the performance of appraisals,'' stating that
granting a request based solely on anticipated delays is troubling. The
commenter suggested requiring clear, convincing and specific evidence.
While the ASC acknowledges the basis for this concern, this is language
carried over from the current rule, and was helpful information for the
ASC in considering more recent temporary waiver requests. The ASC would
not consider ``anticipated delay'' alone, but rather would take this
into account with all other information received.
The commenter addressed the need for applicants to understand the
limited scope of temporary waivers to FRTs, that a temporary waiver
does not remove the requirement for an appraisal for FRTs, and that
many mortgage transactions are guided by underwriting requirements of
an entity not covered under the FRT definition. The ASC agrees with the
commenter's observations. The commenter also expressed concern that all
available options should be exhausted prior to temporary waivers being
considered, such as temporary practice permits and reciprocal
licensing, and that States should be required to do so. While the ASC
agrees that such options may be useful to minimize appraiser shortages,
imposing such a requirement would be outside of the scope of this
rulemaking, which is to amend existing rules of practice and procedure
for temporary waivers.
The commenter also asserted that the ASC should afford great
deference to the State appraiser regulatory agency in the processing of
a Request for Temporary Waiver, and that the ASC should have clear and
convincing evidence if it proceeds contrary to the State's position.
The final rule has deference built into the process for a State's
Request for Temporary Waiver. If all information is properly submitted,
it is promptly published in the Federal Register. Even in the case of a
Petition requesting the ASC exercise its discretionary authority to
initiate a temporary waiver proceeding, the final rule incorporates the
option for ASC referral and consultation with the State, while at the
same time, maintaining the statutory responsibility for the ASC to make
the determination, which would require FFIEC approval in the case of a
temporary waiver being granted.
One commenter asked for reconsideration of the new requirement to
address how complaints concerning appraisals by persons who are not
credentialed would be processed stating that it is unnecessary since
State regulators would continue to review and process complaints.
Another commenter questioned this requirement stating that it is
unnecessary since transactions would be governed by FFIEC agencies
chartering or licensing the lender. While State appraiser regulatory
agencies are charged with effective supervision of credentialed
appraisers, some States may not have the authority to process
complaints about unlicensed or uncredentialed individuals. The ASC
found this to be a void when a temporary waiver was granted, and
therefore review and processing of complaints should be addressed
proactively in considering a Request for Temporary Waiver. If a State
regulator would indeed continue to review and process such complaints,
it would merely need to state that in the Request for Temporary Waiver.
If the State lacks authority to do so, other options could be explored
in a proactive manner.
A commenter stated that the ASC's request for documentation,
statistical or otherwise verifiable, is a request for something that
does not exist due to lack of a centralized reporting or gathering
mechanism for such data. The final rule includes the phrase
``supporting documentation, statistical or otherwise verifiable.'' This
is to provide clarification, without being overly prescriptive, as to
what a Request or Petition for temporary waiver should include to
support the existence of a
[[Page 60873]]
scarcity and delay, and what the ASC will consider in determining
receipt of a Request or Petition. This leaves options open for a
requester or petitioner to provide 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, while recognizing the
data supporting such a claim may vary from location to location and
situation to situation.
D. Section 1102.4: Petition Requesting the ASC Initiate a Temporary
Waiver Proceeding
Section 1102.4 finalizes proposed Sec. 1102.4 with modification to
Sec. 1102.4(a) to include State financial institutions regulatory
agencies as a potential petitioner, consistent with the modification to
the definition of ``Petition'' in Sec. 1102.2(c).
Section 1102.4 clarifies that a Petition is a request for the ASC
to exercise its discretionary authority to initiate a temporary waiver
proceeding. Section 1102.4(a), as modified, states that a Petition may
be filed by the Federal or State 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.
Section 1102.4(b) provides that a Petition should include:
<bullet> 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
<bullet> 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 amendments to this
subsection 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 amendments include the phrase ``supporting documentation,
statistical or otherwise verifiable.'' A Petition should include data
to support a claim that there is a scarcity of 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.
Section 1102.4(c) clarifies the 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.
Section 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 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. Section 1102.4(e) sets forth
what is required in the event a Petition does not meet the requirements
of Sec. 1102.4(b) 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.
Section 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. If the ASC refers a Petition
to the State Appraisal Agency, 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 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 simply 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.
One commenter stated that the proposed option to refer a Petition
to the State appraiser regulatory agency may cause delay and that there
is no statutory requirement for such a referral. Another commenter
asserted that the option to refer a Petition to the State appraiser
regulatory agency results in a delegation to the State appraiser
regulatory agency and will create inconsistencies between States. The
final rule incorporates the option for referral with the State while at
the same time maintaining the statutory responsibility for the ASC to
make a determination. It is important to note that the decision-making
authority is with the ASC with approval from the FFIEC in the case of a
temporary waiver being granted. However, given State regulators may be
the most knowledgeable concerning any scarcity or delay within their
borders, the ASC believes it appropriate to include the option to refer
or consult with State regulators in the event of a Petition being
filed.
Another commenter stated that the rule as proposed creates two
classes of applicants, and that governmental agencies such as State
bank regulators need the ability to directly apply for a waiver without
being referred to State appraiser regulatory agencies. Section
1102.3(a) states that the State appraiser regulatory 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. Alternatively, a State appraiser
regulatory agency may submit a Petition as set forth in proposed Sec.
1102.4. The ASC believes this is consistent with the intent of the
current rule \14\ and agrees with the rationale set forth in the
preamble of the current rule. The State appraiser regulatory agencies
have always been given a more direct path to seek temporary waiver
relief. Referral of a Petition from other persons or entities is an
option the ASC may exercise but is not required as the commenter seems
to suggest.
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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.'' See 57 FR 10980 (April 1992).
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The commenter added that the rule as proposed requires applicants
to provide meaningful suggestions and recommendations for remedying the
situation, and that the cause is often complex, and the applicant may
not be in a position to understand the greater political, legal or
socioeconomic forces causing the shortage. As clarification, and as
proposed, the final rule states that a Petition ``may'' include
meaningful suggestions and recommendations for remedying the situation.
This is not new and was
[[Page 60874]]
carried over from the current rule. The ASC has acknowledged this is
not a problem for the applicant alone to resolve. Particularly in the
North Dakota temporary waiver process, the complexity of the problem
was recognized, which was the basis for the condition to the Order
granting a temporary waiver: ``During the one-year period, the
Requester is expected to develop a plan through continued dialogue with
North Dakota stakeholders, including the Appraiser Board, to identify
potential solutions to address appraiser scarcity and appraisal
delay.'' \15\
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\15\ 84 FR 38630, 38633 (Aug. 7, 2019).
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One commenter expressed concern about availability of appraisal
services, especially in rural areas, and the difficulty in securing
timely appraisals. While recognizing multiple reasons for scarcity in
areas, the commenter expressed support for revision of minimum
credentialing requirements as established by the Appraisal Foundation's
Appraiser Qualifications Board (AQB) to ensure new entrants into the
profession and increase diversity. While the ASC supports a review of
minimum credentialing requirements as established by the AQB to ensure
they do not impose a barrier to entry into the profession and promote
diversity, revisions to minimal credentialing requirements is outside
the scope of this procedural rulemaking.\16\
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\16\ See Agency Actions to Advance Valuation Equity; Building a
well-trained, accessible, and diverse appraiser workforce 3.1:
``Update appraiser qualification criteria related to appraiser
education, experience, and examination requirements to lower
barriers to entry in the appraiser profession.'' Action Plan to
Advance Property Appraisal and Valuation Equity; Closing the Racial
Wealth Gap by Addressing Mis-valuations for Families and Communities
of Color at 5 (March 2022).
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The commenter asked for reconsideration of what they understood to
be a new requirement for a written determination by the State appraiser
regulatory agency. That requirement is only in the case of a Request
for Temporary Waiver and is not required in the case of a Petition.
Moreover, the requirement is part of the statute and the current rule:
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. . . .'' The final rule clarifies the application of this
statutory requirement.
E. Section 1102.5: Order Initiating a Temporary Waiver Proceeding
Section 1102.5 finalizes proposed Sec. 1102.5 without change.
Section 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) 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).
F. Section 1102.6: Notice and Comment
Section 1102.6 finalizes proposed Sec. 1102.6 without change and
does not vary in substance from Sec. 1102.4 of the current rule, 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.
G. Section 1102.7: ASC Determination
Section 1102.7 finalizes proposed Sec. 1102.7 without change.
Section 1102.7 expands the current 45-day deadline for the ASC to make
a determination. Section 1102.7 also, for reasons set forth in the
proposed rule, eliminates the interim Order from the rules of practice
and procedure. 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 timeframe for an ASC determination,
on either a Request for Temporary Waiver or an Order initiating a
temporary waiver proceeding, is expanded 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.
Section 1102.7 also clarifies that in the event the ASC issues an Order
approving a temporary waiver, which is only effective upon FFIEC
approval of the waiver, the FFIEC's consideration of the waiver is not
subject to the ASC's 90-day timeframe for a determination.
One commenter asked for reconsideration of extending the ASC's
timeframe for action on temporary waivers. The final rule provides
clarity on what is expected to avoid delays in submitting proper
information to the ASC. The ASC found the 45-day turnaround period,
which allows only 15 days for consideration of comments received during
the notice and comment period, to be a constraint on proper
deliberation.
Another commenter expressed concern over removing the 45-day
requirement for the ASC to take action stating that the ASC may deem a
Request or Petition incomplete which may result in further delay. Under
either the current rule or this final rule, the timeframe for taking
action would not commence in either event until a Petition or Request
is deemed received. Incomplete information submitted by an applicant
would be the cause of delay in either circumstance. The final rule
provides more clarity, particularly regarding the type of information
that is expected in a Petition or a Request. This degree of specificity
is intended to avoid rejection or supplementation of a Request or
Petition, which was the case in the North Dakota request, resulting in
a delay of nearly one year.
H. Section 1102.8: Waiver Extension
Section 1102.8 finalizes proposed Sec. 1102.8 without change and
does not vary in substance from Sec. 1102.6 of the current rule.
I. Section 1102.9: Waiver Termination
Section 1102.9 finalizes proposed Sec. 1102.9 with clarification
that either a mandatory or discretionary waiver termination requires
publication in the Federal Register, and that a discretionary waiver
termination requires such publication with a 30-day comment period.
Section 1102.9 distinguishes 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, Sec. 1102.9(a)
requires termination in the event of such a finding by the ASC. Section
1102.9(b) retains the provision for a discretionary waiver termination
in the event the ASC finds that the terms and conditions of the waiver
Order are not being satisfied. Section 1102.9(c) requires publication
in the Federal Register of either a mandatory or discretionary waiver
termination, and Section 1102.9 finalizes proposed Sec. 1102.9 with
clarification that either a mandatory or discretionary waiver
termination requires publication in the Federal Register, and that a
discretionary waiver termination requires such publication with a 30-
day comment period. In the absence of
[[Page 60875]]
further ASC action to the contrary, a discretionary waiver termination
automatically becomes final 21 calendar days after the close of the
comment period. Consistent with statute, a mandatory waiver termination
is final upon such a determination being made by the ASC.
IV. Regulatory Requirements
The ASC has concluded that the final rule constitutes a rule of
agency organization, procedure, or practice, and is therefore exempt
from the notice-and-comment rulemaking requirements of the APA.\17\ For
the same reason, the amendments are not subject to the 30-day delayed
effective date for substantive rules under the APA.\18\ 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.\19\
---------------------------------------------------------------------------
\17\ 5 U.S.C. 553(b).
\18\ 5 U.S.C. 553(d).
\19\ 5 U.S.C. 603(a) and 604(a).
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Paperwork Reduction Act
There is no collection of information required by this final 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 \20\ (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 final rule 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 final rule.
---------------------------------------------------------------------------
\20\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------
Unfunded Mandates Reform Act of 1995 Determination
This final rule will not have a significant or unique effect on
State, local, or tribal governments or the private sector. This final
rule amends the current 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, Appraisal management company
registry fees, Appraisers, Banks, Banking, Freedom of information,
Mortgages, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the preamble, the ASC amends 12 CFR
part 1102 as follows:
PART 1102--APPRAISER REGULATION
0
1. The authority for part 1102 continues to read as follows:
Authority: 12 U.S.C. 3348(a), 3332, 3335, 3338 (a)(4)(B),
3348(c), 5 U.S.C. 552a, 553(e); Executive Order 12600, 52 FR 23781
(3 CFR, 1987 Comp., p. 235).
0
2. Subpart A is revised 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.
Authority: 12 U.S.C. 3348(b).
Sec. 1102.1 Authority, purpose, and scope.
(a) Authority. This subpart is issued under section 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 section
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 section 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:
(1) A Federal financial institutions regulatory agency engages in,
contracts for, or regulates; and
(2) Requires the services of an appraiser under the interagency
appraisal rules. ((Title XI, section 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).)
(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
or State 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 (Title XI, section 1121(1); see also 12 U.S.C.
3350(1)).
(h) Temporary waiver means a waiver of any or all credentialing
requirements
[[Page 60876]]
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 paragraph (b)
of this section 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 or State 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 paragraph (b) of this section 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 paragraph (b) of this section 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)); or
(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. 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).) 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.
(a) The ASC shall publish promptly in the Federal Register a notice
respecting:
(1) A received Request for Temporary Waiver (see Sec. 1102.3(c));
or
(2) An ASC Order initiating a temporary waiver proceeding (see
Sec. 1102.5).
(b) 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.
[[Page 60877]]
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. 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.
(c) Publication in the Federal Register. The ASC shall publish
either a mandatory or discretionary waiver termination in the Federal
Register, and a discretionary waiver termination requires such
publication with a 30-day comment period. In the absence of further ASC
action to the contrary, a discretionary waiver termination
automatically becomes final 21 calendar days after the close of the
comment period. A mandatory waiver termination is final upon such a
determination being made by the ASC.
By the Appraisal Subcommittee.
Dated: September 29, 2022.
Zixta Martinez,
Chairperson.
[FR Doc. 2022-21606 Filed 10-6-22; 8:45 am]
BILLING CODE 6700-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.