The Appraisal Subcommittee of the Federal Financial Institutions Examination Council ("ASC") is publishing a notice in the Federal Register to solicit public comment on how the ASC should implement §315 of the Riegle Community Development and Regulatory Improvement Act of 1994 ("CDRIA"). The amendment added the following subparagraph to §1122(a) of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989:
The ASC anticipates that the comments generated by the notice will facilitate the establishment of a more efficient and uniform system for providing temporary practice and reciprocity to State certified and licensed real estate appraisers. The notice is expected to be published in the Federal Register on September 12, 1995.
For further information, please contact the ASC at (202) 634-6520.
Distribution
FDIC-Supervised Banks (Commercial and Savings)
[Federal Register: September 12, 1995 (Volume 60, Number 176)] [Notices] [Page 47365-47368] From the Federal Register Online via GPO Access [wais.access.gpo.gov] ======================================================================= ----------------------------------------------------------------------- FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL [Docket No. AS95-1] Appraisal Subcommittee; Appraisal Regulation; Temporary Practice and Reciprocity AGENCY: Appraisal Subcommittee, Federal Financial Institutions Examination Council. ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: The Appraisal Subcommittee (``ASC'') of the Federal Financial Institutions Examination Council is publishing this Notice to solicit public comments on how it should implement section 315 of the Riegle Community Development and Regulatory Improvement Act of 1994 (``CDRIA''). The ASC anticipates that the comments generated during this process will facilitate the establishment of a more efficient and uniform system for providing temporary practice and reciprocity to State certified and licensed appraisers. DATES: Comments must be received on or before December 11, 1995. ADDRESSES: Persons wishing to submit written comments should file them with Edwin W. Baker, Executive Director, Appraisal Subcommittee, 2100 Pennsylvania Avenue NW., Suite 200, Washington, D.C. 20037. Comments may be forwarded via fax to (202) 634-6555 or by Internet e-mail to asc@apo.com. All comment letters, including those filed electronically, should refer to Docket No. AS95-1. All comment letters will be available for public inspection and copying at the ASC's offices. Comments submitted electronically also will be publicly available in the ASC Forum on Appraisal Profession Online at (703) 478-5502. FOR FURTHER INFORMATION CONTACT: Edwin W. Baker, Executive Director, or Marc L. Weinberg, General Counsel, at (202) 634-6520, Appraisal Subcommittee, 2100 Pennsylvania Avenue NW., Suite 200, Washington, D.C. 20037. SUPPLEMENTARY INFORMATION: I. Introduction and Background Since January 1, 1993, Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (``Title XI''), as amended,\1\ has required all federally regulated financial institutions to use State licensed or certified real estate appraisers, as appropriate, to perform appraisals in federally related transactions. See Sec. 1119(a) of Title XI, 12 U.S.C. 3348(a). In response to Title XI, each State, territory and the District of Columbia (``State'') has established a regulatory program for certifying, licensing and supervising real estate appraisers. In turn, the ASC has been closely monitoring State programs to ensure their compliance with Title XI. \1\ Pub. L. 101-73, 103 Stat. 183 (1989), as amended by Pub. L. 102-233, 105 Stat. 1792 (1991), Pub. L. 102-242, 105 Stat. 2386 (1991), Pub. L. 102-550, 106 Stat. 3672 (1992), Pub. L. 102-485, 106 Stat. 2771 (1992), and Pub. L. 103-325, 108 Stat. 2222 (1994). --------------------------------------------------------------------------- While Title XI authorizes each State to certify, license, and supervise real estate appraisers within its jurisdiction, the Title also provides a means for appraisers licensed or certified in one State to practice on a temporary basis in another State. Section 1122(a)(1) of Title XI, 12 U.S.C. 3351(a)(1), specifically requires ``[a] State appraiser certifying or licensing agency [to] recognize on a temporary basis the certification or license of an appraiser issued by another State if--(A) the property to be appraised is part of a federally related transaction, (B) the appraiser's business is of a temporary nature, and (C) the appraiser registers with the appraiser certifying or licensing agency in the State of temporary practice.'' As discussed in more detail below, reciprocity provides appraisers certified or licensed in one State with a means to practice in another State on a permanent basis. While Title XI, until recently, did not specifically mention reciprocity, the ASC encouraged States to enter into reciprocal appraiser licensing and certification agreements and arrangements. In September 1994, Section 315 of CDRIA was enacted. Pub. L. 103- 325, 108 Stat. 2160, 2222 (1994). CDRIA amended Section 1122(a) of Title XI by adding new subparagraph (2) pertaining to temporary practice and new paragraph (b) regarding reciprocity: [[Page 47366]] (2) Fees for temporary practice. A State appraiser certifying or licensing agency shall not impose excessive fees or burdensome requirements, as determined by the Appraisal Subcommittee, for temporary practice under this subsection. * * * * * (b) Reciprocity. The Appraisal Subcommittee shall encourage the States to develop reciprocity agreements that readily authorize appraisers who are licensed or certified in one State (and who are in good standing with their State appraiser certifying or licensing agency) to perform appraisals in other States. The Senate Report to accompany S. 1275, issued on October 28, 1994, by the Senate Committee on Banking, Housing, and Urban Affairs, said: The Committee's intent is to enable qualified appraisers to practice in a number of States without anticompetitive restrictions. S. Rep. No. 103-169, 103d Cong., 2d Sess. 53 (1994), reprinted in 1994 U.S. Code Cong. & Admin. News 1937. II. ASC Policies Regarding, and Current Status of, Temporary Practice Soon after the full implementation of Title XI in January 1993, and based on the ASC's reviews of State appraiser regulatory programs, the ASC issued Policy Statements Regarding State Certification and Licensing of Real Estate Appraisers (August 1993). Policy Statement 5 specifically addressed temporary practice issues. The Statement, among other things: (1) Recognized that a certified or licensed appraiser from State A, who has an assignment concerning a federally related transaction in State B, has a statutory right to enter State B, register with the State agency in State B and perform the assignment; and (2) informed States that: (a) they could not unreasonably hamper the exercise of temporary practice rights, (b) out-of-State certified or licensed appraisers should register for temporary practice prior to performing the subject appraisal, and (c) temporary practice systems should process registrations promptly and efficiently. The ASC suggested that an acceptable model for temporary practice procedures would include a nominal per assignment fee, proof of a valid license or certificate and the completion of a reasonable temporary practice registration form. The Statement covered several technical matters, such as defining the terms, ``assignment'' and ``temporary'' and providing guidance on permissible State limitations on temporary practice. The Statement addressed how States should enforce their statutes and regulations regarding appraisers who perform appraisals as temporary practitioners. For example, out-of-State certified or licensed appraisers need to be subject to the host State's full regulatory jurisdiction and, therefore, must comply with the State's real estate appraisal statutes and regulations. Moreover, the State should treat temporary practitioners like any other appraisers certified or licensed by the State who wish to perform appraisals in federally related transactions. In addition, the Statement noted that the host State agency should take jurisdiction of any complaints regarding the temporary practicing appraiser's appraisal activities within the State. As a matter of policy, the ASC, as part of the field review process, has written States agencies about temporary practice fees of $100 or more or permits issued on less than a per assignment basis, first requesting the basis for the restrictions and then, if appropriate, requesting liberalization of the restrictions. Some States have been responsive to the ASC's recommendations; others have not. While the ASC believes that Policy Statement 5 and its field review program have been effective in helping to ensure a certified or licensed appraiser's ability to engage in temporary practice, issues remain. Two States still do not permit temporary practice. Of the States that do, some impose short time limits on length of permits. In addition, almost 40 States require temporary practice registrants to file a ``letter of good standing,'' which must be obtained from the home State agency. This requirement often has resulted in unnecessary delays in the issuance of temporary practice permits. Moreover, States charge insurance fees, ranging from $5 to $40, per letter. Frequently, the charges must be paid by certified check, which results in further delays. III. ASC Policies Regarding, and Current Status of, Reciprocity The ASC, in Statement 6 of its Policy Statements, endorsed reciprocity and urged the States to establish permanent reciprocity arrangements promptly to address the needs of certified or licensed appraisers who practice on a non-temporary, multistate basis.\2\ Many interested parties, including lenders and appraisers, have commented that reciprocity is at least as critical as temporary practice. As noted above, reciprocity involves a permanent recognition of another State's certified or licensed appraisers. It generally means that a host State will credential a person based upon that person having been credentialed by his or her home State. It also could involve mutual agreements or understandings among States for their certified or licensed appraisers to operate freely within those States without any further registration, credentialing, or administrative action. At this time, no States have implemented reciprocity agreements of this nature. \2\ The AS… A simple application; No reexamination; No additional review of an applicant's education or experience; Reciprocal licensing or certification fees similar in amount to the corresponding fees for `home' State appraisers; and The collection and forwarding to the ASC of the National Registry [of State Certified or Licensed Real Estate Appraisers (``National Registry'')] fee for each reciprocally licensed or certified appraiser.'' --------------------------------------------------------------------------- Reciprocity, as practiced today, requires that an appraiser who is certified or licensed in State A and reciprocally certified or licensed in State B must comply with both States' appraiser laws, including those requiring continuing education and the payment of certification, licensing and Federal fees. Generally, the appraiser is not required to take and pass State B's certification or licensing examinations. The appraiser, however, usually must submit, to State B, a copy of his or her credentials, a statement of good standing, a consent to local service of process and the payment of appropriate fees. Or, State B might grant the requested certificate or license ``by endorsement'' upon payment of State's B's certification or licensing fee. Many States use both methods. A few States may accept the examination results of other States, but require the applicant to complete the remainder of the application, which then is fully reviewed by the State agency. As of December 31, 1994, all but one State had some sort of reciprocity program in place. Differences in reciprocity procedures and requirements remain problematic. While some regions of the United States have successfully arrived at regional reciprocity agreements, others have not, in part because some States have higher education and experience requirements for applicants than those promulgated by the Appraiser Qualifications Board (``AQB''). Other States require letters of good standing from each State of certification or licensing. In the ASC's view, these differences continue to burden the free movement of certified or licensed appraisers across State lines and to cause confusion among appraisers and users of appraisal services. The ASC believes that States should accept other States' certifications and licenses without reexamining [[Page 47367]] applicants' underlying education or experience, as long as each State has appraiser qualification criteria that meet the minimum standards for certification and licensure as determined by the AQB, uses appraiser certification and licensing examinations that are AQB endorsed and continues to perform education and experience reviews competently. IV. Alternatives The ASC is publishing this Notice to solicit public comments on how it should implement Congress's directives as set forth in CDRIA. The ASC anticipates that the comments generated during this process will facilitate the establishment of a more efficient and uniform system for providing temporary practice and reciprocity to State certified and licensed appraisers. The following sections present for public consideration and comment several possible approaches. A. A Universal ``Drivers License'' Approach to Both Temporary Practice and Reciprocity While a State's licensing or certification of professionals, such as appraisers, differs in substantial ways from awarding persons permits to drive vehicles, a ``drivers license'' approach to both reciprocity and temporary practice seems to warrant serious consideration. States have successfully worked out procedures to honor valid drivers licenses of non-resident drivers and to prosecute their illegal driving activities under local law. As applied to real estate appraisers, this approach would enable a real estate appraiser with a valid certification or license \3\ to perform his or her appraisal functions in any State. To enforce violations, State agencies would have ready access to one or more systems to allow them to determine the status of any single certificate or license holder. Such a system could be based on records from, either the appraiser's home State of certification or licensure or the National Registry. \3\ The appraiser would have only one license or certification. Because the single credential would enable the appraiser to practice in more than one State, States would no longer charge separate fees for temporary practice or reciprocity, and appraisers would have to pay only one annual National Registry fee to the ASC through their home State agency. --------------------------------------------------------------------------- More specifically, an appraiser certified or licensed in State A could travel to State B and perform an appraisal without notifying State B's appraiser regulatory agency. While in State B, the appraiser would need to perform his or her duties in accordance with State B's appraiser statutes and regulations. If a complaint were filed with State B's appraiser regulatory agency respecting the activities of the appraiser while in State B, the complaint would be investigated and handled by State B, with that State sending a copy of the complaint to State A's appraiser regulatory agency. State A's agency would be encouraged to assist State B actively in its investigation, and State A could also take any independent disciplinary action within its power. Consistent with legal principles guiding interstate relations, State A would honor State B's final decision pertaining to the complaint. B. Other Temporary Practice Alternatives 1. Specific Standards This approach would establish specific guidelines for temporary practice fee levels and practices and procedures. The standards could: Make temporary practice available only on a ``per assignment'' basis; Prohibit time limitations of less than six months on the duration of temporary practice permits; Allow temporary practitioners to have one permit extension; Prohibit a State from charging a fee exceeding a fixed amount, e.g., $50, for each temporary practice permit; Enable an appraiser to have at least two temporary practice permits per year; Prohibit mandatory affiliation requirements for temporary practitioners; Require a State's acceptance of an out-of-State appraiser's qualifications strictly on the basis of the presentation of his or her license or certification and sworn statement that it is in good standing in all States of certification or licensure. Existing State requirements for appraisers to obtain home State letters of good standing would be eliminated. Instead, an appraiser's status would be validated through the use of the National Registry (perhaps via electronic access) or the relevant State appraiser registry; Require out-of-State appraisers to register, rather than apply, for temporary practice; Require requests for temporary practice to be processed in no more than five business days from receipt; Require the State of temporary practice to take regulatory responsibility for a visiting appraiser's unethical, incompetent or fraudulent practices performed while within the State; and Require the State agency in the State of temporary practice to cooperate with, and provide assistance to, the home State agency in its investigation of the appraiser's practices. 2. Self-certification of Compliance with Specific Standards This approach would incorporate the specific standards presented above, but would shift from the ASC to States and their State agencies the ongoing duty of ascertaining whether their temporary practice statutes, regulations, procedures, fees and practices are consistent with the ASC's standards. In essence, it would create a ``safe harbor'' for States and State agencies that conform to the ASC's standards. This safe harbor would vanish upon a determination by the State or the ASC that an element of the State's temporary practice program appears to unreasonably burden the free movement of certified or licensed appraisers across State lines. 3. General Standards This approach would avoid specific standards of any kind and basically would incorporate Title XI's language into the ASC's written guidance to the States. Thus, the ASC would require States: To recognize on a temporary basis the certification or license of an appraiser issued by another State, if the property to be appraised is part of a federally related transaction, the appraiser's business is of a temporary nature and the appraiser registers with the State agency in the State of temporary practice; and Not to impose excessive fees or burdensome requirements for temporary practice, as determined by the ASC. C. Other Reciprocity Approaches The ASC is required by Title XI to ``encourage the States to develop reciprocity agreements,'' and those agreements need to ``readily authorize'' out-of-State licensed or certified appraisers (who are in good standing with their State) ``to perform appraisals in other States.'' The following approaches could be used separately or in tandem: 1. Create a General Federal Duty The ASC could create a duty for each State and State agency to work expeditiously and conscientiously with other States and State agencies with a view toward satisfying the purposes of the statutory language. The ASC would monitor each State's progress and could take positive steps to work with and encourage States to work out issues and difficulties whenever appropriate. [[Page 47368]] 2. Request States to Create and File Plans The ASC could request each State to draft and file with the ASC a plan to accomplish reciprocity with at least all contiguous States by a specific time. For States not sharing geographically contiguous borders with any other State, such as Alaska and Hawaii, those States would need to draft a plan to include States that certify or license appraisers who perform a significant number of appraisals in Alaska and Hawaii. The ASC would review each State's plan as part of its State agency monitoring function, and, wherever appropriate, work with the State and surrounding States to resolve issues and arrive at mutually satisfactory arrangements. V. Request for Comments A. In General The ASC requests comment on all aspects of implementing the new legislation from interested members of the public, including appraisers, States and their State appraiser regulatory agencies, users of appraisal services and industry groups. The approaches set forth above are intended only to be starting points for discussion and comment, and the ASC welcomes variations or combinations of these approaches and the recommendation of other alternatives. B. Specific Questions (1) In your view, what are the most serious impediments to temporary practice or reciprocity? Please provide your best estimates of their costs in time and money, if possible. (2) Do you believe that these impediments warrant ASC action? (3) Are any of the alternatives presented in Part IV especially well suited to removing the impediments, and what are your reasons for your choice? (4) Do other alternatives exist? If so, please describe them. (5) Are there any other issues related to temporary practice or reciprocity that should be brought to the ASC's attention? By the Appraisal Subcommittee of the Federal Financial Institutions Examination Council. Dated: August 31, 1995. Diana L. Garmus, Chairperson. [FR Doc. 95-22518 Filed 9-11-95; 8:45 am] BILLING CODE 6201-01-M