[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]
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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.
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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).
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While Title XI authorizes each State to certify, license, and
supervise real estate appraisers within its jurisdiction, the Title
also provides a means for appraisers licensed or certified in one State
to practice on a temporary basis in another State. Section 1122(a)(1)
of Title XI, 12 U.S.C. 3351(a)(1), specifically requires ``[a] State
appraiser certifying or licensing agency [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:
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(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 ASC suggested in the Policy ``that States consider
implementing, at a minimum, the following features in their
reciprocity policies:
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.''
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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
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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.
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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.
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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