Appraisal Subcommittee; Policy Statements, 31924-31939 [2013-12551]

Agencies

• Federal Financial Institutions Examination Council

[Federal Register Volume 78, Number 102 (Tuesday, May 28, 2013)]
[Notices]
[Pages 31924-31939]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12551]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS13-13]


Appraisal Subcommittee; Policy Statements

AGENCY: Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council.

ACTION: Adoption of revised Policy Statements.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council requested public comment on a proposal 
to revise its Policy Statements \1\ providing guidance to ensure State 
appraiser regulatory programs (Programs) \2\ comply with Title XI of 
the Financial Institutions Reform, Recovery, and Enforcement Act of 
1989, as amended (Title XI).\3\ Comments were received from 29 
individuals, companies and State entities. The ASC has considered 
comments received in adopting the revised Policy Statements as set 
forth in this notice. The revised Policy Statements supersede current 
Policy Statements on the date set forth below.
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    \1\ 77 FR 52721 (Aug. 30, 2012).
    \2\ The 50 States, the District of Columbia, and four 
Territories, which are the Commonwealth of Puerto Rico, Commonwealth 
of the Northern Mariana Islands, Guam, and United States Virgin 
Islands, have State appraiser certifying and licensing agencies with 
Programs monitored by the ASC through the Compliance Review process.
    \3\ 12 U.S.C. 3331-3355, 12 U.S.C. 1708(e).

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DATES: Effective Date: June 1, 2013.

FOR FURTHER INFORMATION CONTACT: Alice M. Ritter, General Counsel 
(alice@asc.gov or (202) 595-7577), or Dan Rhoads, Attorney-Advisor 
(dan@asc.gov or (202) 289-2739), or by mail at Appraisal Subcommittee, 
1401 H Street NW., Suite 760, Washington, DC 20005.

SUPPLEMENTARY INFORMATION:

I. Background

    Title XI was adopted to provide protection of Federal financial and 
public policy interests by establishing certain requirements for 
appraisals performed for federally related transactions.\4\ The ASC \5\ 
was established by Title XI to further these goals. The ASC monitors 
requirements established by the States for certification and licensing 
of individuals qualified to perform appraisals in connection with 
federally related transactions, including codes of professional 
responsibility, and also maintains the National Registry of State 
certified and licensed appraisers.\6\ The ASC's obligation to monitor 
State Programs for compliance with the requirements of Title XI is met 
through periodic Compliance Reviews of each State's Program.
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    \4\ Any real estate related financial transaction which: a) a 
federal financial institutions regulatory agency engages in, 
contracts for, or regulates; and b) requires the services of an 
appraiser (12 U.S.C. 3350(4)).
    \5\ The ASC Board is comprised of seven members. Five members 
are designated by the heads of the FFIEC agencies (Board of 
Governors of the Federal Reserve System, Consumer Financial 
Protection Bureau, Federal Deposit Insurance Corporation, Office of 
the Comptroller of the Currency, and National Credit Union 
Administration). The other two members are designated by the heads 
of the Department of Housing and Urban Development and the Federal 
Housing Finance Agency (12 U.S.C. 3310, 12 U.S.C. 1708(e)).
    \6\ 12 U.S.C. 3332.
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    Policy Statements were adopted in 1993 by the ASC to assist States 
in developing and maintaining their Programs in compliance with Title 
XI, and were substantively supplemented in 1997 to address issues 
related to temporary practice and reciprocity. Since 1997, the Policy 
Statements have remained largely unchanged with the exception of 
amendments made in 2008 to Policy Statement 10, Enforcement. Passage of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) in 2010 and implementation of the ASC's revised Compliance 
Review process in 2009 necessitated revision of the existing Policy 
Statements to enhance guidance for States as they implement changes 
required by the Dodd-Frank Act. The revised Policy Statements are 
intended to provide States with the necessary information to maintain 
their Programs in compliance with Title XI. Further, the revised Policy 
Statements address the ASC's authority to evaluate a State Program for 
compliance with Title XI and to take sanctions against a State when its 
Program does not comply with Title XI. Policy Statements 1 through 7 
corresponded with the seven categories evaluated during the ASC's 
Compliance Review process and included in the ASC Compliance Review 
Report to a State. Policy Statement 8 addresses ASC procedures for 
imposition of interim sanctions against a State for failure to comply 
with the requirements of Title XI.

II. Analysis of Comments Received

    The ASC received a total of 29 comments from individuals, States, 
and organizations, electronically as well as by mail, on its proposed 
Policy Statements. These comments may be viewed on the ASC's Web site 
under the Federal Register Documents tab of the Public Documents 
Library of Resources and Records.

[[Page 31925]]

    Policy Statement 1: Statutes, Regulations, Policies and Procedures 
Governing State Programs. The proposed Policy Statement addressed 
general issues such as a State's obligation to: Establish appropriate 
organizational structures for appraiser certification, licensing and 
supervision; ensure adequate funding and staffing to enable the State 
Program to meet its Title XI obligations; adopt relevant Appraiser 
Qualifications Board (AQB) Real Property Appraiser Qualification 
Criteria (AQB Criteria) for the various identified appraiser 
classifications and/or such additional qualification criteria provided 
it does not preclude compliance with AQB Criteria; adopt the Uniform 
Standards of Professional Appraisal Practice (USPAP) promulgated by the 
Appraisal Standards Board (ASB) as minimum standards for covered 
appraisals; prohibit discrimination based on membership or lack thereof 
in a particular professional organization; ensure that State provisions 
exempting appraisers from meeting certification or licensing 
requirements do not permit exempted appraisers to perform appraisals 
for federally related transactions; and permit ASC staff to attend 
Board meetings.
    Some Commenters expressed concern that ASC staff attendance at 
closed meetings and executive sessions of their Boards may expose 
Boards and their members to litigation and potential liability because 
of restrictions imposed by State laws. Concern also was expressed that 
staff attendance at closed meetings where legal advice was being given 
could result in a waiver of applicable privilege as well as potential 
violation of State privacy laws, while an additional commenter stated 
that the presence of ASC staff in closed Board meetings would hamper 
the free flow of information and discussion. The ASC recognizes these 
concerns and has amended the text in Policy Statement 1 to reflect the 
expectation that ASC staff would be permitted to attend open meetings, 
but not closed meetings or executive sessions. Further, the final 
Policy Statement notes that States are expected to make minutes of 
closed meetings and executive sessions available for review by ASC 
staff. The prohibition against discrimination contained in the proposed 
Policy Statement was considered by some Commenters as either too broad 
or without legal authority. The ASC has reconsidered this section and 
has deleted it from the Policy Statement since the prohibition against 
discrimination in Title XI applies to the Federal financial 
institutions regulatory agencies.\7\ One Commenter stated that the 
proposed removal of the requirement that a State must ensure that 
adequate safeguards exist to preserve the independence of the appraiser 
regulatory function if co-located within a department regulating realty 
related activities would remove ongoing guidance to the States about 
the acceptability of such co-location. The language as published in the 
proposed Policy Statement is consistent with ASC authority pursuant to 
Title XI. The ASC believes that the proposal provided sufficient 
flexibility for States to organize the appraisal regulatory function as 
they deem appropriate while encouraging States to ensure that conflicts 
of interest are avoided and that highest ethical standards are 
maintained. Therefore, this language was retained in the final Policy 
Statement. Some Commenters addressed the proposed deletion from Policy 
Statement 2, Temporary Practice, of the provision dealing with 
appraisal review. Although these comments are considered more 
completely in the discussion of Policy Statement 2, language was added 
to Policy Statement 1 addressing appraisal review and applicable rules 
of the Federal financial institutions regulatory agencies. These rules 
define ``appraisal'' and identify which federally-related transactions 
require the use of a licensed or certified appraiser. Under these 
rules, an appraisal review which does not include the reviewer 
providing his or her own opinion of value would not constitute an 
appraisal. This is consistent with Advisory Opinion 20 issued by the 
Appraisal Standards Board which provides that an appraisal review 
assignment that does not include the review appraiser's own opinion of 
value would not constitute an ``appraisal'' under USPAP.
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    \7\ The Board of Governors of the Federal Reserve System, 
Federal Deposit Insurance Corporation, Office of the Comptroller of 
the Currency, and National Credit Union Administration.
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    Policy Statement 2: Temporary Practice. The proposed Policy 
Statement addressed what the ASC considered to be excessive fees or 
burdensome requirements to an out-of-State credentialed appraiser's 
ability to work in a State on a temporary basis. Burdensome 
requirements are specified separately for the ``Home State agency'' and 
the ``Host State.''
    One Commenter stated that the Policy Statement failed to address 
the number of assignments covered by a temporary practice permit. The 
proposed Policy Statement set forth minimum requirements, consistent 
with Title XI, for temporary practice, and noted that individual States 
have the authority to adopt more stringent requirements so long as such 
requirements do not violate the standards in Title XI. In response to 
this comment, the ASC has deleted the language on any limits to the 
number of times an appraiser may request a temporary practice permit 
and acknowledges that States have the right to determine such limits.
    One Commenter suggested that the ASC needs to clarify that 
appraisals performed under temporary practice permits are subject to 
USPAP and that a requirement for geographic competency be included in 
them. The ASC believes that additional guidance is unnecessary since 
appraisals performed under temporary practice permits for federally 
related transactions must be performed in compliance with USPAP, which 
addresses an appraiser's geographic competency. Therefore, the ASC has 
decided to not revise the language.
    The following language in existing Policy Statement 5 concerning 
``technical review'' was recommended for omission in the proposal as 
outdated and unnecessary:

    Finally, some State agencies have sought to require that an 
appraiser register for temporary practice if the appraiser is 
certified or licensed in another State, performs a technical review 
of an appraisal in that other State and changes, or is authorized to 
change, a value in the appraisal. The ASC, however, has concluded 
that for federally related transactions the review appraiser need 
not register for temporary practice or otherwise be subjected to the 
regulatory jurisdiction of the State agency in which the appraisal 
was performed, so long as the review appraiser does not perform the 
technical review in the State within which the property is located.

    The majority of Commenters who addressed this issue, including one 
of the largest mortgage lenders in the country, objected to the removal 
of the language and noted that the existing temporary practice Policy 
Statement provided clarity on the credentialing requirements for 
appraisers conducting appraisal review. The Commenters objecting to the 
proposed change stated that it would result in States being permitted 
to require temporary practice permits for appraisers conducting 
appraisal reviews as part of a lender's credit due diligence process, 
and could increase the cost and time to approve a loan without a 
corresponding benefit to a potential borrower.
    The basic premise of temporary practice has always encompassed an 
appraiser physically entering another

[[Page 31926]]

State pursuant to a temporary practice permit to carry out an 
assignment for a federally related transaction. This long-standing 
interpretation of temporary practice leads to the conclusion that a 
review appraiser, regardless of the type of review conducted, is not 
acting within the scope of temporary practice if the activity is 
conducted outside of the State where the subject property is located. 
Any further assertion by a State of jurisdiction over an appraiser 
outside of its State does not fall within the purview of temporary 
practice or Title XI. Title XI Sec.  1110 provides, however, that the 
Federal financial institutions regulatory agencies shall prescribe 
appropriate standards for the performance of appraisals in connection 
with federally related transactions, and require that such appraisals 
be subject to appropriate review for compliance with USPAP. Therefore, 
rather than address this as a temporary practice issue, Section F 
(Appraisal Standards) in final Policy Statement 1 has been revised to 
include a discussion of the applicable rules of the Federal financial 
institutions regulatory agencies.
    Policy Statement 3: National Registry. The proposed Policy 
Statement addressed several Dodd-Frank Act amendments to Title XI 
concerning appraiser classifications and States' ASC National Registry 
reporting requirements. The proposal included a discussion on the ASC 
National Registry's extranet application and security requirements as 
well as requiring States to notify the ASC as soon as practicable if it 
is determined that a credential holder listed on the National Registry 
did not qualify for the credential held or in the event of voluntary 
surrenders, suspensions and revocations, or any action that interrupts 
a credential holder's ability to practice. As discussed in the 
proposal, States would be required to submit all ``disciplinary 
actions'' (as defined in the proposed Policy Statement) for inclusion 
on the National Registry via the extranet application as of July 1, 
2013.
    Six Commenters addressed various aspects of this proposed Policy 
Statement. One Commenter suggested that the ASC collate Registry data 
to provide a centralized data repository so that States would not be 
required to establish routine communications with each other concerning 
appraiser credentials. One Commenter suggested that States be 
prohibited from reporting appraisal standard or ethical violations 
until the accused has exhausted all available appeals since immediate 
reporting may cause unwarranted harm to an appraiser where charges are 
minor or unfounded. Another Commenter expressed concern that States 
were not reporting promptly and suggested that specific processes and 
timelines be developed to maximize the benefits of the Registry. The 
language in the proposed Policy Statement is consistent with the 
mandates of Title XI and strikes an appropriate balance with the 
States' regulatory authority concerning the application of their 
individual disciplinary and administrative processes.
    Policy Statement 4: Application Process. The proposed Policy 
Statement addressed the requirements applicable to a State Program's 
application processes under Title XI, including general processing of 
applications for appraiser credentials, qualifying education, 
continuing education, experience requirements, and examination.
    Three of the five Commenters addressing this proposed Policy 
Statement stated that the 90-day period for processing applications 
should be removed or extended. They stated that this period was 
inadequate under their established application processing procedures. 
One Commenter noted that they relied on volunteer appraisers for 
conducting required experience reviews to release staff for 
investigations. One Commenter suggested that the ASC could specify a 
time when an application would be deemed complete. The ASC notes that 
the 90-day application process period in the proposal is a recommended 
time frame, and is based on extensive experience gained from the ASC 
reviews of State Programs. The ASC will consider a longer application 
process when a State can demonstrate that it has sound reasons for its 
application process taking longer than 90 days. Therefore, the ASC is 
retaining the proposed language in the final policy and notes that 
establishing further parameters for processing of applications is a 
matter appropriately left for the States. The ASC will consider during 
a State review whether a State's application process is unreasonable or 
results in inappropriate delay.
    Several Commenters noted difficulty with the requirement that 
States must verify that the qualifying/continuing education claimed by 
an appraiser is acceptable under AQB Criteria and consistent with the 
credential sought. These Commenters stated that for in-state classes or 
classes given by a national provider, the verification would be 
relatively simple, but verification of education provided out-of-state 
is more difficult absent a central data base. The ASC believes that it 
is the role of the States to approve courses for both qualifying and 
continuing education and, therefore, the ASC does not believe that it 
has the authority to establish a national database of approved courses 
given the varied approval standards and the ability of States to 
require standards higher than prescribed by the AQB. The final Policy 
Statement therefor does not include establishment of a national 
database of approved courses.
    Another Commenter suggested that, absent documented abuse, States 
should be permitted to accept affidavits or certifications for upgrades 
and renewals. The ASC notes that Title XI provides the minimum 
requirements applicable to appraisers performing appraisals for 
federally related transactions, including meeting minimum criteria 
established by the AQB, with enforcement of those AQB Criteria being 
the province of the States, subject to monitoring by the ASC. 
Therefore, the ASC believes that the use of affidavits in support of 
applications and upgrades is inconsistent with the purpose of Title XI. 
The final Policy Statement retains the prohibition on the use of 
affidavits to demonstrate meeting AQB Criteria in certain 
circumstances.
    Policy Statement 5: Reciprocity. The proposed Policy Statement 
addressed reciprocity policies consistent with Title XI. The Dodd-Frank 
act amended the Title XI provision on reciprocity to require that in 
order for a State's appraisers to be eligible to perform appraisals for 
federally related transactions, the State must, at a minimum, have a 
reciprocity policy in place that meets the Dodd-Frank Act. Such a 
policy requires issuance of a reciprocal credential if: (1) The 
appraiser is coming from a State that is ``in compliance;'' (2) the 
appraiser holds a valid credential from that State; and (3) the 
credentialing requirements of that State (as they currently exist) meet 
or exceed those of the reciprocal credentialing State (as they 
currently exist). A State may have a more lenient or more open door 
policy; however, States cannot impose additional impediments to 
issuance of reciprocal credentials.
    Several Commenters opined that it was an unreasonable burden on the 
State where a reciprocal credential was being sought (Reciprocal State) 
to be required to determine if the credentialing requirements of the 
applicant's home State (Home State) meet or exceed its own 
credentialing requirements since some States may not have the expertise 
or resources to make such determinations. One Commenter suggested that 
the ASC make such

[[Page 31927]]

determinations on request. Several Commenters also noted that the 
``meet or exceeds'' standard for credentialing requirements presents 
opportunities for States to adjust their credentialing requirements 
which then would serve as a basis for denying reciprocal applications. 
Support also was expressed for a strong national standard with one 
Commenter suggesting that reciprocal licenses could be issued solely on 
the basis that the Home State credential was in good standing and the 
Home State was ``in compliance.'' The ASC notes that Title XI does not 
authorize the establishment of a national standard based solely on 
whether an applicant's credential is in good standing in a Home State 
that is ``in compliance.'' The final Policy Statement does not adopt a 
national standard as suggested.
    Policy Statement 6: Education. The proposed Policy Statement 
addressed specific requirements regarding course approval, including 
the approval of distance education courses (e.g., on-line courses), and 
referred to discussion in proposed Policy Statement 4 concerning 
qualifying and continuing education in the application process. As 
required by the Dodd-Frank Act, the ASC included language in the 
proposal to encourage States to accept courses approved by the AQB's 
Course Approval Program.
    One Commenter opined that the ASC lacked legal authority to 
prohibit States from specifying a particular course provider in 
resolution of a disciplinary matter where there are multiple authorized 
providers of the same course/material in that State. The final Policy 
Statement has been revised to discourage States from treating one 
education provider more favorably than another equally qualified 
education provider.
    Policy Statement 7: State Agency Enforcement. The proposed Policy 
Statement addressed specific requirements for an effective and 
compliant enforcement program. The proposal addressed: (1) Timeliness 
of complaint investigations and initiating enforcement action; (2) 
effectiveness of a State's enforcement process; (3) consistent and 
equitable treatment of an appraiser in the State's enforcement process; 
and (4) appropriate complaint documentation in a State's enforcement 
records, including specific requirements for tracking complaints of 
alleged appraiser misconduct or wrongdoing using an electronic 
complaint log.
    A number of Commenters expressed concern that the proposed 
requirement to maintain complaint logs in an electronic sortable 
spreadsheet format would be expensive and time-consuming to implement 
with limited benefit. The ASC recognizes these concerns and has amended 
the language in the final Policy Statement to strongly encourage 
maintenance of complaint logs in such format. Further, in the final 
Policy Statement, the ASC sets forth the expectation that States will 
document that persons analyzing complaints for compliance with USPAP 
are knowledgeable about the appraisal process and USPAP.
    The majority of the 17 Commenters addressing this proposed Policy 
Statement stated that the 12-month time period for complaint resolution 
was not realistic and unduly burdensome. Most of these Commenters noted 
that at various stages of investigation and discipline there are a 
number of instances when a State appraiser regulatory agency no longer 
has control of the process and, therefore, cannot affect the speed with 
which the process works, and that sanctioning a State Program for 
something beyond its control is unfair. Commenters provided a range of 
suggestions from establishing separate investigation and discipline 
tracks to extending the time period for complaint resolution from one 
year to two years or a ``timely'' period. The ASC notes that Title XI 
requires complaints to be processed and investigated in a reasonable 
time period. Nevertheless, the ASC recognizes the concerns expressed by 
these Commenters. Therefore, the ASC has included more specific 
language in the final Policy Statement clarifying that special 
documented circumstances such as the referral of a complaint to another 
agency for review or action may be a reason for a delay in complaint 
resolution. In those circumstances, the final Policy Statement notes 
that the ASC expects a State to document the dates and reasons for the 
referral.
    Several Commenters expressed concern about excluding statutes of 
limitation as a basis for closing a complaint without completing an 
investigation of that complaint. In their view, this prohibition would 
create problems with record retention and other matters. One Commenter 
suggested application of the 10-year statute of limitations in 12 
U.S.C. 1833a. The ASC notes that statutes of limitation vary widely 
among the States, not only in length but in the triggering event of the 
underlying transaction. Consequently, in some States the statute of 
limitations may expire before a complainant has a reasonable period of 
time to file a complaint. Moreover, a standard rule permitting the 
closure of investigations/complaints on the basis of statutes of 
limitations would be inconsistent with the requirements of Title XI. 
Therefore, the ASC has retained language that closing a complaint based 
on a statute of limitations is inconsistent with the Title XI 
requirement that States assure effective supervision of the activities 
of credentialed appraisers.
    Policy Statement 8: Interim Sanctions. The proposed Policy 
Statement addressed due process procedures that would provide a State 
with an opportunity to be heard or to correct conditions before the ASC 
imposes an interim sanction. Pursuant to the Dodd-Frank Act, the ASC 
has the authority to impose interim actions and suspensions against a 
State agency as an alternative to or in advance of a non-recognition 
proceeding against a State agency that fails to have an effective 
Program.\8\ The Dodd-Frank Act's interim sanction authority 
specifically authorizes the ASC to remove a State licensed or certified 
appraiser from the National Registry on an interim basis, not to exceed 
90 days, pending State agency action on licensing, certification, 
registration, or disciplinary proceedings.
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    \8\ Title XI Sec.  1118 (a), 12 U.S.C. 3347.
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    Several Commenters suggested that the factors involved in analysis 
as well as mitigating or aggravating circumstances be identified and 
explained and that options for interim sanctions be identified also. 
Other Commenters expressed concern about removal of appraisers from the 
National Registry because of a State Program's failures and request 
clarification of that issue. One Commenter noted that removal in those 
circumstances may raise serious constitutional concerns. The ASC has 
addressed these comments in the final Policy Statement by clarifying 
the procedures set forth in Policy Statement 8, sections B and C, to 
address instances when action is being taken against a State Program/
agency as an alternative to, or in advance of, a non-recognition 
proceeding.
    The ASC believes the final Policy Statement is consistent with the 
requirements of Title XI. In this regard, the ASC notes that if a State 
Program is sanctioned for non-compliance with Title XI through a 
suspension of the State Program, or a portion thereof, appraisers 
credentialed by that State relative to the portion of the State Program 
being sanctioned may not be eligible to appraise for federally related 
transactions.

Appendix A: Compliance Review Process

    The proposal contained a new rating system to provide greater 
gradation in

[[Page 31928]]

the State compliance Findings and the time frame for the Review Cycle. 
As proposed, a State receiving an ``Excellent'' rating would be on a 2-
year Review Cycle, as would a State receiving a rating of ``Good'' or 
``Needs Improvement.'' A State receiving a ``Needs Improvement'' rating 
would, however, be subject to appropriate additional monitoring. One 
commenter stated that the Review Cycle provided little incentive for a 
State to achieve an ``Excellent'' rating and suggested that an increase 
in the period between full Compliance Reviews may be a suitable 
response to the State's efforts to achieve that rating. The ASC notes 
that there is some potential value in this approach to extend the 
Review Cycle by reducing the burden of onsite Compliance Reviews on 
States with an ``Excellent'' rating. However, the ASC believes that 
additional experience is needed with this new rating system before 
extending the Review Cycle beyond two years. Therefore, the ASC is 
adopting the Compliance Review process and rating system as proposed 
and acknowledges that future refinements may be necessary.

Proposed Appendix B: Summary of Requirements

    The proposed Appendix B provided a summary of requirements for each 
Policy Statement to aid States in compliance with the Title XI. Several 
Commenters suggested that this discussion was helpful and should be 
incorporated into the applicable Policy Statement. The ASC agrees with 
the Commenters and has eliminated the Appendix and moved the 
requirements to the applicable location in the final Policy Statements.

Final Appendix B (Proposed Appendix C): Glossary of Terms

    In response to Commenters request for clarity on several terms, the 
ASC made minor changes to the text in the final appendix. In 
particular, the discussion on ``special documented circumstances'' has 
been incorporated into final Policy Statement 7 and deleted from this 
appendix. Several editorial changes have been made to clarify 
ambiguities in definitions.

 Proposed Appendix D: ASC Bulletins and Supplements

    The relevant guidance provided in the ASC Bulletins and Supplements 
referenced in the Proposed Appendix has been incorporated into 
appropriate Policy Statements. The ASC consequently has deleted 
Proposed Appendix D.
    For the reasons discussed in the preamble, the ASC adopts the 
revised Policy Statements as follows:

Introduction and Purpose

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (FIRREA), as amended (Title XI), established 
the Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council (ASC).
    \1\The purpose of Title XI is to provide protection of Federal 
financial and public policy interests by upholding Title XI 
requirements for appraisals performed for federally related 
transactions. Specifically those appraisals shall be 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.
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    \1\ The ASC board is made up of seven members. Five members are 
designated by the heads of the FFIEC agencies (Board of Governors of 
the Federal Reserve System, Consumer Financial Protection Bureau, 
Federal Deposit Insurance Corporation, Office of the Comptroller of 
the Currency, and National Credit Union Administration). The other 
two members are designated by the heads of the Department of Housing 
and Urban Development and the Federal Housing Finance Agency.
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    Pursuant to Title XI, one of the ASC's core functions is to monitor 
the requirements established by the States \2\ for certification and 
licensing of appraisers qualified to perform appraisals in connection 
with federally related transactions.\3\ The ASC performs periodic 
Compliance Reviews \4\ of each State appraiser regulatory program 
(Program) to determine compliance, or lack thereof, with Title XI, and 
to assess the Program's implementation of the AQB Criteria as adopted 
by the Appraiser Qualifications Board (AQB).
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    \2\ See Appendix B, Glossary of Terms, for the definition of 
``State.''
    \3\ See Appendix B, Glossary of Terms, for the definition of 
``federally related transaction.''
    \4\ See Appendix A, Compliance Review Process.
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    Pursuant to authority granted to the ASC under Title XI, the ASC is 
issuing these Policy Statements \5\ to provide States with the 
necessary information to maintain their Programs in compliance with 
Title XI. Policy Statements 1 through 7 correspond with the categories 
that are evaluated during the Compliance Review process and included in 
the ASC Compliance Review Report (Report). Policy Statement 8 entitled 
Interim Sanctions sets forth required procedures in the event that 
interim sanctions are imposed against a State by the ASC.
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    \5\ These Policy Statements, adopted April 10, 2013, supersede 
all previous Policy Statements adopted by the ASC, the most recent 
version of which was issued in October 2008.
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Policy Statement 1

Statutes, Regulations, Policies and Procedures Governing State Programs

A. State Regulatory Structure
    Title XI requires the ASC to monitor each State appraiser 
certifying and licensing agency for the purpose of determining whether 
each such agency has in place policies, practices and procedures 
consistent with the requirements of Title XI.\6\ The ASC recognizes 
that each State may have legal, fiscal, regulatory or other factors 
that may influence the structure and organization of its Program. 
Therefore, a State has flexibility to structure its Program so long as 
it meets its Title XI-related responsibilities.
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    \6\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    States should maintain an organizational structure for appraiser 
certification, licensing and supervision that avoids conflicts of 
interest. A State agency may be headed by a board, commission or an 
individual. State board \7\ or commission members, or employees in 
policy or decision-making positions, should understand and adhere to 
State statutes and regulations governing performance of 
responsibilities consistent with the highest ethical standards for 
public service. In addition, Programs using private entities or 
contractors should establish appropriate internal policies, procedures, 
and safeguards to promote compliance with the State agency's 
responsibilities under Title XI and these Policy Statements.
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    \7\ See Appendix B, Glossary of Terms, for the definition of 
``State board.''
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B. Funding and Staffing
    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) amended Title XI to require the ASC to determine 
whether States have sufficient funding and staffing to meet their Title 
XI requirements. Compliance with this provision requires that a State 
must provide its Program with funding and staffing sufficient to carry 
out its Title XI-related duties. The ASC evaluates the sufficiency of 
funding and staffing as part of its review of all aspects of a 
Program's effectiveness, including the adequacy of State boards, 
committees, or commissions responsible for carrying out Title XI-
related duties.
C. Minimum Criteria
    Title XI requires States to adopt and/or implement all relevant AQB 
Criteria.

[[Page 31929]]

Historically, requirements established by a State for certified 
residential or certified general classifications have been required to 
meet or exceed AQB Criteria. Effective July 1, 2013, requirements 
established by a State for licensed appraisers, as well as for trainee 
and supervisory appraisers, must also meet or exceed the AQB Criteria, 
as required by the Dodd-Frank Act.
D. Federally Recognized Appraiser Classifications
1. State Certified Appraisers
    ``State certified appraisers'' means those individuals who have 
satisfied the requirements for residential or general certification in 
a State whose criteria for certification meet or exceed the applicable 
minimum AQB Criteria. Permitted scope of practice and designation for 
State certified residential or certified general appraisers must be 
consistent with State and Federal laws, including regulations and 
supplementary guidance.
2. State Licensed Appraisers
    As of July 1, 2013, ``State licensed appraisers'' means those 
individuals who have satisfied the requirements for licensing in a 
State whose criteria for licensing meet or exceed the applicable 
minimum AQB Criteria. Effective July 1, 2013, the permitted scope of 
practice and designation for State licensed appraisers must be 
consistent with State and Federal laws, including regulations and 
supplementary guidance.
3. Trainee Appraiser and Supervisory Appraiser
    As of July 1, 2013, any minimum qualification requirements 
established by a State for individuals in the position of ``trainee 
appraiser'' and ``supervisory appraiser'' must meet or exceed the 
applicable minimum AQB Criteria. ASC staff will evaluate State 
designations such as ``registered appraiser,'' ``apprentice 
appraiser,'' ``provisional appraiser,'' or any other similar 
designation to determine if, in substance, such designation is 
consistent with a ``trainee appraiser'' designation and, therefore, 
administered to comply with Title XI. Effective July 1, 2013, the 
permitted scope of practice and designation for trainee appraisers and 
supervisory appraisers must be consistent with State and Federal laws, 
including regulations and supplementary guidance.
    Any State or Federal agency may impose additional appraiser 
qualification requirements for State licensed, certified residential or 
certified general classifications or for trainee and supervisor 
classifications, if they consider such requirements necessary to carry 
out their responsibilities under Federal and/or State statutes and 
regulations, so long as the additional qualification requirements do 
not preclude compliance with AQB Criteria.
E. Non-Federally Recognized Credentials
    States using non-federally recognized credentials or designations 
\8\ must ensure that they are easily distinguished from the federally 
recognized credentials.
---------------------------------------------------------------------------

    \8\ See Appendix B, Glossary of Terms, for the definition of 
``non-federally recognized credentials or designations.''
---------------------------------------------------------------------------

F. Appraisal Standards
    Title XI and the Federal financial institutions regulatory 
agencies' regulations mandate that all appraisals performed in 
connection with federally related transactions be in written form, 
prepared in accordance with generally accepted appraisal standards as 
promulgated by the Appraisal Standards Board (ASB) in the Uniform 
Standards of Professional Appraisal Practice (USPAP), and be subject to 
appropriate review for compliance with USPAP.\9\ States that have 
incorporated USPAP into State law should ensure that statutes or 
regulations are updated timely to adopt the latest version of USPAP, or 
if State law allows, automatically incorporate the latest version of 
USPAP. States should consider ASB Advisory Opinions, Frequently Asked 
Questions, and other written guidance issued by the ASB regarding 
interpretation and application of USPAP.
---------------------------------------------------------------------------

    \9\ See Appendix B, Glossary of Terms, for the definition of 
``Uniform Standards of Professional Appraisal Practice.''
---------------------------------------------------------------------------

    Any State or Federal agency may impose additional appraisal 
standards if they consider such standards necessary to carry out their 
responsibilities, so long as additional appraisal standards do not 
preclude compliance with USPAP or the Federal financial institutions 
regulatory agencies' appraisal regulations for work performed for 
federally related transactions.
    The Federal financial institutions regulatory agencies' appraisal 
regulations define ``appraisal'' and identify which real estate-related 
financial transactions require the services of a state certified or 
licensed appraiser. These regulations define ``appraisal'' as a 
``written statement independently and impartially prepared by a 
qualified appraiser setting forth an opinion as to the market value of 
an adequately described property as of a specific date(s) supported by 
the presentation and analysis of relevant market information.'' Per 
these regulations, an appraiser performing an appraisal review which 
includes the reviewer providing his or her own opinion of value 
constitutes an appraisal. Under these same regulations, an appraisal 
review that does not include the reviewer providing his or her own 
opinion of value does not constitute an appraisal. Therefore, under the 
Federal financial institutions regulatory agencies' regulations, only 
those transactions that involve appraisals for federally related 
transactions require the services of a state certified or licensed 
appraiser.
H. Exemptions
    Title XI and the Federal financial institutions regulatory 
agencies' regulations specifically require the use of only State 
certified or licensed appraisers in connection with the appraisal of 
certain real estate-related financial transactions.\10\ A State may not 
exempt any individual or group of individuals from meeting the State's 
certification or licensing requirements if the individual or group 
member performs an appraisal when Federal statutes and regulations 
require the use of a certified or licensed appraiser. For example, an 
individual who has been exempted by the State from its appraiser 
certification or licensing requirements because he or she is an 
officer, director, employee or agent of a federally regulated financial 
institution would not be permitted to perform an appraisal in 
connection with a federally related transaction.
---------------------------------------------------------------------------

    \10\ Title XI Sec.  1112, 12 U.S.C. 3341; Title XI Sec.  1113, 
12 U.S.C. 3342; Title XI Sec.  1114, 12 U.S.C. 3343.
---------------------------------------------------------------------------

I. ASC Staff Attendance at State Board Meetings
    ASC staff regularly attends open State board meetings as part of 
the on-site Compliance Review process. States are expected to make 
available for review by ASC staff minutes of closed meetings and 
executive sessions. The efficacy of the ASC's Compliance Review process 
rests on the ASC's ability to obtain reliable information about all 
areas of a State's Program. States are encouraged to allow ASC staff to 
attend closed and executive sessions of State board meetings where such 
attendance would not violate State law or regulation or be inconsistent 
with other legal obligations of the State board. ASC staff is obligated 
to protect information obtained during the Compliance Review process

[[Page 31930]]

concerning the privacy of individuals and any confidential matters.
J. Summary of Requirements
    1. States must require that appraisals be performed in accordance 
with the latest version of USPAP.\11\
---------------------------------------------------------------------------

    \11\ Title XI Sec.  1101, 12 U.S.C. 3331; Title XI Sec.  
1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification 
Criteria.
---------------------------------------------------------------------------

    2. States must, at a minimum, adopt and/or implement all relevant 
AQB Criteria.\12\
---------------------------------------------------------------------------

    \12\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345; 
Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    3. States must have policies, practices and procedures consistent 
with Title XI.\13\
---------------------------------------------------------------------------

    \13\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States must have funding and staffing sufficient to carry out 
their Title XI-related duties.\14\
---------------------------------------------------------------------------

    \14\ Id; Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must use proper designations and permitted scope of 
practice for certified residential or certified general 
classifications, and as of July 1, 2013, a State must use the proper 
designations and permitted scope of practice for the licensed 
classification, and trainee and supervisor classifications.\15\
---------------------------------------------------------------------------

    \15\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345; 
Title XI Sec.  1118 (a), 12 U.S.C. 3347; Title XI Sec.  1113, 12 
U.S.C. 3342; AQB Real Property Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    6. State board members, and any persons in policy or decision-
making positions, must perform their responsibilities consistent with 
Title XI.\16\
---------------------------------------------------------------------------

    \16\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    7. States' certification and licensing requirements must meet the 
minimum requirements set forth in Title XI.\17\
---------------------------------------------------------------------------

    \17\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345.
---------------------------------------------------------------------------

    8. State agencies must be granted adequate authority by the State 
to maintain an effective regulatory Program in compliance with Title 
XI.\18\
---------------------------------------------------------------------------

    \18\ Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

Policy Statement 2

Temporary Practice

A. Requirement for Temporary Practice
    Title XI requires State agencies to recognize, on a temporary 
basis, the certification or license of an out-of-State appraiser 
entering the State for the purpose of completing an appraisal 
assignment \19\ for a federally related transaction. The out-of-State 
appraiser must register with the State agency in the State of temporary 
practice (Host State). A State may determine the process necessary for 
``registration'' provided such process complies with Title XI and is 
not'' burdensome'' as determined by the ASC or involve excessive fees. 
Thus, a credentialed appraiser \20\ from State A has a statutory right 
to enter State B (the Host State) to perform an assignment concerning a 
federally related transaction, so long as the appraiser registers with 
the State agency in State B prior to performing the assignment. Though 
Title XI contemplates reasonably free movement of credentialed 
appraisers across State lines, an out-of-State appraiser must comply 
with the Host State's real estate appraisal statutes and regulations 
and is subject to the Host State's full regulatory jurisdiction. States 
should utilize the National Registry to verify credential status on 
applicants for temporary practice.
---------------------------------------------------------------------------

    \19\ See Appendix B, Glossary of Terms, for the definition of 
``assignment.''
    \20\ See Appendix B, Glossary of Terms, for the definition of 
``credentialed appraisers.''
---------------------------------------------------------------------------

B. Excessive Fees or Burdensome Requirements
    Title XI prohibits States from imposing excessive fees or 
burdensome requirements, as determined by the ASC, for temporary 
practice.\21\ Adherence by State agencies to the following mandates and 
prohibitions will deter the imposition of excessive fees or burdensome 
requirements.
---------------------------------------------------------------------------

    \21\ Title XI Sec.  1122 (a) (2), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    1. Host State agencies must:
    a. Issue temporary practice permits on an assignment basis;
    b. issue temporary practice permits within five business days of 
receipt of a completed application, or notify the applicant and 
document the file as to the circumstances justifying delay or other 
action;
    c. issue temporary practice permits designating the actual date of 
issuance;
    d. Take regulatory responsibility for a temporary practitioner's 
unethical, incompetent and/or fraudulent practices performed while in 
the State;
    e. notify the appraiser's home State agency \22\ in the case of 
disciplinary action concerning a temporary practitioner; and
---------------------------------------------------------------------------

    \22\ See Appendix B, Glossary of Terms, for the definition of 
``home State agency.''
---------------------------------------------------------------------------

    f. allow at least one temporary practice permit extension through a 
streamlined process.
    2. Host State agencies may not:
    a. Limit the valid time period of a temporary practice permit to 
less than 6 months, except in the case of an appraiser not holding a 
credential in active status for at least that period of time;
    b. Limit an appraiser to one temporary practice permit per calendar 
year; \23\
---------------------------------------------------------------------------

    \23\ State agencies may establish by statute or regulation a 
policy that places reasonable limits on the number of times an out-
of-State certified or licensed appraiser may exercise his or her 
temporary practice rights in a given year. If such a policy is not 
established, a State agency may choose not to honor an out-of-State 
certified or licensed appraiser's temporary practice rights if it 
has made a determination that the appraiser is abusing his or her 
temporary practice rights and is regularly engaging in real estate 
appraisal services within the State.
---------------------------------------------------------------------------

    c. charge a temporary practice permit fee exceeding $250, including 
one extension fee;
    d. impose State appraiser qualification requirements upon temporary 
practitioners that exceed AQB Criteria for the credential held;
    e. require temporary practitioners to obtain a certification or 
license in the State of temporary practice;
    f. require temporary practitioners to affiliate with an in-State 
licensed or certified appraiser;
    g. refuse to register licensed or certified appraisers seeking 
temporary practice in a State that does not have a licensed or 
certified level credential; or
    h. prohibit temporary practice.
    3. Home State agencies may not:
    a. Delay the issuance of a written ``letter of good standing'' or 
similar document for more than five business days after receipt of a 
request; or
    b. fail to take disciplinary action, if appropriate, when one of 
its certified or licensed appraisers is disciplined by another State 
agency for unethical, incompetent or fraudulent practices under a 
temporary practice permit.
C. Summary of Requirements
    1. States must recognize, on a temporary basis, appraiser 
credentials issued by another State if the property to be appraised is 
part of a federally related transaction.\24\
---------------------------------------------------------------------------

    \24\ Title XI Sec.  1122(a) (1), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    2. State agencies must adhere to mandates and prohibitions as 
determined by the ASC that deter the imposition of excessive fees or 
burdensome requirements for temporary practice.\25\
---------------------------------------------------------------------------

    \25\ Title XI Sec.  1122(a) (2), 12 U.S.C. 3351.
---------------------------------------------------------------------------

Policy Statement 3

National Registry

A. Requirements for the National Registry
    Title XI requires the ASC to maintain a National Registry of State 
certified and licensed appraisers who are eligible to perform 
appraisals in federally related transactions.\26\ Title XI further 
requires the States to transmit to the ASC: (1) A roster listing 
individuals who have received a State certification or license in 
accordance with Title XI; (2) reports on the issuance and renewal of 
licenses

[[Page 31931]]

and certifications, sanctions, disciplinary actions, revocations and 
suspensions; and (3) the Registry fee as set by the ASC \27\ from 
individuals who have received certification or licensing. States must 
notify the ASC as soon as practicable if a credential holder listed on 
the National Registry does not qualify for the credential held.
---------------------------------------------------------------------------

    \26\ Title XI Sec.  1103(a) (3), 12 U.S.C. 3332.
    \27\ Title XI Sec.  1109, Roster of State certified or licensed 
appraisers; authority to collect and transmit fees, requires the ASC 
to consider at least once every 5 years whether to adjust the dollar 
amount of the registry fees to account for inflation. (Title XI 
Sec.  1109(a), 12 U.S.C. 3338.)
---------------------------------------------------------------------------

    Roster and Registry fee requirements apply to all individuals who 
receive State certifications or licenses, originally or by reciprocity, 
whether or not the individuals are, in fact, performing or planning to 
perform appraisals in federally related transactions. If an appraiser 
is certified or licensed in more than one State, the appraiser is 
required to be on each State's roster of certified or licensed 
appraisers, and a Registry fee is due from each State in which the 
appraiser is certified or licensed.
    Only AQB-compliant certified and, effective July 1, 2013, AQB-
compliant licensed appraisers in active status on the National Registry 
are eligible to perform appraisals in connection with federally related 
transactions.
    Some States may give State certified or licensed appraisers an 
option to not pay the Registry fee. If a State certified or licensed 
appraiser chooses not to pay the Registry fee, then the Program must 
ensure that any potential user of that appraiser's services is aware 
that the appraiser's certificate or license is limited to performing 
appraisals in connection with non-federally related transactions.\28\ 
The Program must place a conspicuous notice directly on the face of any 
evidence of the appraiser's authority to appraise stating, ``Not 
Eligible To Appraise Federally Related Transactions,'' and the 
appraiser must not be listed in active status on the National Registry.
---------------------------------------------------------------------------

    \28\ See Appendix B, Glossary of Terms, for the definition of 
``non-federally related transactions.''
---------------------------------------------------------------------------

    The ASC extranet application allows States to update their 
appraiser credential information directly to the National Registry. 
Only Authorized Registry Officials are allowed to request access for 
their State personnel (see section C below). The ASC will issue a User 
Name and Password to the designated State personnel responsible for 
that State's National Registry entries. Designated State personnel are 
required to protect the right of access, and not share their User Name 
or Password with anyone. State agencies must adopt and implement a 
written policy to protect the right of access, as well as the ASC 
issued User Name and Password. The ASC will provide detailed 
specifications regarding the data elements on the National Registry and 
reporting procedures to those States not using the ASC extranet 
application.\29\ The ASC strongly encourages the States to utilize the 
extranet application as a more secure method of submitting information 
to the National Registry.
---------------------------------------------------------------------------

    \29\ See section D, Information Sharing, below requiring all 
States to report disciplinary action via the extranet application by 
July 1, 2013.
---------------------------------------------------------------------------

    The ASC creates a unique National Registry number for each listed 
appraiser and protects each appraiser's privacy rights. This unique 
identifier is available to appropriate State and Federal regulatory 
agencies to simplify multi-State queries regarding specific appraisers.
B. Registry Fee and Invoicing Policies
    Each State must remit to the ASC the annual Registry fee, as set by 
the ASC, for State certified or licensed appraisers within the State to 
be listed on the National Registry. Requests to prorate refunds or 
partial-year registrations will not be granted. If a State collects 
multiple-year fees for multiple-year certifications or licenses, the 
State may choose to remit to the ASC the total amount of the multiple-
year Registry fees or the equivalent annual fee amount. The ASC will, 
however, record appraisers on the National Registry only for the number 
of years for which the ASC has received payment. Nonpayment by a State 
of an appraiser's National Registry fee may result in the status of 
that appraiser being listed as ``inactive.'' When a State's failure to 
pay a past due invoice results in appraisers being listed as inactive, 
the ASC will not change those appraisers back to active status until 
payment is received from the State. An inactive status on the National 
Registry, for whatever the reason, renders an appraiser ineligible to 
perform appraisals in connection with federally related transactions.
C. Access to National Registry Data
    The ASC Web site provides free access to the public portion of the 
National Registry at www.asc.gov. The public portion of the National 
Registry data may be downloaded using predefined queries or user-
customized applications.
    Access to the full database, which includes non-public data (e.g., 
certain disciplinary action information), is restricted to authorized 
State and Federal regulatory agencies. States must designate a senior 
official, such as an executive director, to serve as the State's 
Authorized Registry Official, and provide to the ASC, in writing, 
information regarding the designated Authorized Registry Official. 
States should ensure that the authorization information provided to the 
ASC is updated and accurate.
D. Information Sharing
    Information sharing (routine exchange of certain information among 
lenders, governmental entities, State agencies and the ASC) is 
essential for carrying out the purposes of Title XI. Title XI requires 
the ASC, any other Federal agency or instrumentality, or any federally 
recognized entity to report any action of a State certified or licensed 
appraiser that is contrary to the purposes of Title XI to the 
appropriate State agency for disposition. The ASC believes that full 
implementation of this Title XI requirement is vital to the integrity 
of the system of State appraiser regulation. States are encouraged to 
develop and maintain procedures for sharing of information among 
themselves.
    The National Registry's value and usefulness are largely dependent 
on the quality and frequency of State data submissions. Accurate and 
frequent data submissions from all States are necessary to maintain an 
up-to-date National Registry. States must submit appraiser data in a 
secure format to the ASC at least monthly. If there are no changes to 
the data, the State agency must notify the ASC of that fact in writing. 
States are encouraged to submit data as frequently as possible.
    State agencies must report as soon as practicable any disciplinary 
action \30\ taken against an appraiser to the ASC. Prior to July 1, 
2013, at a minimum, this information must be submitted with the State's 
monthly, or more frequent, Registry data submission. As of July 1, 
2013, all States will be required to report disciplinary action via the 
extranet application. States not reporting via the extranet application 
will be required to provide, in writing to the ASC, a description of 
the circumstances preventing compliance with this requirement. For the 
most serious disciplinary actions (i.e., voluntary surrenders, 
suspensions and revocations, or any action that interrupts a credential 
holder's ability to practice), the State agency must notify the ASC of 
such action as soon as practicable, but no later than five (5) business 
days after the disciplinary

[[Page 31932]]

action is final, in order for the appraiser's status to be changed on 
the National Registry to ``inactive,'' thereby making the appraiser 
ineligible to perform appraisals for federally related transactions or 
other transactions requiring the use of State certified or licensed 
appraisers.
---------------------------------------------------------------------------

    \30\ See Appendix B, Glossary of Terms, for the definition of 
``disciplinary action.''
---------------------------------------------------------------------------

    Title XI also contemplates the reasonably free movement of 
certified and licensed appraisers across State lines. This freedom of 
movement assumes, however, that certified and licensed appraisers are, 
in all cases, held accountable and responsible for their actions while 
performing appraisal activities.
E. Summary of Requirements
    1. States must reconcile and pay National Registry invoices in a 
timely manner.\31\
---------------------------------------------------------------------------

    \31\ Title XI Sec.  1118 (a), 12 U.S.C. 3347; Title XI Sec.  
1109(a), 12 U.S.C. 3338.
---------------------------------------------------------------------------

    2. States must submit all disciplinary actions to the ASC for 
inclusion on the National Registry.\32\
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

    3. As of July 1, 2013, all States will be required to report 
disciplinary action via the extranet application as soon as 
practicable.\33\
---------------------------------------------------------------------------

    \33\ Id.
---------------------------------------------------------------------------

    4. States must designate a senior official, such as an executive 
director, who will serve as the State's Authorized Registry Official, 
and provide to the ASC, in writing, information regarding the selected 
Authorized Registry Official, and any individual(s) authorized to act 
on their behalf.\34\ (States should ensure that the authorization 
information provided to the ASC is kept current.)
---------------------------------------------------------------------------

    \34\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States using the ASC extranet application must implement written 
policies to ensure that all personnel with access to the National 
Registry protect the right of access and not share the User Name or 
Password with anyone.\35\
---------------------------------------------------------------------------

    \35\ Id.
---------------------------------------------------------------------------

    6. States must ensure the accuracy of all data submitted to the 
National Registry.\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    7. States must submit appraiser data to the ASC at least monthly. 
If a State's data does not change during the month, the State agency 
must notify the ASC of that fact in writing.\37\
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

    8. States must notify the ASC as soon as practicable of voluntary 
surrenders, suspensions, revocations, or any other action that 
interrupts a credential holder's ability to practice.\38\
---------------------------------------------------------------------------

    \38\ Id.
---------------------------------------------------------------------------

    9. If a State certified or licensed appraiser chooses not to pay 
the Registry fee, the State must ensure that any potential user of that 
appraiser's services is aware that the appraiser's certificate or 
license is limited to performing appraisals only in connection with 
non-federally related transactions.\39\
---------------------------------------------------------------------------

    \39\ Id.
---------------------------------------------------------------------------

Policy Statement 4

Application Process

    AQB Criteria sets forth the minimum education, experience and 
examination requirements applicable to all States for credentialing of 
real property appraisers. In the application process, States must, at a 
minimum, employ a reliable means of validating both education and 
experience credit claimed by applicants for credentialing.\40\
---------------------------------------------------------------------------

    \40\ Includes applications for credentialing of State licensed, 
certified residential or certified general classifications, and 
trainee and supervisor classifications.
---------------------------------------------------------------------------

A. Processing of Applications
    States must process applications in a consistent, equitable and 
well-documented manner. Applications for credentialing should be timely 
processed by State agencies (within 90 days). Any delay in the 
processing of applications should be sufficiently documented in the 
file to explain the delay. States must ensure appraiser credential 
applications submitted for processing do not contain expired 
examinations as established by AQB Criteria.
B. Qualifying Education for Initial or Upgrade Applications
    States must verify that:
    (1) The applicant's claimed education courses are acceptable under 
AQB Criteria; and
    (2) the applicant has successfully completed courses consistent 
with AQB Criteria for the appraiser credential sought.
    Documentation must be provided to support education claimed by 
applicants for initial credentialing or upgrade. States may not accept 
an affidavit for education claimed from applicants for certification. 
Effective July 1, 2013, States may not accept an affidavit for 
education claimed from applicants for any federally recognized 
credential.\41\ States must maintain adequate documentation to support 
verification of education claimed by applicants.
---------------------------------------------------------------------------

    \41\ If a State accepts education-related affidavits from 
applicants for initial licensure in any non-certified 
classification, upon the appraiser's application to upgrade to a 
certified classification, the State must require documentation to 
support the appraiser's educational qualification for the certified 
classification, not just the incremental amount of education 
required to move from the non-certified to the certified 
classification. This requirement applies to all federally recognized 
credentials effective July 1, 2013.
---------------------------------------------------------------------------

C. Continuing Education for Reinstatement and Renewal Applications
1. Reinstatement Applications
    States must verify that:
    (1) The applicant's claimed continuing education courses are 
acceptable under AQB Criteria; and
    (2) the applicant has successfully completed all continuing 
education consistent with AQB Criteria for reinstatement of the 
appraiser credential sought.
    Documentation must be provided to support continuing education 
claimed by applicants for reinstatement. States may not accept an 
affidavit for continuing education claimed from applicants for 
reinstatement. States must maintain adequate documentation to support 
verification of claimed education.
2. Renewal Applications
    States must ensure that continuing education courses for renewal of 
an appraiser credential are consistent with AQB Criteria and that 
continuing education hours required for renewal of an appraiser 
credential were completed consistent with AQB Criteria. States may 
accept affidavits for continuing education credit claimed for 
credential renewal so long as the State implements a reliable 
validation procedure that adheres to the following objectives and 
requirements:
    a. Validation objectives--The State's validation procedures must be 
structured to permit acceptable projections of the sample results to 
the entire population of subject appraisers. Therefore, the sample must 
include an adequate number of affidavits to have a reasonable chance of 
identifying appraisers who fail to comply with AQB Criteria, and the 
sample must include a statistically relevant representation of the 
appraiser population being sampled.
    b. Minimum Standards--The following minimum standards apply to 
these audits:
    (1) Validation must include a prompt post-approval audit. Each 
audit of an affidavit for continuing education credit claimed must be 
completed within 60 days from the date the renewed credential is 
issued;
    (2) States must audit the continuing education-related affidavit 
for each

[[Page 31933]]

credentialed appraiser selected in the sampling procedure;
    (3) The State must determine that the education courses claimed 
conform to AQB Criteria and that the appraiser successfully completed 
each course;
    (4) When a State determines that an appraiser's continuing 
education does not meet AQB Criteria, the State must take appropriate 
action to suspend the appraiser's eligibility to perform appraisals in 
federally related transactions until such time that the requisite 
continuing education has been completed. The State must notify the ASC 
as soon as practicable after taking such action in order for the 
appraiser's record on the National Registry to be updated 
appropriately; and
    (5) If more than ten percent of the audited appraisers fail to meet 
the AQB Criteria, the State must take remedial action \42\ to address 
the apparent weakness of its affidavit process. The ASC will determine 
on a case-by-case basis whether remedial actions are effective and 
acceptable.
---------------------------------------------------------------------------

    \42\ For example:
    (1) A State may conduct an additional audit using a higher 
percentage of audited appraisers; or
    (2) a State may publically post action taken to sanction non-
compliant appraisers to increase awareness in the appraiser 
community of the importance of compliance with continuing education 
requirements.
---------------------------------------------------------------------------

    c. Documentation--States must maintain adequate documentation to 
support its affidavit renewal and audit procedures and actions.
    d. List of Education Courses--To promote accountability, the ASC 
encourages States accepting affidavits for continuing education credit 
claimed for credential renewal to require that the appraiser provide a 
list of courses to support the affidavit.
D. Experience for Initial or Upgrade Applications
    States must ensure that appraiser experience logs conform to AQB 
Criteria. States may not accept an affidavit for experience credit 
claimed by applicants for certification. Effective July 1, 2013, States 
may not accept an affidavit for experience credit claimed by applicants 
for any federally recognized credential.\43\
---------------------------------------------------------------------------

    \43\ See Appendix B, Glossary of Terms, for the definition of 
``federally recognized credential.'' If prior to July 1, 2013, a 
State accepted experience-related affidavits from applicants for 
initial licensure in any non-certified classification, upon the 
appraiser's application to upgrade to a certified classification, 
the State must require experience documentation to support the 
appraiser's qualification for the certified classification, not just 
the incremental amount of experience required to move from the non-
certified to the certified classification. For example, if a State 
accepted an experience affidavit from an appraiser to support the 
appraiser's initial hours to qualify for the licensed 
classification, and subsequently that appraiser applies to upgrade 
to the certified residential classification, the State must require 
documentation to support the full experience hours required for the 
certified residential classification, not just the difference in 
hours between the two classifications.
---------------------------------------------------------------------------

1. Validation Required
    States must implement a reliable validation procedure to verify 
that each applicant's:
    (1) Experience meets AQB Criteria;
    (2) experience is USPAP compliant; and
    (3) experience hours have been successfully completed consistent 
with AQB Criteria.
2. Validation Procedures, Objectives and Requirements
a. Selection of Work Product
    Program staff or State board members must select the work product 
to be analyzed for USPAP compliance; applicants may not have any role 
in selection of work product. States must analyze a representative 
sample of the applicant's work product.
b. USPAP Compliance
    For appraisal experience to be acceptable under AQB Criteria, it 
must be USPAP compliant. States must exercise due diligence in 
determining whether submitted documentation of experience or work 
product demonstrates compliance with USPAP. Persons analyzing work 
product for USPAP compliance must have sufficient knowledge to make 
that determination.
c. Determination of Experience Time Periods
    When measuring the experience time period required by AQB Criteria, 
States must review each appraiser's experience log and note the dates 
of the first and last acceptable appraisal activity performed by the 
applicant. At a minimum, the time period spanned between those 
appraisal activities must comply with the AQB Criteria.
d. Supporting Documentation
    States must maintain adequate documentation to support validation 
methods. The applicant's file, either electronic or paper, must include 
the information necessary to identify each appraisal assignment 
selected and analyzed by the State, notes, letters and/or reports 
prepared by the official(s) evaluating the report for USPAP compliance, 
and any correspondence exchanged with the applicant regarding the 
appraisals submitted. This supporting documentation may be discarded 
upon the completion of the first ASC Compliance Review performed after 
the credential issuance or denial for that applicant.
E. Examination
    States must ensure that an appropriate AQB-approved qualifying 
examination is administered for each of the federally recognized 
appraiser classifications requiring an examination.
F. Summary of Requirements
Processing of Applications
    1. States must process applications in a consistent, equitable and 
well-documented manner.\44\
---------------------------------------------------------------------------

    \44\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. States must ensure appraiser credential applications submitted 
for processing do not contain expired examinations as established by 
AQB Criteria.\45\
---------------------------------------------------------------------------

    \45\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Education
    1. States must verify that the applicant's claimed education 
courses are acceptable under AQB Criteria, whether for initial 
credentialing, renewal, upgrade or reinstatement.\46\
---------------------------------------------------------------------------

    \46\ Id.
---------------------------------------------------------------------------

    2. States must verify that the applicant has successfully completed 
courses consistent with AQB Criteria for the appraiser credential 
sought, whether for initial credentialing, renewal, upgrade or 
reinstatement.\47\
---------------------------------------------------------------------------

    \47\ Id.
---------------------------------------------------------------------------

    3. States must maintain adequate documentation to support 
verification.\48\
---------------------------------------------------------------------------

    \48\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States may not accept an affidavit for education claimed from 
applicants for certification. Effective July 1, 2013, States may not 
accept an affidavit for education claimed from applicants for any 
federally recognized credential.\49\
---------------------------------------------------------------------------

    \49\ Id.
---------------------------------------------------------------------------

    5. States may not accept an affidavit for continuing education 
claimed from applicants for reinstatement.\50\
---------------------------------------------------------------------------

    \50\ Id.
---------------------------------------------------------------------------

    6. States may accept affidavits for continuing education credit 
claimed for credential renewal so long as the State implements a 
reliable validation procedure.\51\
---------------------------------------------------------------------------

    \51\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    7. Audits of affidavits for continuing education credit claimed 
must be completed within sixty days from the date the renewed 
credential is issued.\52\
---------------------------------------------------------------------------

    \52\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    8. States are required to take remedial action when it is 
determined that more than ten percent of audited appraiser's affidavits 
for continuing education

[[Page 31934]]

credit claimed fail to meet the minimum AQB Criteria.\53\
---------------------------------------------------------------------------

    \53\ Id.
---------------------------------------------------------------------------

    9. States must require the 7-hour National USPAP Update Course for 
renewals consistent with AQB Criteria.\54\
---------------------------------------------------------------------------

    \54\ Title XI Sec.  1118 (a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    10. States must take appropriate action to suspend an appraiser's 
eligibility to perform appraisals in federally related transactions 
when it determines that the appraiser's continuing education does not 
meet AQB Criteria until such time that the requisite continuing 
education has been completed. The State must notify the ASC as soon as 
practicable after taking such action in order for the appraiser's 
record on the National Registry to be updated appropriately.\55\
---------------------------------------------------------------------------

    \55\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

Experience
    1. States may not accept an affidavit for experience credit claimed 
from applicants for certification. Effective July 1, 2013, States may 
not accept an affidavit for experience credit claimed from applicants 
for any federally recognized credential.\56\
---------------------------------------------------------------------------

    \56\ Id.
---------------------------------------------------------------------------

    2. States must ensure that appraiser experience logs conform to AQB 
Criteria.\57\
---------------------------------------------------------------------------

    \57\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    3. States must use a reliable means of validating appraiser 
experience claims on all initial or upgrade applications for appraiser 
credentialing.\58\
---------------------------------------------------------------------------

    \58\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States must select the work product to be analyzed for USPAP 
compliance on all initial or upgrade applications for appraiser 
credentialing.\59\
---------------------------------------------------------------------------

    \59\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must analyze a representative sample of the applicant's 
work product on all initial or upgrade applications for appraiser 
credentialing.\60\
---------------------------------------------------------------------------

    \60\ Id.
---------------------------------------------------------------------------

    6. States must exercise due diligence in determining whether 
submitted documentation of experience or work product demonstrates 
compliance with USPAP on all initial applications for appraiser 
credentialing.\61\
---------------------------------------------------------------------------

    \61\ Id.
---------------------------------------------------------------------------

    7. Persons analyzing work product for USPAP compliance must have 
sufficient knowledge to make that determination.\62\
---------------------------------------------------------------------------

    \62\ Id.
---------------------------------------------------------------------------

Examination
    1. States must ensure that an appropriate AQB-approved qualifying 
examination is administered for each of the federally recognized 
credentials requiring an examination.\63\
---------------------------------------------------------------------------

    \63\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Policy Statement 5

Reciprocity

A. Reciprocity Policy
    Title XI contemplates the reasonably free movement of certified and 
licensed appraisers across State lines. Beginning July 1, 2013, the ASC 
will monitor Programs for compliance with the reciprocity provision of 
Title XI as amended by the Dodd-Frank Act.\64\ Title XI requires that 
in order for a State's appraisers to be eligible to perform appraisals 
for federally related transactions, the State must have a policy in 
place for issuing reciprocal credentials IF:
---------------------------------------------------------------------------

    \64\ Title XI Sec.  1122 (b), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    a. The appraiser is coming from a State (Home State) that is ``in 
compliance'' with Title XI as determined by the ASC; AND
    b. (i) The appraiser holds a valid credential from the Home State; 
AND
    (ii) the credentialing requirements of the Home State (as they 
exist at the time of application for reciprocal credential) meet or 
exceed those of the reciprocal credentialing State (Reciprocal State) 
(as they exist at the time of application for reciprocal credential).
    An appraiser relying on a credential from a State that does not 
have such a policy in place may not perform appraisals for federally 
related transactions. A State may be more lenient in the issuance of 
reciprocal credentials by implementing a more open door policy. 
However, States cannot impose additional impediments to issuance of 
reciprocal credentials.\65\
---------------------------------------------------------------------------

    \65\ Effective July 1, 2013, States will be evaluated for 
compliance with this Title XI requirement.
---------------------------------------------------------------------------

    For purposes of implementing the reciprocity policy, States with an 
ASC Finding \66\ of ``Poor'' do not satisfy the ``in compliance'' 
provision for reciprocity. Therefore, States are not required to 
recognize, for purposes of granting a reciprocal credential, the 
license or certification of an appraiser credentialed in a State with 
an ASC Finding of ``Poor.''
---------------------------------------------------------------------------

    \66\ See Appendix A, Compliance Review Process, for an 
explanation of ASC Findings.
---------------------------------------------------------------------------

B. Application of Reciprocity Policy
    The following examples illustrate application of reciprocity in a 
manner that complies with Title XI. The examples refer to the 
reciprocity policy requiring issuance of a reciprocal credential IF:
    a. The appraiser is coming from a State that is ``in compliance''; 
AND
    b. (i) the appraiser holds a valid credential from that State; AND
    (ii) the credentialing requirements of that State (as they 
currently exist) meet or exceed those of the reciprocal credentialing 
State (as they currently exist).
1. Additional Requirements Imposed on Applicants
    State A requires that prior to issuing a reciprocal credential the 
applicant must certify that disciplinary proceedings are not pending 
against that applicant in any jurisdiction. Under b (ii) above, if this 
requirement is not imposed on all of its own applicants for 
credentialing, STATE A cannot impose this requirement on applicants for 
reciprocal credentialing.
2. Credentialing Requirements
    An appraiser is seeking a reciprocal credential in STATE A. The 
appraiser holds a valid credential in STATE Z, even though it was 
issued in 2007. This satisfies b (i) above. However in order to satisfy 
b (ii), STATE A would evaluate STATE Z's credentialing requirements as 
they currently exist to determine whether they meet or exceed STATE A's 
current requirements for credentialing.
3. Multiple State Credentials
    An appraiser credentialed in several states is seeking a reciprocal 
credential in State A. That appraiser's initial credentials were 
obtained through examination in the original credentialing State and 
through reciprocity in the additional States. State A requires the 
applicant to provide a ``letter of good standing'' from the State of 
original credentialing as a condition of granting a reciprocal 
credential. State A may not impose such a requirement since Title XI 
does not distinguish between credentials obtained by examination and 
credentials obtained by reciprocity for purposes of granting reciprocal 
credentials.
C. Appraiser Compliance Requirements
    In order to maintain a credential granted by reciprocity, 
appraisers must comply with the credentialing State's policies, rules 
and statutes governing appraisers, including requirements for payment 
of certification and licensing fees, as well as continuing 
education.\67\
---------------------------------------------------------------------------

    \67\ A State may offer to accept continuing education (CE) for a 
renewal applicant who has satisfied CE requirements of a home State; 
however a State may not impose this as a requirement for renewal, 
thereby imposing a requirement for the renewal applicant to retain a 
home State credential.

---------------------------------------------------------------------------

[[Page 31935]]

D. Summary of Requirements
    1. Effective July 1, 2013, in order for a State's appraisers to be 
eligible to perform appraisals for federally related transactions, the 
State must have a reciprocity policy in place for issuing a reciprocal 
credential to an appraiser from another State under the conditions 
specified in Title XI.\68\
---------------------------------------------------------------------------

    \68\ Title XI Sec.  1122(b), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    2. States may be more lenient in the issuance of reciprocal 
credentials by implementing a more open door policy; however, States 
may not impose additional impediments to issuance of reciprocal 
credentials.\69\
---------------------------------------------------------------------------

    \69\ Id.
---------------------------------------------------------------------------

Policy Statement 6

Education

    AQB Criteria sets forth minimum requirements for appraiser 
education courses. This Policy Statement addresses proper 
administration of education requirements for compliance with AQB 
Criteria. (For requirements concerning qualifying and continuing 
education in the application process, see Policy Statement 4, 
Application Process.)
A. Course Approval
    States must ensure that approved appraiser education courses are 
consistent with AQB Criteria and maintain sufficient documentation to 
support that approved appraiser education courses conform to AQB 
Criteria.
    States should ensure that course approval expiration dates assigned 
by the State coincide with the endorsement period assigned by the AQB's 
Course Approval Program or any other AQB-approved organization 
providing approval of course design and delivery.
    States should ensure that educational providers are afforded equal 
treatment in all respects.\70\
---------------------------------------------------------------------------

    \70\ For example:
    (1) Consent agreements requiring additional education should not 
specify a particular course provider when there are other providers 
on the State's approved course listing offering the same course; and
    (2) courses from professional organizations should not be 
automatically approved and/or approved in a manner that is less 
burdensome than the State's normal approval process.
---------------------------------------------------------------------------

    The ASC encourages States to accept courses approved by the AQB's 
Course Approval Program.
B. Distance Education
    States must ensure that distance education courses meet AQB 
Criteria and that the delivery mechanism for distance education courses 
offered by a non-academic provider has been approved by an AQB-approved 
organization providing approval of course design and delivery.
C. Summary of Requirements
    1. States must ensure that appraiser education courses are 
consistent with AQB Criteria.\71\
---------------------------------------------------------------------------

    \71\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    2. States must maintain sufficient documentation to support that 
approved appraiser courses conform to AQB Criteria.\72\
---------------------------------------------------------------------------

    \72\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    3. States must ensure the delivery mechanism for distance education 
courses offered by a non-academic provider has been approved by an AQB-
approved organization providing approval of course design and 
delivery.\73\
---------------------------------------------------------------------------

    \73\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Policy Statement 7

State Agency Enforcement

A. State Agency Regulatory Program
    Title XI requires the ASC to monitor the States for the purpose of 
determining whether the State processes complaints and completes 
investigations in a reasonable time period, appropriately disciplines 
sanctioned appraisers and maintains an effective regulatory 
program.\74\
---------------------------------------------------------------------------

    \74\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

B. Enforcement Process
    States must ensure that the system for processing and investigating 
complaints \75\ and sanctioning appraisers is administered in a timely, 
effective, consistent, equitable, and well-documented manner.
---------------------------------------------------------------------------

    \75\ See Appendix B, Glossary of Terms, for the definition of 
``complaint.''
---------------------------------------------------------------------------

1. Timely Enforcement
    States must process complaints of appraiser misconduct or 
wrongdoing in a timely manner to ensure effective supervision of 
appraisers, and when appropriate, that incompetent or unethical 
appraisers are not allowed to continue their appraisal practice. Absent 
special documented circumstances, final administrative decisions 
regarding complaints must occur within one year (12 months) of the 
complaint filing date. Special documented circumstances are those 
extenuating circumstances (fully documented) beyond the control of the 
State agency that delays normal processing of a complaint such as: 
Complaints involving a criminal investigation by a law enforcement 
agency when the investigative agency requests that the State refrain 
from proceeding; final disposition that has been appealed to a higher 
court; documented medical condition of the respondent; ancillary civil 
litigation; and complex fraud cases that involve multiple individuals 
and reports. Such special documented circumstances also include those 
periods when State rules require referral of a complaint to another 
State entity for review and the State agency is precluded from further 
processing of the complaint until it is returned. In that circumstance, 
the State agency should document the required referral and the time 
period during which the complaint was not under its control or 
authority.
2. Effective Enforcement
    Effective enforcement requires that States investigate allegations 
of appraiser misconduct or wrongdoing, and if allegations are proven, 
take appropriate disciplinary or remedial action. Dismissal of an 
alleged violation solely due to an ``absence of harm to the public'' is 
inconsistent with Title XI. Financial loss or the lack thereof is not 
an element in determining whether there is a violation. The extent of 
such loss, however, may be a factor in determining the appropriate 
level of discipline.
    Persons analyzing complaints for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP and States must 
document how such persons are so qualified.
    States must analyze each complaint to determine whether additional 
violations, especially those relating to USPAP, should be added to the 
complaint.
    Closure of a complaint based on a State's statute of limitations 
results in dismissal of a complaint without the investigation of the 
merits of the complaint, and is inconsistent with the Title XI 
requirement that States assure effective supervision of the activities 
of credentialed appraisers.\76\
---------------------------------------------------------------------------

    \76\ Title XI Sec.  1117, 12 U.S.C. 3346.
---------------------------------------------------------------------------

3. Consistent and Equitable Enforcement
    Absent specific documented facts or considerations, substantially 
similar cases within a State should result in similar dispositions.
4. Well-Documented Enforcement
    ``Well-documented'' means that States obtain and maintain 
sufficient relevant documentation pertaining to a matter so as to 
enable understanding of the facts and determinations in the matter and 
the reasons for those determinations.

[[Page 31936]]

a. Complaint Files
    Complaint files must:
     Include documentation outlining the progress of the 
investigation;
     demonstrate that appraisal reports are analyzed and all 
USPAP violations are identified;
     include rationale for the final outcome of the case (i.e., 
dismissal or imposition of discipline);
     include documentation explaining any delay in processing, 
investigation or adjudication;
     contain documentation that all ordered or agreed upon 
discipline, such as probation, fine, or completion of education is 
tracked and that completion of all terms is confirmed; and
     be organized in a manner that allows understanding of the 
steps taken throughout the complaint, investigation, and adjudicatory 
process.
b. Complaint Logs
    States must track all complaints using a complaint log. The 
complaint log must record all complaints, regardless of their 
procedural status in the investigation and/or resolution process, 
including complaints pending before the State board, Office of the 
Attorney General, other law enforcement agencies, and/or offices of 
administrative hearings. The complaint log must include the following 
information (States are strongly encouraged to maintain this 
information in an electronic, sortable format):

1. Case number
2. Name of respondent
3. Actual date the complaint was received by the State
4. Source of complaint (e.g., consumer, lender, bank regulator, 
appraiser, hotline)
5. Current status of the complaint
6. Date the complaint was closed (e.g., final disposition by the 
administrative hearing agency, Office of the Attorney General, State 
Appraiser Regulatory Agency or Court of Appeals)
7. Method of disposition (e.g., dismissal, letter of warning, consent 
order, final order)
C. Summary of Requirements
    1. States must maintain relevant documentation to enable 
understanding of the facts and determinations in the matter and the 
reasons for those determinations.\77\
---------------------------------------------------------------------------

    \77\ Title XI Sec.  1118 (a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. States must resolve all complaints filed against appraisers 
within one year (12 months) of the complaint filing date, except for 
special documented circumstances.\78\
---------------------------------------------------------------------------

    \78\ Id.
---------------------------------------------------------------------------

    3. States must ensure that the system for processing and 
investigating complaints and sanctioning appraisers is administered in 
an effective, consistent, equitable, and well-documented manner.\79\
---------------------------------------------------------------------------

    \79\ Id.
---------------------------------------------------------------------------

    4. States must track complaints of alleged appraiser misconduct or 
wrongdoing using a complaint log.\80\
---------------------------------------------------------------------------

    \80\ Id.
---------------------------------------------------------------------------

    5. States must appropriately document enforcement files and include 
rationale.\81\
---------------------------------------------------------------------------

    \81\ Id.
---------------------------------------------------------------------------

    6. States must regulate, supervise and discipline their 
credentialed appraisers.\82\
---------------------------------------------------------------------------

    \82\ Id.
---------------------------------------------------------------------------

    7. Persons analyzing complaints for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP, and States must 
document how such persons are so qualified.\83\
---------------------------------------------------------------------------

    \83\ Id.
---------------------------------------------------------------------------

Policy Statement 8

Interim Sanctions

A. Authority
    Title XI grants the ASC authority to impose interim sanctions on 
individual appraisers pending State agency action and on State agencies 
that fail to have an effective Program as an alternative to or in 
advance of a non-recognition proceeding. In determining whether a 
Program is effective the ASC shall conduct an analysis as required by 
Title XI. An ASC Finding of Poor on the Report issued to a State at the 
conclusion of an ASC Compliance Review will trigger an analysis by the 
ASC for potential interim sanction(s).\84\ The following provisions 
apply to the exercise by the ASC of its authority to impose interim 
sanction(s) on State agencies.
---------------------------------------------------------------------------

    \84\ Imposition of an interim sanction against a State agency 
may result in appraisers credentialed by that State being removed 
from the National Registry on an interim basis, not to exceed 90 
days, pending State agency action.
---------------------------------------------------------------------------

B. Opportunity To Be Heard or Correct Conditions
    The ASC shall provide the State agency with:
    1. written notice of intention to impose an interim sanction; and
    2. opportunity to respond or to correct the conditions causing such 
notice to the State.
    Notice and opportunity to respond or correct the conditions shall 
be in accordance with section C, Procedures.
C. Procedures
    This section prescribes the ASC's procedures which will be followed 
in arriving at a decision by the ASC to impose an interim sanction 
against a State agency.
1. Notice
    The ASC shall provide a written Notice of intention to impose an 
interim sanction (Notice) to the State agency. The Notice shall contain 
the ASC's analysis as required by Title XI of the State's licensing and 
certification of appraisers, the issuance of temporary licenses and 
certifications for appraisers, the receiving and tracking of submitted 
complaints against appraisers, the investigation of complaints, and 
enforcement actions against appraisers.\85\ The ASC shall verify the 
State's date of receipt, and publish both the Notice and the State's 
date of receipt in the Federal Register.
---------------------------------------------------------------------------

    \85\ Id.
---------------------------------------------------------------------------

2. State Agency Response
    Within 15 days of receipt of the Notice, the State may submit a 
response to the ASC's Executive Director. Alternatively, a State may 
submit a Notice Not to Contest with the ASC's Executive Director. The 
filing of a Notice Not to Contest shall not constitute a waiver of the 
right to a judicial review of the ASC's decision, findings and 
conclusions. Failure to file a Response within 15 days shall constitute 
authorization for the ASC to find the facts to be as presented in the 
Notice and analysis. The ASC, for good cause shown, may permit the 
filing of a Response after the prescribed time.
3. Briefs, Memoranda and Statements
    Within 45 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, the State agency may file 
with the ASC's Executive Director a written brief, memorandum or other 
statement providing factual data and policy and legal arguments 
regarding the matters set out in the Notice and analysis.
4. Oral Presentations to the ASC
    Within 45 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, the State may file a 
request with the ASC's Executive Director to make oral presentation to 
the ASC. If the State has filed a request for oral presentation, the 
matter shall be heard within 45 days. An oral presentation shall be 
considered as an opportunity to offer, emphasize and clarify the facts, 
policies and laws concerning the proceeding, and is not a

[[Page 31937]]

Meeting \86\ of the ASC. On the appropriate date and time, the State 
agency will make the oral presentation before the ASC. Any ASC member 
may ask pertinent questions relating to the content of the oral 
presentation. Oral presentations will not be recorded or otherwise 
transcribed. Summary notes will be taken by ASC staff and made part of 
the record on which the ASC shall decide the matter.
---------------------------------------------------------------------------

    \86\ The proceeding is more in the nature of a Briefing not 
subject to open meeting requirements. The presentation is an 
opportunity for the State to brief the ASC--to offer, emphasize and 
clarify the facts, policies and laws concerning the proceeding, and 
for the ASC members to ask questions. Additional consideration is 
given to the fact that this stage of the proceeding is pre-
decisional.
---------------------------------------------------------------------------

5. Conduct of Interim Sanction Proceedings
    (a) Written Submissions. All aspects of the proceeding shall be 
conducted by written submissions, with the exception of oral 
presentations allowed under subsection 4 above.
    (b) Disqualification. An ASC member who deems himself or herself 
disqualified may at any time withdraw. Upon receipt of a timely and 
sufficient affidavit of personal bias or disqualification of such 
member, the ASC will rule on the matter as a part of the record.
    (c) Authority of ASC Chairperson. The Chairperson of the ASC, in 
consultation with other members of the ASC whenever appropriate, shall 
have complete charge of the proceeding and shall have the duty to 
conduct it in a fair and impartial manner and to take all necessary 
action to avoid delay in the disposition of proceedings.
    (d) Rules of Evidence. Except as is otherwise set forth in this 
section, relevant material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551, et seq.) and other 
applicable law.
6. Decision of the ASC and Judicial Review
    Within 90 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, or in the case of oral 
presentation having been granted, within 30 days after presentation, 
the ASC shall issue a final decision, findings and conclusions and 
shall publish the decision promptly in the Federal Register. The final 
decision shall be effective on issuance. The ASC's Executive Director 
shall ensure prompt circulation of the decision to the State agency. A 
final decision of the ASC is a prerequisite to seeking judicial review.
7. Computing Time
    Time computation is based on business days. The date of the act, 
event or default from which the designated period of time begins to run 
is not included. The last day is included unless it is a Saturday, 
Sunday, or Federal holiday, in which case the period runs until the end 
of the next day which is not a Saturday, Sunday or Federal holiday.
8. Documents and Exhibits
    Unless otherwise provided by statute, all documents, papers and 
exhibits filed in connection with any proceeding, other than those that 
may be withheld from disclosure under applicable law, shall be placed 
by the ASC's Executive Director in the proceeding's file and will be 
available for public inspection and copying.
9. Judicial Review
    A decision of the ASC under this section shall be subject to 
judicial review. The form of proceeding for judicial review may include 
any applicable form of legal action, including actions for declaratory 
judgments or writs of prohibitory or mandatory injunction in a court of 
competent jurisdiction.\87\
---------------------------------------------------------------------------

    \87\ 5 U.S.C. 703--Form and venue of proceeding.
---------------------------------------------------------------------------

Appendix A--Compliance Review Process

    The ASC monitors State Programs for compliance with Title XI. 
The monitoring of a State Program is largely accomplished through 
on-site visits known as a Compliance Review (Review). A Review is 
conducted over a two- to four-day period, and is scheduled to 
coincide with a meeting of the Program's decision-making body 
whenever possible. ASC staff reviews the seven compliance areas 
addressed in Policy Statements 1 through 7. Sufficient documentation 
demonstrating compliance must be maintained by a State and made 
available for inspection during the Review. ASC staff reviews a 
sampling of documentation in each of the seven compliance areas. The 
sampling is intended to be representative of the State Program in 
its entirety.
    Based on the Review, ASC staff provides the State with an ASC 
staff report detailing preliminary findings. The State is given 60 
days to respond to the ASC staff report. At the conclusion of the 
Review, a Compliance Review Report (Report) is issued to the State 
with the ASC Finding on the Program's overall compliance, or lack 
thereof, with Title XI. Deficiencies resulting in non-compliance in 
any of the seven compliance areas are cited in the Report. ``Areas 
of Concern'' \88\ which potentially expose a Program to compliance 
issues in the future are also addressed in the Report. The ASC's 
final disposition is based upon the ASC staff report, the State's 
response and staff's recommendation.
---------------------------------------------------------------------------

    \88\ See Appendix B, Glossary of Terms, for the definition of 
``Areas of Concern.''
---------------------------------------------------------------------------

    The following chart provides an explanation of the ASC Findings 
and rating criteria for each ASC Finding category. The ASC Finding 
places particular emphasis on whether the State is maintaining an 
effective regulatory Program in compliance with Title XI.

------------------------------------------------------------------------
          ASC finding               Rating criteria       Review cycle*
------------------------------------------------------------------------
Excellent.....................   State meets    2-year.
                                 all Title XI mandates
                                 and complies with
                                 requirements of ASC
                                 Policy Statements.
                                 State
                                 maintains a strong
                                 regulatory Program.
                                 Very low risk
                                 of Program failure.
Good..........................   State meets    2-year.
                                 the majority of Title
                                 XI mandates and
                                 complies with the
                                 majority of ASC
                                 Policy Statement
                                 requirements.
                                 Deficiencies
                                 are minor in nature.
                                 State is
                                 adequately addressing
                                 deficiencies
                                 identified and
                                 correcting them in
                                 the normal course of
                                 business.
                                 State
                                 maintains an
                                 effective regulatory
                                 Program.
                                 Low risk of
                                 Program failure.

[[Page 31938]]

 
Needs Improvement.............   State does     2-year with
                                 not meet all Title XI   additional
                                 mandates and does not   monitoring.
                                 comply with all
                                 requirements of ASC
                                 Policy Statements.
                                 Deficiencies
                                 are material but
                                 manageable and if not
                                 corrected in a timely
                                 manner pose a
                                 potential risk to the
                                 Program.
                                 State may
                                 have a history of
                                 repeated deficiencies
                                 but is showing
                                 progress toward
                                 correcting
                                 deficiencies.
                                 State
                                 regulatory Program
                                 needs improvement.
                                 Moderate risk
                                 of Program failure.
Not Satisfactory..............   State does     1-year.
                                 not meet all Title XI
                                 mandates and does not
                                 comply with all
                                 requirements of ASC
                                 Policy Statements.
                                 Deficiencies
                                 present a significant
                                 risk and if not
                                 corrected in a timely
                                 manner pose a well-
                                 defined risk to the
                                 Program.
                                 State may
                                 have a history of
                                 repeated deficiencies
                                 and requires more
                                 supervision to ensure
                                 corrective actions
                                 are progressing.
                                 State
                                 regulatory Program
                                 has substantial
                                 deficiencies.
                                 Substantial
                                 risk of Program
                                 failure.
Poor \89\.....................   State does     Continuous
                                 not meet Title XI       monitoring.
                                 mandates and does not
                                 comply with
                                 requirements of ASC
                                 Policy Statements.
                                 Deficiencies
                                 are significant and
                                 severe, require
                                 immediate attention
                                 and if not corrected
                                 represent critical
                                 flaws in the Program.
                                 State may
                                 have a history of
                                 repeated deficiencies
                                 and may show a lack
                                 of willingness or
                                 ability to correct
                                 deficiencies.
                                 High risk of
                                 Program failure.
------------------------------------------------------------------------
*Program history or nature of deficiency may warrant a more accelerated
  Review Cycle.

    The ASC  has two primary Review Cycles: Two-year and one-year. 
Most States are scheduled on a two-year Review Cycle. States may be 
moved to a one-year Review Cycle if the ASC determines more frequent 
on-site Reviews are needed to ensure that the State maintains an 
effective Program. Generally, States are placed on a one-year Review 
Cycle because of non-compliance issues or serious areas of concerns 
that warrant more frequent on-site visits. Both two-year and one-
year Review Cycles include a review of all aspects of the State's 
Program.
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    \89\ An ASC Finding of ``Poor'' may result in significant 
consequences to the State. See Policy Statement 5, Reciprocity; see 
also Policy Statement 8, Interim Sanctions.
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    The ASC may conduct Follow-up Reviews and additional monitoring. 
A Follow-up Review focuses only on specific areas identified during 
the previous on-site Review. Follow-up Reviews usually occur within 
6-12 months of the previous Review. In addition, as a risk 
management tool, ASC staff identifies State Programs that may have a 
significant impact on the nation's appraiser regulatory system in 
the event of Title XI compliance issues. For States that represent a 
significant percentage of the credentials on the National Registry, 
ASC staff performs annual on-site Priority Contact visits. The 
primary purpose of the Priority Contact visit is to review topical 
issues, evaluate regulatory compliance issues, and maintain a close 
working relationship with the State. This is not a complete Review 
of the Program. The ASC will also schedule a Priority Contact visit 
for a State when a specific concern is identified that requires 
special attention. Additional monitoring may be required where a 
deficiency is identified and reports on required or agreed upon 
corrective actions are required monthly or quarterly. Additional 
monitoring may include on-site monitoring as well as off-site 
monitoring.

Appendix B--Glossary of Terms

    AQB Criteria: Refers to the Real Property Appraiser 
Qualification Criteria as established by the Appraiser 
Qualifications Board of the Appraisal Foundation setting forth 
minimum education, experience and examination requirements for the 
licensure and certification of real property appraisers, and minimum 
requirements for ``Trainee'' and ``Supervisory'' appraisers.
    Assignment: As referenced herein, for purposes of temporary 
practice, ``assignment'' means one or more real estate appraisals 
and written appraisal report(s) covered by a single contractual 
agreement.
    Complaint: As referenced herein, any document filed with, 
received by, or serving as the basis for possible inquiry by the 
State agency regarding alleged violation of Title XI, Federal or 
State law or regulation, or USPAP by a credentialed appraiser, 
appraiser applicant, or for allegations of unlicensed appraisal 
activity. A complaint may be in the form of a referral, letter of 
inquiry, or other document alleging appraiser misconduct or 
wrongdoing.
    Credentialed appraisers: Refers to State licensed, certified 
residential or certified general appraiser classifications.
    Disciplinary action: As referenced herein, corrective or 
punitive action taken by or on behalf of a State agency which may be 
formal or informal, or may be consensual or involuntary, resulting 
in any of the following:
    a. revocation of credential;
    b. suspension of credential;
    c. written consent agreements, orders or reprimands;
    d. probation or any other restriction on the use of a 
credential;
    e. fine;
    f. voluntary surrender in lieu of disciplinary action;
    g. other acts as defined by State statute or regulation as 
disciplinary.
    With the exception of voluntary surrender, suspension or 
revocation, such action may be exempt from reporting to the National 
Registry if defined by State statute, regulation or written policy 
as ``non-disciplinary.''
    Federally related transaction: Refers to any real estate related 
financial transaction which: (a) A Federal financial institutions 
regulatory agency engages in, contracts for, or regulates; and (b) 
requires the services of an appraiser. (See Title XI Sec.  1121 (4), 
12 U.S.C. 3350.)
    Federal financial institutions regulatory agencies: Refers to 
the Board of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, the Office of the Comptroller of the 
Currency, and the National Credit Union Administration. (See Title 
XI Sec.  1121 (6), 12 U.S.C. 3350.)
    Home State agency: As referenced herein, State agency or 
agencies that grant an appraiser a licensed or certified credential. 
Residency in the home State is not required. Appraisers may have 
more than one home State agency.
    Non-federally recognized credentials or designations: Refers to 
any State appraiser credential or designation other than State 
licensed, certified residential or certified general 
classifications, and trainee and supervisor classifications as 
defined in Policy Statement 1, and which is not recognized by the 
Federal regulators for purposes of their appraisal regulations.
    Real estate related financial transaction: Any transaction 
involving:
    (a) The sale, lease, purchase, investment in or exchange of real 
property, including interests in property, or the financing thereof;
    (b) the refinancing of real property or interests in real 
property; and
    (c) the use of real property or interests in property as 
security for a loan or investment, including mortgage-backed 
securities.

(See Title XI Sec.  1121 (5), 12 U.S.C. 3350.)

    State: Any State, the District of Columbia, the Commonwealth of 
Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, 
and the United States Virgin

[[Page 31939]]

Islands. (American Samoa does not have a Program.)
    State board: As referenced herein, ``State board'' means a group 
of individuals (usually appraisers, bankers, consumers, and/or real 
estate professionals) appointed by the Governor or a similarly 
positioned State official to assist or oversee State Programs. A 
State agency may be headed by a board, commission or an individual.
    Uniform Standards of Professional Appraisal Practice (USPAP): 
Refers to appraisal standards promulgated by the Appraisal Standards 
Board of the Appraisal Foundation establishing minimum requirements 
for development and reporting of appraisals, including real property 
appraisal. Title XI requires appraisals prepared by State certified 
and licensed appraisers to be performed in conformance with USPAP.
* * * * *

    Dated: May 2, 2013.

By the Appraisal Subcommittee.

Darrin Benhart,
Vice Chairman.
[FR Doc. 2013-12551 Filed 5-24-13; 8:45 am]
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