Appraisal Subcommittee; Proposed Revised Policy Statements, 43966-43983 [2017-19998]

Download as PDF 43966 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices CONTACT PERSON FOR MORE INFORMATION: Judith Ingram, Press Officer, Telephone: (202) 694–1220. Dayna C. Brown, Secretary and Clerk of the Commission. [FR Doc. 2017–20098 Filed 9–18–17; 11:15 am] BILLING CODE 6715–01–P FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL [Docket No. AS17–06] Appraisal Subcommittee; Proposed Revised Policy Statements Appraisal Subcommittee of the Federal Financial Institutions Examination Council. ACTION: Proposed Revised Policy Statements. AGENCY: The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council requests public comment on a proposal to revise ASC Policy Statements (proposed Policy Statements). The proposed Policy Statements provide guidance to ensure State appraiser regulatory programs comply with Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended, and the rules promulgated thereunder. The proposed Policy Statements would supersede the current ASC Policy Statements. The ASC previously published the Proposed Revised Policy Statements on January 10, 2017, under Docket Number AS17– 01. The comment period was scheduled to close on April 10, 2017. The ASC suspended the comment period in response to the White House Chief of Staff Memorandum titled Regulatory Freeze Pending Review, signed on January 20, 2017, pending review by the Office of Management and Budget (OMB). Technical edits for clarification have been made to the proposed Policy Statements since the initial publication, which are addressed below in Supplementary Information, section III, Statement-by-Statement. DATES: Comments must be received on or before November 20, 2017. ADDRESSES: Commenters are encouraged to submit comments by the Federal eRulemaking Portal or email, if possible. You may submit comments, identified by Docket Number AS17–06, by any of the following methods: • Federal eRulemaking Portal: https://www.Regulations.gov. Follow the instructions for submitting comments. Click on the ‘‘Help’’ tab on the Regulations.gov home page to get sradovich on DSKBBY8HB2PROD with NOTICES SUMMARY: VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 information on using Regulations.gov, including instructions for submitting public comments. • E-Mail: webmaster@asc.gov. Include the docket number in the subject line of the message. • Fax: (202) 289–4101. Include docket number on fax cover sheet. • Mail: Address to Appraisal Subcommittee, Attn: Lori Schuster, Management and Program Analyst, 1401 H Street NW., Suite 760, Washington, DC 20005. • Hand Delivery/Courier: 1401 H Street NW., Suite 760, Washington, DC 20005. In general, the ASC will enter all comments received into the docket and publish those comments on the Federal eRulemaking (Regulations.gov) Web site without change, including any business or personal information that you provide, such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. At the close of the comment period, all public comments will also be made available on the ASC’s Web site at https://www.asc.gov (follow link in ‘‘What’s New’’) as submitted, unless modified for technical reasons. You may review comments by any of the following methods: • Viewing Comments Electronically: Go to https://www.Regulations.gov. Enter ‘‘Docket ID AS17–06’’ in the Search box and click ‘‘Search.’’ Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period. • Viewing Comments Personally: You may personally inspect comments at the ASC office, 1401 H Street NW., Suite 760, Washington, DC 20005. To make an appointment, please call Lori Schuster at (202) 595–7578. FOR FURTHER INFORMATION CONTACT: James R. Park, Executive Director, at (202) 595–7575, or Alice M. Ritter, General Counsel, at (202) 595–7577, Appraisal Subcommittee, 1401 H Street NW., Suite 760, Washington, DC 20005. SUPPLEMENTARY INFORMATION: I. Background Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act PO 00000 Frm 00035 Fmt 4703 Sfmt 4703 of 1989, as amended (Title XI), established the 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.2 Pursuant to Title XI, one of the ASC’s core functions is to monitor the requirements established by the States 3 for certification and licensing of appraisers qualified to perform appraisals in connection with federally related transactions. This is accomplished through periodic ASC Compliance Reviews of each State appraiser regulatory program (Appraiser Program) to determine compliance or lack thereof with Title XI, and to assess implementation of minimum requirements for credentialing of appraisers as adopted by the Appraiser Qualifications Board (The Real Property Appraiser Qualification Criteria or AQB Criteria). Title XI as amended by the DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) 4 expanded the ASC’s core functions to include monitoring of the requirements established by States that elect to register and supervise the operations and activities of appraisal management companies 5 (AMCs). States electing to register and supervise AMCs must implement minimum requirements in accordance with the AMC Rule.6 As a result, States with an 1 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 [Board], Consumer Financial Protection Bureau [CFPB], Federal Deposit Insurance Corporation [FDIC], Office of the Comptroller of the Currency [OCC], and National Credit Union Administration [NCUA]). The other two members are designated by the heads of the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA). 2 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. (Title XI § 1121(4), 12 U.S.C. 3350.) 3 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. 4 Public Law 111–203, 124 Stat. 1376. 5 Title XI § 1103(a)(1)(B), 12 U.S.C. 3332. 6 The Dodd-Frank Act added section 1124 to Title XI, Appraisal Management Company Minimum Requirements, which required the OCC, Board, FDIC, NCUA, CFPB, and FHFA to establish, by rule, minimum requirements for the registration and supervision of AMCs by States that elect to register and supervise AMCs pursuant to Title XI and the rules promulgated thereunder. (Title XI § 1124(a), 12 U.S.C. 3353(a).) Those rules were finalized and published on June 9, 2015, at 80 Federal Register 32658 with an effective date of August 10, 2015. (12 CFR 34.210–34.216; 12 CFR 225.190–225.196; 12 CFR 323.8–323.14; 12 CFR 1222.20–1222.26) E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices AMC regulatory program (AMC Program) will be evaluated during the ASC’s Compliance Review to determine compliance or lack thereof with Title XI, and to assess implementation of the minimum requirements for State registration and supervision of AMCs as established by the AMC Rule. The amendments to Title XI by the DoddFrank Act also allow States with an AMC Program to add information about AMCs in their State to the National Registry of AMCs (AMC Registry). The proposed Policy Statements include guidance to the States regarding how AMC Programs will be evaluated during ASC Compliance Reviews. II. Overview of Proposed Policy Statements The ASC is issuing these proposed Policy Statements 7 in three parts to provide States with the necessary information to maintain their Appraiser Programs and AMC Programs in compliance with Title XI and the rules promulgated thereunder: ➢ Part A, Appraiser Program—Policy Statements 1 through 7 correspond with the categories that are: (a) Evaluated during the Appraiser Program Compliance Review; and (b) included in the ASC’s Compliance Review Report of the Appraiser Program. ➢ Part B, AMC Program—Policy Statements 8 through 11 correspond with the categories that are: (a) Evaluated during the AMC Program Compliance Review; and (b) included in the ASC’s Compliance Review Report of the AMC Program. ➢ Part C, Interim Sanctions—Policy Statement 12 sets forth required procedures in the event that interim sanctions are imposed against a State by the ASC for non-compliance in either the Appraiser Program or the AMC Program. The proposal also includes two appendices: 1. Appendix A provides an overview of the Compliance Review process; and 2. Appendix B provides a glossary of terms. III. Statement-by-Statement The following provides a section by section highlight of changes presented in the proposed Policy Statements. sradovich on DSKBBY8HB2PROD with NOTICES Introduction and Purpose The ASC proposes to expand the introduction to include the monitoring of States that elect to register and supervise the operations and activities 7 These Policy Statements, adopted [date to be inserted when final], supersede all previous Policy Statements adopted by the ASC. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 of AMCs, and to include an explanation of the proposed Policy Statements’ three parts and appendices. Part A: Appraiser Program Policy Statement 1: Statutes, Regulations, Policies and Procedures Governing State Appraiser Programs The ASC proposes to modify Policy Statement 1 to include a definition of trainee appraiser to better reflect how changes to Title XI affect Appraiser Programs with trainee requirements. Policy Statement 2: Temporary Practice The ASC proposes to modify Policy Statement 2 to clarify requirements for temporary practice and includes requirements to track temporary practice permits and maintain documentation. Policy Statement 3: National Registry of Appraisers The ASC proposes to modify Policy Statement 3 to clarify requirements regarding States’ submission of registry fees and eligibility of appraisers for the Appraiser Registry. Technical edits for clarification were made to Policy Statement 3 since the initial publication. The Summary of Requirements include the 5-day reporting requirement for disciplinary action consistent with the body of the Policy Statement, and clarify the requirement for States to adopt and implement a policy to protect right of access to the Appraiser Registry. Policy Statement 4: Application Process The ASC proposes to modify Policy Statement 4 to include additional guidance to States implementing AQB Criteria regarding the background of applicants for credentials and requires States to document applicant files with evidence supporting decisions made regarding individual appraisers. Policy Statement 4 as proposed also provides additional guidance on requirements for States to validate renewal requirements for appraisers and provides parameters for auditing education-related affidavits. Finally, Policy Statement 4 as proposed clarifies the requirement that States engage analysts who are knowledgeable about the Uniform Standards of Professional Appraisal Practice (USPAP) and document how the analysts are qualified. Technical edits for clarification were made to Policy Statement 4 since the initial publication. The section titled Processing of Applications refers to ‘‘documentation’’ required rather than ‘‘files.’’ In the section titled ‘‘Validation Procedures, Objectives and Requirements,’’ the subsection PO 00000 Frm 00036 Fmt 4703 Sfmt 4703 43967 ‘‘Selection of Work Product’’ is renamed ‘‘Experience Hours Validation’’ to more accurately reflect the content of the subsection, and compliance with USPAP is moved to the following subsection titled ‘‘USPAP Compliance’’; the subsection ‘‘Determination of Experience Time Periods’’ no longer restates AQB Criteria, but rather requires that time periods conform with AQB Criteria; and ‘‘Supporting Documentation’’ clarifies documentation required. The Summary of Requirements were modified to conform with these technical edits. Policy Statement 5: Reciprocity The ASC proposes to modify Policy Statement 5 to include a requirement that States obtain and maintain sufficient relevant documentation pertaining to an application for issuance of a credential by reciprocity. Policy Statement 6: Education The ASC proposes to modify Policy Statement 6 to clarify that States may not continue to accept AQB approved courses after the AQB’s expiration date unless the course content is reviewed and approved by the State. Policy Statement 7: State Agency Enforcement The ASC proposes to modify Policy Statement 7 to clarify the requirement that States consider USPAP violations when investigating a complaint whether or not USPAP violations were the basis for the complaint. Technical edits for clarification were made to Policy Statement 7 since the initial publication. A footnote was added to clarify that the one-year period for resolution of complaints is not intended to have the impact of a statute of limitation. Part B: AMC Program As proposed, Policy Statements 8, 9 & 10 duplicate the provisions of Policy Statements 1, 3 & 7 to every extent possible. The standard language is intentional and will create better understanding of the Policy Statements by the States as they will be able to anticipate how to comply based on their understanding of the Policy Statements they have been following. Differences are discussed below. Policy Statement 8: Statutes, Regulations, Policies and Procedures Governing State AMC Programs The ASC proposes a new Policy Statement 8 to reflect the statutory provision that States are not required to establish an AMC Program, but clarify for those States that establish AMC E:\FR\FM\20SEN1.SGM 20SEN1 43968 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices Programs the ASC oversight during ASC Compliance Reviews. As proposed, Policy Statement 8 reiterates that States with an AMC Program must: (1) Establish and maintain an AMC Program with the legal authority and mechanisms consistent with the AMC Rule; (2) impose requirements on AMCs consistent with the AMC Rule; and (3) enforce and document ownership limitations for State-registered AMCs. As proposed, Policy Statement 8 informs States that while they may have a more expansive definition of an AMC in their State statute, only AMCs that meet the federal definition in Title XI may be included on the AMC Registry. Policy Statement 9: National Registry of AMCs (AMC Registry) The ASC proposes a new Policy Statement 9 to clarify requirements for States with an AMC Program to maintain the AMC Registry in the same way they maintain the Appraiser Registry. Technical edits for clarification were made to Policy Statement 9 since the initial publication. The Summary of Requirements includes the requirement for States to adopt and implement a policy to protect right of access to the AMC Registry. Policy Statement 10: State Agency Enforcement The ASC proposes a new Policy Statement 10 to clarify requirements for States’ AMC enforcement programs in those States with an AMC Program. Policy Statement 11: Statutory Implementation Period The ASC proposes a new Policy Statement 11 to clarify the statutory implementation period and any extensions that may be granted. Part C: Interim Sanctions sradovich on DSKBBY8HB2PROD with NOTICES Policy Statement 12: Interim Sanctions The ASC proposes a new Policy Statement 12 which modifies existing Policy Statement 8 to clarify interim sanctions which may be imposed on State Programs when those programs fail to be effective. The proposed procedures include due process provisions and rules of evidence, and would establish timeliness for proceedings. IV. Request for Comment The ASC seeks comment on all aspects of the proposed Policy Statements. In addition, the ASC requests comments on whether the proposed Policy Statements provide State Programs with the necessary information to understand the ASC’s VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 expectations during a Compliance Review. The text of the proposed Policy Statements is as follows: Contents Introduction and Purpose Part A: Appraiser Program Policy Statement 1 Statutes, Regulations, Policies and Procedures Governing State Appraiser Programs A. State Regulatory Structure B. Funding and Staffing C. Minimum Criteria D. Federally Recognized Appraiser Classifications E. Non-Federally Recognized Credentials F. Appraisal Standards G. Exemptions H. ASC Staff Attendance at State Board Meetings I. Summary of Requirements Policy Statement 2 Temporary Practice A. Requirement for Temporary Practice B. Excessive Fees or Burdensome Requirements C. Summary of Requirements Policy Statement 3 National Registry of Appraisers A. Requirements for the National Registry of Appraisers B. Registry Fee and Invoicing Policies C. Access to Appraiser Registry Data D. Information Sharing E. Summary of Requirements Policy Statement 4 Application Process A. Processing of Applications B. Qualifying Education for Initial or Upgrade Applications C. Continuing Education for Reinstatement and Renewal Applications D. Experience for Initial or Upgrade Applications E. Examination F. Summary of Requirements Policy Statement 5 Reciprocity A. Reciprocity Policy B. Application of Reciprocity Policy C. Appraiser Compliance Requirements D. Well-Documented Application Files E. Summary of Requirements Policy Statement 6 Education A. Course Approval B. Distance Education C. Summary of Requirements Policy Statement 7 State Agency Enforcement A. State Agency Regulatory Program B. Enforcement Process C. Summary of Requirements Part B: AMC Program Policy Statement 8 Statutes, Regulations, Policies and Procedures Governing State AMC Programs A. Participating States and ASC Oversight B. Relation to State Law C. Funding and Staffing D. Minimum Requirements for Registration and Supervision of AMCs as Established by the AMC Rule PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 E. Summary of Requirements Policy Statement 9 National Registry of AMCs (AMC Registry) A. Requirements for the AMC Registry B. Registry Fee and Invoicing Policies C. Reporting Requirements D. Access to AMC Registry Data E. Summary of Requirements Policy Statement 10 State Agency Enforcement A. State Agency Regulatory Program B. Enforcement Process C. Summary of Requirements Policy Statement 11 Statutory Implementation Period Part C: Interim Sanctions Policy Statement 12 Interim Sanctions A. Authority B. Opportunity to be Heard or Correct Conditions C. Procedures Appendices Appendix A—Compliance Review Process Appendix B—Glossary of Terms Introduction and Purpose Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 as amended (Title XI) established the Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC).8 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. Pursuant to Title XI, one of the ASC’s core functions is to monitor the requirements established by the States 9 for certification and licensing of appraisers qualified to perform appraisals in connection with federally related transactions.10 Title XI as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) 11 expanded the ASC’s core functions to include monitoring of the requirements established by States that elect to 8 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, Bureau of Consumer Financial Protection, 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. 9 See Appendix B, Glossary of Terms, for the definition of ‘‘State.’’ 10 See Appendix B, Glossary of Terms, for the definition of ‘‘federally related transaction.’’ 11 Public Law. 111–203, 124 Stat. 1376. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices register and supervise the operations and activities of appraisal management companies 12 (AMCs).13 The ASC performs periodic Compliance Reviews 14 of each State appraiser regulatory program (Appraiser Program) to determine compliance or lack thereof with Title XI, and to assess implementation of minimum requirements for credentialing of appraisers as adopted by the Appraiser Qualifications Board (The Real Property Appraiser Qualification Criteria or AQB Criteria). As a result of the Dodd-Frank Act amendments to Title XI, States with an AMC regulatory program (AMC Program) will be evaluated during the Compliance Review to determine compliance or lack thereof with Title XI, and to assess implementation of the minimum requirements for State registration and supervision of AMCs as established by the AMC Rule.15 The ASC is issuing these revised Policy Statements 16 in three parts to provide States with the necessary information to maintain their Appraiser Programs and AMC Programs in compliance with Title XI: ➢ Part A, Appraiser Program—Policy Statements 1 through 7 correspond with the categories that are: (a) Evaluated during the Appraiser Program Compliance Review; and (b) included in the ASC’s Compliance Review Report of the Appraiser Program. ➢ Part B, AMC Program—Policy Statements 8 through 11 correspond with the categories that are: (a) Evaluated during the AMC Program Compliance Review; and (b) included in the ASC’s Compliance Review Report of the AMC Program. ➢ Part C, Interim Sanctions—Policy Statement 12 sets forth required procedures in the event that interim sanctions are imposed against a State by the ASC for non-compliance in either sradovich on DSKBBY8HB2PROD with NOTICES 12 Title XI § 1103(a)(1)(B), 12 U.S.C. 3332. 13 See Appendix B, Glossary of Terms, for the definition of ‘‘appraisal management company’’ or AMC. 14 See Appendix A, Compliance Review Process. 15 The Dodd-Frank Act required the Office of the Comptroller of the Currency; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; National Credit Union Administration; Bureau of Consumer Financial Protection; and Federal Housing Finance Agency to establish, by rule, minimum requirements to be imposed by a participating State appraiser certifying and licensing agency on AMCs doing business in the State. (Title XI § 1124(a), 12 U.S.C. 3353(a).) Those rules were finalized and published on June 9, 2015, at 80 Federal Register 32658 with an effective date of August 10, 2015. (12 CFR 34.210–34.216; 12 CFR 225.190–225.196; 12 CFR 323.8–323.14; 12 CFR 1222.20–1222.26.) 16 These Policy Statements, adopted [date to be inserted when final], supersede all previous Policy Statements adopted by the ASC. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 the Appraiser Program or the AMC Program. Part A: Appraiser Program Policy Statement 1 Statutes, Regulations, Policies and Procedures Governing State Appraiser 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.17 The ASC recognizes that each State may have legal, fiscal, regulatory or other factors that may influence the structure and organization of its Appraiser Program. Therefore, a State has flexibility to structure its Appraiser Program so long as it meets its Title XI-related responsibilities. 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 18 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, Appraiser 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. B. Funding and Staffing The 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 Appraiser 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 an Appraiser Program’s effectiveness, including the adequacy of State boards, committees, or commissions responsible for carrying out Title XI-related duties. 17 Title XI § 1118(a), 12 U.S.C. 3347. Appendix B, Glossary of Terms, for the definition of ‘‘State board.’’ 18 See PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 43969 C. Minimum Criteria Title XI requires States to adopt and/ or implement all relevant AQB Criteria. Requirements established by a State for certified residential or certified general appraisers, as well as requirements established for licensed appraisers, trainee appraisers and supervisory appraisers must meet or exceed applicable AQB Criteria. D. Federally Recognized Appraiser Classifications 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. State Licensed Appraisers ‘‘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. The permitted scope of practice and designation for State licensed appraisers must be consistent with State and Federal laws, including regulations and supplementary guidance. Trainee Appraisers ‘‘Trainee appraisers’’ means those individuals who have satisfied the requirements for credentialing in a State whose criteria for credentialing meet or exceed the applicable minimum AQB Criteria. Any minimum qualification requirements established by a State for individuals in the position of ‘‘trainee appraiser’’ or ‘‘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. The permitted scope of practice and designation for trainee 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 trainee, State licensed, certified residential or E:\FR\FM\20SEN1.SGM 20SEN1 43970 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices certified general 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. sradovich on DSKBBY8HB2PROD with NOTICES E. Non-Federally Recognized Credentials States using non-federally recognized credentials or designations 19 must ensure that they are easily distinguished from the federally recognized credentials. 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.20 States that have incorporated USPAP into State law should ensure that statutes or regulations are updated timely to adopt the current version of USPAP, or if State law allows, automatically incorporate the latest version of USPAP as it becomes effective. States should consider ASB Advisory Opinions, Frequently Asked Questions, and other written guidance issued by the ASB regarding interpretation and application of USPAP. 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 19 See Appendix B, Glossary of Terms, for the definition of ‘‘non-federally recognized credentials or designations.’’ 20 See Appendix B, Glossary of Terms for the definition of ‘‘Uniform Standards of Professional Appraisal Practice.’’ VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 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. G. Exemptions Title XI and the Federal financial institutions regulatory agencies’ regulations specifically require the use of State certified or licensed appraisers in connection with the appraisal of certain real estate-related financial transactions.21 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. H. ASC Staff Attendance at State Board Meetings 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 Appraiser Program. 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. 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 concerning 21 Title XI § 1112, 12 U.S.C. 3341; Title XI § 1113, 12 U.S.C. 3342; Title XI § 1114, 12 U.S.C. 3343. PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 the privacy of individuals and any confidential matters. I. Summary of Requirements 1. States must require that appraisals be performed in accordance with the latest version of USPAP.22 2. States must, at a minimum, adopt and/or implement all relevant AQB Criteria.23 3. States must have policies, practices and procedures consistent with Title XI.24 4. States must have funding and staffing sufficient to carry out their Title XI-related duties.25 5. States must use proper designations and permitted scope of practice for certified residential; certified general; licensed; and trainee classifications.26 6. State board members, and any persons in policy or decision-making positions, must perform their responsibilities consistent with Title XI.27 7. States’ certification and licensing requirements must meet the minimum requirements set forth in Title XI.28 8. State requirements for trainee appraisers and supervisory appraisers must meet or exceed the AQB Criteria. 9. State agencies must be granted adequate authority by the State to maintain an effective regulatory Appraiser Program in compliance with Title XI.29 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 30 for a federally related transaction. States are not, however, required to grant temporary practice permits to trainee appraisers. The outof-State appraiser must register with the State agency in the State of temporary practice (Host State). A State may determine the process necessary for 22 Title XI § 1101, 12 U.S.C. 3331; Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 23 Title XI §§ 1116(a), (c) and (e), 12 U.S.C. 3345; Title XI § 1118(a), 12 U.S.C. 3347. 24 Title XI § 1118(a), 12 U.S.C. 3347. 25 Id; Title XI § 1118(b), 12 U.S.C. 3347. 26 Title XI §§ 1116(a), (c) and (e), 12 U.S.C. 3345; Title XI § 1118(a), 12 U.S.C. 3347; Title XI § 1113, 12 U.S.C. 3342; AQB Real Property Appraiser Qualification Criteria. 27 Title XI § 1118(a), 12 U.S.C. 3347. 28 Title XI §§ 1116(a), (c) and (e), 12 U.S.C. 3345. 29 Title XI § 1118(b), 12 U.S.C. 3347. 30 See Appendix B, Glossary of Terms, for the definition of ‘‘assignment.’’ E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices sradovich on DSKBBY8HB2PROD with NOTICES ‘‘registration’’ provided such process complies with Title XI and does not impose ‘‘excessive fees or burdensome requirements,’’ as determined by the ASC.31 Thus, a credentialed appraiser 32 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 of Appraisers to verify credential status on applicants for temporary practice. 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.33 Adherence by State agencies to the following mandates and prohibitions will deter the imposition of excessive fees or burdensome requirements. 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 permit’s effective date; 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 34 in the case of disciplinary action concerning a temporary practitioner; f. allow at least one temporary practice permit extension through a streamlined process; g. track all temporary practice permits using a permit log which includes the name of the applicant, date application received, date completed application received, date of issuance, and date of expiration, if any (States are strongly encouraged to maintain this information in an electronic, sortable format); and 31 Title XI § 1122(a)(2), 12 U.S.C. 3351. Appendix B, Glossary of Terms, for the definition of ‘‘credentialed appraisers.’’ 33 Title XI § 1122(a)(2), 12 U.S.C. 3351. 34 See Appendix B, Glossary of Terms, for the definition of ‘‘home State agency.’’ 32 See VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 h. maintain documentation sufficient to demonstrate compliance with this Policy Statement. Host State agencies may not: a. Limit the valid time period of a temporary practice permit to less than 6 months (unless the applicant requests a specific end date and the applicant is allowed an extension if required to complete the assignment, the applicant’s credential is no longer in active status during that period of time); b. limit an appraiser to one temporary practice permit per calendar year; 35 c. charge a temporary practice permit fee exceeding $250, including one extension fee; d. impose State appraiser qualification requirements for education, experience and/or exam upon temporary practitioners; 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. 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 consider and, if appropriate, take disciplinary action when one of its certified or licensed appraisers is disciplined by another State. 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.36 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.37 35 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. 36 Title XI § 1122(a)(1), 12 U.S.C. 3351. 37 Title XI § 1122(a)(2), 12 U.S.C. 3351. PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 43971 Policy Statement 3 National Registry of Appraisers A. Requirements for the National Registry of Appraisers 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 (Appraiser Registry).38 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 and certifications, sanctions, disciplinary actions, revocations and suspensions; and (3) the registry fee as set by the ASC 39 from individuals who have received certification or licensing. States must notify the ASC as soon as practicable if a credential holder listed on the Appraiser Registry does not qualify for the credential held. 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 licensed appraisers in active status on the Appraiser Registry are eligible to perform appraisals in connection with federally related transactions. Only those appraisers whose registry fees have been transmitted to the ASC will be eligible to be on the Appraiser Registry for the period subsequent to payment of the fee. 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 Appraiser Program must ensure that any potential user of that appraiser’s services is aware that the appraiser is not eligible to perform appraisals for federally related transactions. The Appraiser Program must place a conspicuous notice directly on the face of any evidence of the appraiser’s authority to appraise 38 Title XI § 1103(a)(3), 12 U.S.C. 3332. XI § 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 § 1109(a), 12 U.S.C. 3338.) 39 Title E:\FR\FM\20SEN1.SGM 20SEN1 43972 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices stating, ‘‘Not Eligible To Appraise Federally Related Transactions,’’ and the appraiser must not be listed in active status on the Appraiser Registry. The ASC extranet application allows States to update their appraiser credential information directly to the Appraiser 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 Appraiser Registry entries. Designated State personnel are required to protect the right of access, and not share their User Name or Password with anyone. States 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 Appraiser Registry. sradovich on DSKBBY8HB2PROD with NOTICES 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 Appraiser 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 Appraiser Registry only for the number of years for which the ASC has received payment. Nonpayment by a State of an appraiser’s registry fee may result in the status of that appraiser being listed as ‘‘inactive.’’ States must reconcile and pay registry invoices in a timely manner (45 calendar days after the invoice date). 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 Appraiser Registry, for whatever the reason, renders an appraiser ineligible to perform appraisals in connection with federally related transactions. C. Access to Appraiser Registry Data The ASC Web site provides free access to the public portion of the Appraiser Registry at www.asc.gov. The public portion of the Appraiser 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 VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 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 must 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 Appraiser 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 Appraiser 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. States must report all disciplinary action 40 taken against an appraiser to the ASC via the extranet application within 5 business days after the disciplinary action is final, as determined by State law.41 States not reporting via the extranet application must provide, in writing to the ASC, a description of the circumstances preventing compliance with this requirement.42 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 appraiser’s status must be changed on the Appraiser Registry to ‘‘inactive,’’ 40 See Appendix B, Glossary of Terms, for the definition of ‘‘disciplinary action.’’ 41 Id. 42 Title XI § 1118(a), 12 U.S.C. 3347. PO 00000 Frm 00041 Fmt 4703 Sfmt 4703 thereby making the appraiser ineligible to perform appraisals for federally related transactions or other transactions requiring the use of State certified or licensed appraisers.43 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 registry invoices in a timely manner (45 calendar days after the invoice date).44 2. States must report all disciplinary action taken against an appraiser to the ASC via the extranet application within 5 business days after the disciplinary action is final, as determined by State law.45 3. States not reporting via the extranet application must provide, in writing to the ASC, a description of the circumstances preventing compliance with this requirement.46 4. 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 appraiser’s status must be changed on the Appraiser 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.47 5. 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.48 6. States must ensure that the authorization information provided to the ASC is updated and accurate.49 7. States must adopt and implement a written policy to protect the right of access to the Appraiser Registry, as well as the ASC issued User Name and Password.50 43 Id. 44 Title XI § 1118(a), 12 U.S.C. 3347; Title XI § 1109(a), 12 U.S.C. 3338. 45 Id. 46 Title XI § 1118(a), 12 U.S.C. 3347. 47 Id. 48 Id. 49 Id. 50 Id. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices 8. States must ensure the accuracy of all data submitted to the Appraiser Registry.51 9. States must submit appraiser data (other than discipline) 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.52 10. 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.53 Policy Statement 4 sradovich on DSKBBY8HB2PROD with NOTICES Application Process AQB Criteria sets forth the minimum education, experience and examination requirements applicable to all States for credentialing of real property appraisers (certified, licensed, trainee and supervisory). 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.54 Effective January 1, 2017, AQB Criteria also requires States to assess whether an applicant for a real property appraiser credential possesses a background that would not call into question public trust. The basis for such assessment shall be a matter left to the individual States, and must, at a minimum, be documented to the file. A. Processing of Applications States must process applications in a consistent, equitable and welldocumented manner. Applications for credentialing should be timely processed by State agencies (within 90 calendar days after receipt of a completed application). Any delay in the processing of applications must be sufficiently documented in the file to explain the delay. States must ensure appraiser credential applications submitted for processing do not contain invalid examinations as established by AQB Criteria. States must obtain and maintain sufficient relevant documentation pertaining to an application for issuance, upgrade and renewal of a credential so as to enable understanding of the facts and determinations in the 51 Id. 52 Id. 53 Id. 54 Includes applications for credentialing of trainee, licensed, certified residential or certified general classifications. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 matter and the reasons for those determinations. Documentation must include: 1. Application receipt date; 2. Education; 3. Experience; 4. Examination; 5. Continuing education; and 6. Any administrative or disciplinary action taken in connection with the application process, including results of any continuing education audit. 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. States may not accept an affidavit for claimed qualifying education from applicants for any federally recognized credential.55 States must maintain adequate documentation to support verification of education claimed by applicants. 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. States may not accept an affidavit for continuing education claimed from applicants for reinstatement. Applicants for reinstatement must submit documentation to support claimed continuing education and 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 55 If a State accepts education-related affidavits from applicants for initial licensure in any noncertified 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. PO 00000 Frm 00042 Fmt 4703 Sfmt 4703 43973 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 selected from each federally recognized credential level 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 (1) Validation must include a prompt post-approval audit. Each audit of an affidavit for continuing education credit claimed must be completed within 60 business days from the date the credential is scheduled for renewal (based on the credential’s expiration date). To ensure the audit is a statistically relevant representation, a sampling of credentials that were renewed after the scheduled expiration date and/or beyond the date the sample was selected, must also be audited to ensure that a credential holder may not avoid being selected for a continuing education audit by renewing early or late. (2) States must audit the continuing education-related affidavit for each credentialed appraiser selected in the sampling procedure. (3) States must determine that 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, and the appraiser has failed to complete any remedial action offered, 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 within five (5) business days after taking such action in order for the appraiser’s record on the Appraiser Registry to be updated appropriately. (5) If a State determines that a renewal applicant knowingly falsely attested to completing the continuing education E:\FR\FM\20SEN1.SGM 20SEN1 43974 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices required by AQB Criteria, the State must take appropriate administrative and/or disciplinary action and report such action, if deemed to be discipline, to the ASC within five (5) business days. (6) If more than ten percent of the audited appraisers fail to meet the AQB Criteria, the State must take remedial action 56 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. (7) In the case of a renewal being processed after the credential’s expiration date, but within the State’s allowed grace period for a late renewal, the State must establish a reliable process to audit affidavits for continuing education (e.g., requiring documentation of all continuing education). 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 any federally recognized credential.57 sradovich on DSKBBY8HB2PROD with NOTICES 56 For 18:28 Sep 19, 2017 Jkt 241001 States must implement a reliable validation procedure to verify that each applicant’s experience meets AQB Criteria, including but not limited to, being USPAP compliant and containing the required number of hours and months. 2. Validation Procedures, Objectives and Requirements a. Experience Hours Validation States must determine the hours and time period claimed on the experience log are accurate. Appraiser Program staff or State board members must select the work product to validate the experience hours claimed; applicants may not have any role in this selection process. b. USPAP Compliance States must analyze a representative sample of the applicant’s work product for compliance with USPAP. 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 be knowledgeable about appraisal practice and USPAP, and States must be able to document how such persons are so qualified. c. Determination of Experience Time Periods Experience time periods must conform to requirements set forth in the AQB Criteria for the credential sought. d. Supporting Documentation example: (1) A State may conduct an additional audit using a higher percentage of audited appraisers; or (2) a State may publicly post action taken to sanction non-compliant appraisers to increase awareness in the appraiser community of the importance of compliance with continuing education requirements. 57 See Policy Statement 1D and E for discussion of ‘‘federally recognized credential’’ and ‘‘nonfederally recognized credential.’’ If prior to July 1, 2013, a State accepted experience-related affidavits from applicants for initial licensure in any noncertified 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. VerDate Sep<11>2014 1. Validation Required 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 to validate the experience hours claimed and each appraisal assignment analyzed by the State for USPAP compliance, 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 PO 00000 Frm 00043 Fmt 4703 Sfmt 4703 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 welldocumented manner.58 2. States must ensure appraiser credential applications submitted for processing do not contain invalid examinations as established by AQB Criteria.59 3. States must obtain and maintain sufficient relevant documentation pertaining to an application for issuance, upgrade or renewal of a credential so as to enable understanding of the facts and determinations in the matter and the reasons for those determinations.60 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.61 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.62 3. States must maintain adequate documentation to support verification.63 4. States may not accept an affidavit for education claimed from applicants for any federally recognized credential.64 5. States may not accept an affidavit for continuing education claimed from applicants for reinstatement.65 6. States may accept affidavits for continuing education credit claimed for credential renewal so long as the State implements a reliable validation procedure.66 7. Audits of affidavits for continuing education credit claimed must be completed within sixty (60) business days from the date the credential is scheduled for renewal (based on the credential’s expiration date).67 8. In the case of a renewal being processed after the credential’s 58 Title XI § 1118(a), 12 U.S.C. 3347. XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 60 Title XI § 1118(a), 12 U.S.C. 3347. 61 Id. 62 Id. 63 Title XI § 1118(a), 12 U.S.C. 3347. 64 Id. 65 Id. 66 Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 67 Title XI § 1118(a), 12 U.S.C. 3347. 59 Title E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices expiration date, but within the State’s allowed grace period for a late renewal, the State must establish a reliable process to audit affidavits for continuing education (e.g., requiring documentation of all continuing education).68 9. States are required to take remedial action when it is determined that more than ten percent of audited appraiser’s affidavits for continuing education credit claimed fail to meet the minimum AQB Criteria.69 10. States are required to take appropriate administrative and/or disciplinary action when it is determined that an applicant knowingly falsely attested to completing continuing education.70 11. When a State determines that an appraiser’s continuing education does not meet AQB Criteria, and the appraiser has failed to complete any remedial action offered, 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 within five (5) business days after taking such action in order for the appraiser’s record on the Appraiser Registry to be updated appropriately.71 Experience 1. States may not accept an affidavit for experience credit claimed from applicants for any federally recognized credential.72 2. States must ensure that appraiser experience logs conform to AQB Criteria.73 3. States must use a reliable means of validating appraiser experience claims on all initial or upgrade applications for appraiser credentialing.74 4. States must select the work product to validate the experience hours claimed on all initial or upgrade applications for appraiser credentialing.75 5. States must analyze a representative sample of the applicant’s work product for compliance with USPAP on all initial or upgrade applications for appraiser credentialing.76 6. States must exercise due diligence in determining whether submitted documentation of experience or work product demonstrates compliance with USPAP on all initial or upgrade applications for appraiser credentialing.77 7. Persons analyzing work product for USPAP compliance must be knowledgeable about appraisal practice and USPAP, and States must be able to document how such persons are so qualified.78 8. Experience time periods must conform to requirements set forth in the AQB Criteria for the credential sought.79 Examination 1. States must ensure that an appropriate AQB-approved qualifying examination is administered for each of the federally recognized credentials requiring an examination.80 Policy Statement 5 Reciprocity A. Reciprocity Policy Title XI contemplates the reasonably free movement of certified and licensed appraisers across State lines. The ASC monitors Appraiser Programs for compliance with the reciprocity provision of Title XI as amended by the Dodd-Frank Act.81 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: 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 82 meet or exceed those of the reciprocal credentialing State (Reciprocal State).83 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 obtaining reciprocal credentials. For purposes of implementing the reciprocity policy, States with an ASC sradovich on DSKBBY8HB2PROD with NOTICES 68 Id. 69 Id. 77 Id. 70 Id. 78 Id. 71 Id. 72 Id. 73 Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 74 Title XI § 1118(a), 12 U.S.C. 3347. 75 Title XI § 1118(a), 12 U.S.C. 3347. 76 Id. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 79 Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 80 Id. 81 Title XI § 1122(b), 12 U.S.C. 3351. 82 As they exist at the time of application for reciprocal credential. 83 Id. PO 00000 Frm 00044 Fmt 4703 Sfmt 4703 43975 Finding 84 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.’’ 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). Example 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. Example 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. Example 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 84 See Appendix A, Compliance Review Process, for an explanation of ASC Findings. E:\FR\FM\20SEN1.SGM 20SEN1 43976 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices 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.85 D. Well-Documented Application Files States must obtain and maintain sufficient relevant documentation pertaining to an application for issuance of a credential by reciprocity so as to enable understanding of the facts and determinations in the matter and the reasons for those determinations. E. Summary of Requirements 1. States 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 in order for the State’s appraisers to be eligible to perform appraisals for federally related transactions.86 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.87 3. States must obtain and maintain sufficient relevant documentation pertaining to an application for issuance of a credential by reciprocity so as to enable understanding of the facts and determinations in the matter and the reasons for those determinations.88 Policy Statement 6 Education sradovich on DSKBBY8HB2PROD with NOTICES 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.) 85 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. 86 Title XI § 1122(b), 12 U.S.C. 3351. 87 Id. 88 Title XI § 1118(a), 12 U.S.C. 3347. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 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 AQBapproved organization providing approval of course design and delivery. States may not continue to accept AQB approved courses after the AQB’s expiration date unless the course content is reviewed and approved by the State. States should ensure that educational providers are afforded equal treatment in all respects.89 States are encouraged 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, including secondary providers, has been approved by an AQB-approved organization providing approval of course design and delivery. States may not continue to accept courses after the AQB-approved organization’s approval of course design and delivery date has expired. C. Summary of Requirements 1. States must ensure that appraiser education courses are consistent with AQB Criteria.90 2. States must maintain sufficient documentation to support that approved appraiser courses conform to AQB Criteria.91 3. States must ensure the delivery mechanism for distance education courses offered by a non-academic provider, including secondary providers, has been approved by an AQB-approved organization providing 89 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. 90 Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 91 Title XI § 1118(a), 12 U.S.C. 3347. PO 00000 Frm 00045 Fmt 4703 Sfmt 4703 approval of course design and delivery.92 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.93 B. Enforcement Process States must ensure that the system for processing and investigating complaints 94 and sanctioning appraisers is administered in a timely, effective, consistent, equitable, and well-documented manner. 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. 95 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 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 92 Title XI § 1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification Criteria. 93 Title XI § 1118(a), 12 U.S.C. 3347. 94 See Appendix B, Glossary of Terms, for the definition of ‘‘complaint.’’ 95 The one-year period for resolution of complaints is not intended to have the impact of a statute of limitation or statute of repose. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices 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 be able to 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 solely on a State’s statute of limitations that results in dismissal of a complaint without the investigation of the merits of the complaint is inconsistent with the Title XI requirement that States assure effective supervision of the activities of credentialed appraisers.96 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 States must 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. sradovich on DSKBBY8HB2PROD with NOTICES a. Complaint Files Complaint files must: • Include documentation outlining the progress of the investigation; • demonstrate that appraisal reports are analyzed and any USPAP violations are identified and considered, whether or not they were the subject of the complaint; • 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, AMC, bank regulator, appraiser, hotline) or name of complainant 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) 8. Terms of disposition (e.g., probation, fine, education, mentorship) 9. In the case of open complaints, the most recent activity and date thereof (e.g. respondent’s response to complaint received, contacted Attorney General for a status update, Board voted to offer a consent agreement) 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.97 2. States must resolve all complaints filed against appraisers within one year (12 months) of the complaint filing date, except for special documented circumstances.98 3. States must ensure that the system for processing and investigating 97 Title 96 Title XI § 1117, 12 U.S.C. 3346. VerDate Sep<11>2014 18:28 Sep 19, 2017 XI § 1118(a), 12 U.S.C. 3347. 98 Id. Jkt 241001 PO 00000 Frm 00046 Fmt 4703 Sfmt 4703 43977 complaints and sanctioning appraisers is administered in an effective, consistent, equitable, and welldocumented manner.99 4. States must track complaints of alleged appraiser misconduct or wrongdoing using a complaint log.100 5. States must appropriately document enforcement files and include rationale.101 6. States must regulate, supervise and discipline their credentialed appraisers.102 7. Persons analyzing complaints for USPAP compliance must be knowledgeable about appraisal practice and USPAP, and States must be able to document how such persons are so qualified.103 Part B: AMC Program Policy Statement 8 Statutes, Regulations, Policies and Procedures Governing State AMC Programs A. Participating States and ASC Oversight States are not required to establish an AMC registration and supervision program. For those States electing to participate in the registration and supervision of AMCs (participating States), ASC staff will informally monitor the State’s progress to implement the requirements of Title XI and the AMC Rule.104 Formal ASC oversight of State AMC Programs will begin at the next regularly scheduled Compliance Review of a State after the following occurs: 1. A State decides to be a participating State pursuant to the AMC Rule; 2. A State establishes an AMC program in accordance with the AMC Rule; and 3. A State begins reporting to the National Registry of AMCs (AMC Registry). Formal ASC oversight will consist of evaluating AMC Programs in participating States during the Compliance Review process to determine compliance or lack thereof with Title XI, and to assess implementation of the minimum requirements for State registration and supervision of AMCs as established by 99 Id. 100 Id. 101 Id. 102 Id. 103 Id. 104 Title XI § 1103(a)(1)(B), 12 U.S.C. 3332. AMC Rule means the interagency final rule on minimum requirements for State registration and supervision of AMCs (12 CFR 34.210–34.216; 12 CFR 225.190– 225.196; 12 CFR 323.8–323.14; 12 CFR 1222.20– 1222.26. E:\FR\FM\20SEN1.SGM 20SEN1 43978 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices the AMC Rule. Upon expiration of the statutory implementation period (see Policy Statement 11, Statutory Implementation Period), Compliance Reviews will include ASC oversight of AMC Programs for any participating State. B. Relation to State Law Participating States may establish requirements in addition to those in the AMC Rule. Participating States may also have a more expansive definition of AMCs.105 However, if a participating State has a more expansive definition of AMCs than in Title XI (thereby encompassing State regulation of AMCs that are not within the Title XI definition of AMC), the State must ensure such AMCs are identified as such in the State database, just as States currently do for nonfederally recognized credentials or designations. Only those AMCs that meet the Federal definition of AMC will be eligible to be on the AMC Registry. C. Funding and Staffing The Dodd-Frank Act amended Title XI to require the ASC to determine whether participating States have sufficient funding and staffing to meet their Title XI requirements. Compliance with this provision requires that a State must provide its AMC 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 an AMC Program’s effectiveness, including the adequacy of State boards, committees, or commissions responsible for carrying out Title XI-related duties. D. Minimum Requirements for Registration and Supervision of AMCs as Established by the AMC Rule sradovich on DSKBBY8HB2PROD with NOTICES 1. AMC Registration and Supervision If a State chooses to participate in the registration and supervision of AMCs in accordance with the AMC Rule, the 105 Title XI as amended by the Dodd-Frank Act defines ‘‘appraisal management company’’ to mean, in part, an external third party that oversees a network or panel of more than 15 appraisers (State certified or licensed) in a State, or 25 or more appraisers nationally (two or more States) within a given year. (12 U.S.C. 3350(11).) Title XI as amended by the Dodd-Frank Act also allows States to adopt requirements in addition to those in the AMC Rule. (12 U.S.C. 3353(b).) For example, States may decide to supervise entities that provide appraisal management services, but do not meet the size thresholds of the Title XI definition of AMC. If a State has a more expansive regulatory framework that covers entities that provide appraisal management services but do not meet the Title XI definition of AMC, the State should only submit information regarding AMCs meeting the Title XI definition to the AMC Registry. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 State will be required to comply with the minimum requirements set forth in the AMC Rule. States should refer to the AMC Rule for compliance requirements 106 as this Policy Statement merely summarizes what the AMC Rule requires of participating States. (a) The AMC Rule includes requirements for participating States to establish and maintain within the State appraiser certifying and licensing agency an AMC Program with the legal authority and mechanisms to: (1) Review and approve or deny AMC initial registration applications and/or renewals for registration; (2) Examine records of AMCs and require AMCs to submit information; (3) Verify that appraisers on AMCs’ panels hold valid State credentials; (4) Conduct investigations of AMCs to assess potential violations of appraisalrelated laws, regulations, or orders; (5) Discipline, suspend, terminate, or deny renewal of the registration of an AMC that violates appraisal-related laws, regulations, or orders; and (6) Report an AMC’s violation of appraisal-related laws, regulations, or orders, as well as disciplinary and enforcement actions and other relevant information about an AMC’s operations, to the ASC. (b) The AMC Rule includes requirements for participating States to impose requirements on AMCs that are not Federally regulated AMCs 107 to: (1) Register with and be subject to supervision by the State appraiser certifying and licensing agency; (2) Engage only State-certified or State-licensed appraisers for federally related transactions in conformity with any federally related transaction regulations; (3) Establish and comply with processes and controls reasonably designed to ensure that the AMC, in engaging an appraiser, selects an appraiser who is independent of the transaction and who has the requisite education, expertise, and experience necessary to competently complete the appraisal assignment for the particular market and property type; (4) Direct the appraiser to perform the assignment in accordance with USPAP; and (5) Establish and comply with processes and controls reasonably 106 See footnote 107. regulated AMCs,’’ meaning AMCs that are subsidiaries owned and controlled by an insured depository institution or an insured credit union and regulated by a Federal financial institutions regulatory agency, are not required to register with the State (Title XI § 1124(c), 12 U.S.C. 3353(c)). 107 ‘‘Federally PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 designed to ensure that the AMC conducts its appraisal management services in accordance with the requirements of section 129E(a) through (i) of the Truth in Lending Act, 15 U.S.C. 1639e(a) through (i), and regulations thereunder. 2. Ownership Limitations for StateRegistered AMCs A. Appraiser Certification or Licensing of Owners An AMC subject to State registration shall not be registered by a State or included on the AMC Registry if such AMC, in whole or in part, directly or indirectly, is owned by any person who has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any State for a substantive cause,108 as determined by the State appraiser certifying and licensing agency. A State’s process for review could, for example, be by questionnaire, or affidavit, or background screening, or otherwise. States must document to the file the State’s method of review and the result. B. Good Moral Character of Owners An AMC shall not be registered by a State if any person that owns more than 10 percent of the AMC— (1) Is determined by the State not to have good moral character; or (2) Fails to submit to a background investigation carried out by the State. A State’s process for review could, for example, be by questionnaire, or affidavit, or background screening, or otherwise. The ASC would expect written documentation of the State’s method of review and the result. 3. Requirements for Federally Regulated AMCs Participating States are not required to identify Federally regulated AMCs 109 operating in their States, but rather the Federal financial institution regulatory agencies are responsible for requiring such AMCs to identify themselves to participating States and report required information. A Federally regulated AMC shall not be included on the AMC Registry if such AMC, in whole or in part, directly or indirectly, is owned by any person who 108 An AMC subject to State registration is not barred from being registered by a State or included on the AMC Registry of AMCs if the license or certificate of the appraiser with an ownership interest was not revoked for a substantive cause and has been reinstated by the State or States in which the appraiser was licensed or certified. (12 CFR 34.210–34.216; 12 CFR 225.190–225.196; 12 CFR 323.8–323.14; 12 CFR 1222.20–1222.26.) 109 See footnote 107. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any State for a substantive cause, as determined by the ASC. E. Summary of Requirements 1. Participating States must establish and maintain an AMC Program with the legal authority and mechanisms consistent with the AMC Rule.110 2. Participating States must impose requirements on AMCs consistent with the AMC Rule.111 3. Participating States must enforce and document ownership limitations for State-registered AMCs.112 4. Only those AMCs that meet the Federal definition of AMC will be eligible to be on the AMC Registry. Therefore, participating States that have a more expansive definition of AMCs than in the AMC Rule must ensure such non-Federally recognized AMCs are identified as such in the State database.113 5. States must have funding and staffing sufficient to carry out their Title XI-related duties.114 Policy Statement 9 National Registry of AMCs (AMC Registry) sradovich on DSKBBY8HB2PROD with NOTICES A. Requirements for the AMC Registry Title XI requires the ASC to maintain the AMC Registry of AMCs that are either registered with and subject to supervision of a participating State or are operating subsidiaries of a Federally regulated financial institution.115 Title XI further requires the States to transmit to the ASC: (1) Reports on a timely basis of supervisory activities involving AMCs, including investigations resulting in disciplinary action being taken; and (2) the registry fee as set by the ASC 116 from AMCs that are either registered with a participating State or are Federally regulated AMCs.117 As with appraiser registry fees, Title XI, § 1109(a)(4)(b) requires the AMC registry fee to be collected by each participating State and transmitted to the ASC. Therefore, as with appraisers, an AMC will pay a registry fee in each participating State in which the AMC operates. As with appraisers, an AMC operating in multiple participating 110 12 CFR 34.210–34.216; 12 CFR 225.190– 225.196; 12 CFR 323.8–323.14; 12 CFR 1222.20– 1222.26. 111 Id. 112 Id. 113 Title XI § 1118(b), 12 U.S.C. 3347. 114 Id. 115 Title XI § 1103(a)(6), 12 U.S.C. 3332. 116 Title XI § 1109(a)(4), 12 U.S.C. 3338. 117 Title XI § 1109(a)(3) and (4), 12 U.S.C. 3338. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 States will pay a registry fee in multiple States in order to be on the AMC Registry for each State. States must notify the ASC as soon as practicable if an AMC listed on the AMC Registry is no longer registered with or operating in the State. The ASC extranet application allows States to update their AMC information directly to the AMC Registry. B. Registry Fee and Invoicing Policies Each State must remit to the ASC the annual registry fee, as set by the ASC, for AMCs to be listed on the AMC Registry. Requests to prorate refunds or partial-year registrations will not be granted. If a State collects multiple-year fees for multiple-years, 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 AMCs on the AMC Registry only for the number of years for which the ASC has received payment. States must reconcile and pay registry invoices in a timely manner (45 calendar days after receipt of the invoice). C. Reporting Requirements State agencies must report all disciplinary action 118 taken against an AMC to the ASC via the extranet application within 5 business days after the disciplinary action is final, as determined by State law. States not reporting via the extranet application must provide, in writing to the ASC, a description of the circumstances preventing compliance with this requirement. For the most serious disciplinary actions (e.g., any action that interrupts an AMCs ability to provide appraisal management services), the AMCs status must be changed on the AMC Registry to ‘‘inactive.’’ A Federally regulated AMC operating in a State must report to the State the information required to be submitted by the State to the ASC, pursuant to the ASC’s policies regarding the determination of the AMC Registry fee. D. Access to AMC Registry Data The ASC Web site provides free access to the public portion of the AMC Registry at www.asc.gov. The public portion of the AMC 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 118 See Appendix B, Glossary of Terms, for the definition of ‘‘disciplinary action.’’ PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 43979 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 must ensure that the authorization information provided to the ASC is updated and accurate. States must adopt and implement a written policy to protect the right of access, as well as the ASC issued User Name and Password. E. Summary of Requirements 1. States must reconcile and pay registry invoices in a timely manner (45 calendar days after receipt of the invoice).119 2. State agencies must report all disciplinary action taken against an AMC to the ASC via the extranet application within 5 business days after the disciplinary action is final, as determined by State law.120 3. States not reporting via the extranet application must provide, in writing to the ASC, a description of the circumstances preventing compliance with this requirement.121 4. For the most serious disciplinary actions (e.g., any action that interrupts an AMC’s ability to provide appraisal management services), the AMC’s status must be changed on the AMC Registry to ‘‘inactive.’’ 122 5. States must notify the ASC as soon as practicable if an AMC listed on the AMC Registry is no longer registered with or operating in the State. 6. 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.123 7. States must adopt and implement a written policy to protect the right of access to the AMC Registry, as well as the ASC issued User Name and Password.124 8. States must ensure the accuracy of all data submitted to the AMC Registry.125 119 Title XI § 1118(a), 12 U.S.C. 3347; Title XI § 1109(a), 12 U.S.C. 3338. 120 Title XI § 1118(a), 12 U.S.C. 3347. 121 Id. 122 Id. 123 Id. 124 Id. 125 Id. E:\FR\FM\20SEN1.SGM 20SEN1 43980 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices Policy Statement 10 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 AMCs and maintains an effective regulatory program.126 B. Enforcement Process States must ensure that the system for processing and investigating complaints 127 and sanctioning AMCs is administered in a timely, effective, consistent, equitable, and welldocumented 128 manner. 1. Timely Enforcement States must process complaints against AMCs in a timely manner to ensure effective supervision of AMCs. 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. sradovich on DSKBBY8HB2PROD with NOTICES 2. Effective Enforcement Effective enforcement requires that States investigate complaints, and if allegations are proven, take appropriate disciplinary or remedial action. 126 Title XI § 1118(a), 12 U.S.C. 3347. 127 See Appendix B, Glossary of Terms, for the definition of ‘‘complaint.’’ 128 See Appendix B, Glossary of Terms, for the definition of ‘‘well-documented.’’ VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 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 States must 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. a. Complaint Files Complaint files must: • Include documentation outlining the progress of the investigation; • 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 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, AMC, bank regulator, appraiser, hotline) or name of complainant 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 AMC Program or Court of Appeals) 7. Method of disposition (e.g., dismissal, letter of warning, consent order, final order) 8. Terms of disposition (e.g., probation, fine) 9. In the case of open complaints, the most recent activity and date PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 thereof (e.g. respondent’s response to complaint received, contacted Attorney General for a status update, Board voted to offer a consent agreement) 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.129 2. States must resolve all complaints filed against appraisers within one year (12 months) of the complaint filing date, except for special documented circumstances.130 3. States must ensure that the system for processing and investigating complaints and sanctioning AMCs is administered in an effective, consistent, equitable, and well-documented manner.131 4. States must track complaints of alleged appraiser misconduct or wrongdoing using a complaint log.132 5. States must appropriately document enforcement files and include rationale.133 Policy Statement 11 Statutory Implementation Period Title XI and the AMC Rule set forth the statutory implementation period.134 The AMC Rule was effective on August 10, 2015. As of 36 months from that date (August 10, 2018), an AMC may not provide appraisal management services for a federally related transaction in a non-participating State unless the AMC is a Federally regulated AMC. Appraisal management services may still be provided for federally related transactions in non-participating States by individual appraisers, by AMCs that are below the minimum statutory panel size threshold, and as noted, by Federally regulated AMCs. The ASC, with the approval of the Federal Financial Institutions Examination Council (FFIEC), may extend this statutory implementation period for an additional 12 months if the ASC makes a finding that a State has made substantial progress toward implementing a registration and supervision program for AMCs that meets the standards of Title XI.135 129 Title XI § 1118(a), 12 U.S.C. 3347. 130 Id. 131 Id. 132 Id. 133 Id. 134 Title XI § 1124(f)(1), 12 U.S.C. 3353 and 12 CFR 34.210–34.216; 12 CFR 225.190–225.196; 12 CFR 323.8–323.14; 12 CFR 1222.20–1222.26. 135 Title XI § 1124(f)(2), 12 U.S.C. 3353. E:\FR\FM\20SEN1.SGM 20SEN1 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices and enforcement actions against appraisers and AMCs.139 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. Part C: Interim Sanctions Policy Statement 12 Interim Sanctions A. Authority Title XI grants the ASC authority to impose sanctions on a State that fails to have an effective Appraiser or AMC Program.136 The ASC may remove a State credentialed appraiser or a registered AMC from the Appraiser or AMC Registry on an interim basis, not to exceed 90 days, pending State agency action on licensing, certification, registration and disciplinary proceedings as an alternative to or in advance of a non-recognition proceeding.137 In determining whether an Appraiser or AMC Program is effective, the ASC shall conduct an analysis as required by Title XI. An ASC Finding of Poor on the Compliance Review Report 138 issued to a State at the conclusion of an ASC Compliance Review may trigger an analysis by the ASC for potential interim sanction(s). The following provisions apply to the exercise by the ASC of its authority to impose interim sanction(s) on State agencies. 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. sradovich on DSKBBY8HB2PROD with NOTICES 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 registration of AMCs, the issuance of temporary licenses and certifications for appraisers, the receiving and tracking of submitted complaints against appraisers and AMCs, the investigation of complaints, 136 Title XI § 1118(a), 12 U.S.C. 3347. 137 Id. 138 See Appendix A—Compliance Review Process. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 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 Meeting 140 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. 139 Title XI § 1118(a), 12 U.S.C. 3347. 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. 140 The PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 43981 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. 551–559) 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 E:\FR\FM\20SEN1.SGM 20SEN1 43982 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices 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.141 Appendices Appendix A—Compliance Review Process The ASC monitors State Appraiser and AMC Programs for compliance with Title XI. The monitoring of State Programs 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 Appraiser Program and the seven compliance areas addressed in Policy Statements 1 through 7. ASC staff reviews a participating State’s AMC Program and the four compliance areas addressed in Policy Statements 8 through 11. 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 compliance areas. The sampling is intended to be representative of a State Program in its entirety. Based on the Review, ASC staff provides the State with an ASC staff report for the Appraiser Program, and if applicable, an ASC staff report for the AMC Program, detailing preliminary findings. The State is given 60 days to respond to the ASC staff report(s). At the conclusion of the Review, a Compliance Review Report (Report) is issued to the State for the Appraiser Program, and if applicable, a Report is also issued for the AMC Program, with the ASC Finding on each Program’s overall compliance, or lack thereof, with Title XI. Deficiencies resulting in noncompliance in any of the compliance areas are cited in the Report. ‘‘Areas of Concern’’ 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. 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. Review Cycle (program history or nature of deficiency may warrant a more accelerated Review Cycle) ASC finding Rating criteria Excellent ............................... • State meets all Title XI mandates and complies with requirements of ASC Policy Statements. • State maintains a strong regulatory Program. • Very low risk of Program failure. • State meets 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. • State does not meet all Title XI mandates and does not 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. • State does 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. • State does not meet Title XI 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. Good .................................... Needs Improvement ............. Not Satisfactory .................... sradovich on DSKBBY8HB2PROD with NOTICES Poor 142 ................................ The ASC has two primary Review Cycles: Two-year and one-year. Most States are 141 5 U.S.C. 703—Form and venue of proceeding. VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 2-year. 2-year. 2-year with additional monitoring. 1-year. Continuous monitoring. 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 142 An ASC Finding of ‘‘Poor’’ may result in significant consequences to the State. See Policy Statement 5, Reciprocity; see also Policy Statement 12, Interim Sanctions. PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 E:\FR\FM\20SEN1.SGM 20SEN1 43983 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices 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. 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 Appraiser 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. sradovich on DSKBBY8HB2PROD with NOTICES Appendix B—Glossary of Terms Appraisal management company (AMC): Refers to, in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction secured by a consumer’s principal dwelling or by an underwriter of or other principal in the secondary mortgage markets, that oversees a network or panel of more than 15 certified or licensed appraisers in a State or 25 or more nationally within a given year— (A) To recruit, select, and retain appraisers; (B) to contract with licensed and certified appraisers to perform appraisal assignments; (C) to manage the process of having an appraisal performed, including providing administrative duties such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for services provided, and reimbursing appraisers for services performed; or (D) to review and verify the work of appraisers. 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 VerDate Sep<11>2014 18:28 Sep 19, 2017 Jkt 241001 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 or appraiser applicant, for allegations of unlicensed appraisal activity, or complaints involving AMCs. A complaint may be in the form of a referral, letter of inquiry, or other document alleging 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 or registration b. suspension of credential or registration c. written consent agreements, orders or reprimands d. probation or any other restriction on the use of a credential e. fine f. voluntary surrender 143 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 § 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 § 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 trainee, State licensed, certified residential or certified general classifications as defined in Policy Statement 1, and which is not recognized by Title XI. 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; 143 A voluntary surrender that is not deemed disciplinary by State law or regulation, or is not related to any disciplinary process need not be reported as discipline provided the individual’s Appraiser Registry record is updated to show the credential is inactive. PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 (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 § 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 Islands. (American Samoa does not have a Program.) State board: As referenced herein, ‘‘State board’’ means a group of individuals (usually appraisers, AMC representatives, 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. 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. * * * * * By the Appraisal Subcommittee. Dated: September 13, 2017. Arthur Lindo, Chairman. [FR Doc. 2017–19998 Filed 9–19–17; 8:45 am] BILLING CODE 6700–01–P FEDERAL MARITIME COMMISSION Notice of Agreement Filed The Commission hereby gives notice of the filing of the following agreement under the Shipping Act of 1984. Interested parties may submit comments on the agreement to the Secretary, Federal Maritime Commission, Washington, DC 20573, within twelve days of the date this notice appears in the Federal Register. A copy of the agreement is available through the Commission’s Web site (www.fmc.gov) or by contacting the Office of Agreements at (202) 523–5793 or tradeanalysis@fmc.gov. Agreement No.: 012487–001. Title: Eastern Car Liner Ltd/Austral Asia Line Pte. Ltd Space Charter Agreement. Parties: Eastern Car Liner, Ltd. and Austral Asia Line Pte Ltd. E:\FR\FM\20SEN1.SGM 20SEN1

Agencies

[Federal Register Volume 82, Number 181 (Wednesday, September 20, 2017)]
[Notices]
[Pages 43966-43983]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-19998]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS17-06]


Appraisal Subcommittee; Proposed Revised Policy Statements

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

ACTION: Proposed Revised Policy Statements.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council requests public comment on a proposal 
to revise ASC Policy Statements (proposed Policy Statements). The 
proposed Policy Statements provide guidance to ensure State appraiser 
regulatory programs comply with Title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, as amended, and the 
rules promulgated thereunder. The proposed Policy Statements would 
supersede the current ASC Policy Statements. The ASC previously 
published the Proposed Revised Policy Statements on January 10, 2017, 
under Docket Number AS17-01. The comment period was scheduled to close 
on April 10, 2017. The ASC suspended the comment period in response to 
the White House Chief of Staff Memorandum titled Regulatory Freeze 
Pending Review, signed on January 20, 2017, pending review by the 
Office of Management and Budget (OMB). Technical edits for 
clarification have been made to the proposed Policy Statements since 
the initial publication, which are addressed below in Supplementary 
Information, section III, Statement-by-Statement.

DATES: Comments must be received on or before November 20, 2017.

ADDRESSES: Commenters are encouraged to submit comments by the Federal 
eRulemaking Portal or email, if possible. You may submit comments, 
identified by Docket Number AS17-06, by any of the following methods:
     Federal eRulemaking Portal: https://www.Regulations.gov. 
Follow the instructions for submitting comments. Click on the ``Help'' 
tab on the Regulations.gov home page to get information on using 
Regulations.gov, including instructions for submitting public comments.
     E-Mail: webmaster@asc.gov. Include the docket number in 
the subject line of the message.
     Fax: (202) 289-4101. Include docket number on fax cover 
sheet.
     Mail: Address to Appraisal Subcommittee, Attn: Lori 
Schuster, Management and Program Analyst, 1401 H Street NW., Suite 760, 
Washington, DC 20005.
     Hand Delivery/Courier: 1401 H Street NW., Suite 760, 
Washington, DC 20005.
    In general, the ASC will enter all comments received into the 
docket and publish those comments on the Federal eRulemaking 
(Regulations.gov) Web site without change, including any business or 
personal information that you provide, such as name and address 
information, email addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, are part of the 
public record and subject to public disclosure. Do not enclose any 
information in your comment or supporting materials that you consider 
confidential or inappropriate for public disclosure. At the close of 
the comment period, all public comments will also be made available on 
the ASC's Web site at https://www.asc.gov (follow link in ``What's 
New'') as submitted, unless modified for technical reasons.
    You may review comments by any of the following methods:
     Viewing Comments Electronically: Go to https://www.Regulations.gov. Enter ``Docket ID AS17-06'' in the Search box and 
click ``Search.'' Click on the ``Help'' tab on the Regulations.gov home 
page to get information on using Regulations.gov, including 
instructions for viewing public comments, viewing other supporting and 
related materials, and viewing the docket after the close of the 
comment period.
     Viewing Comments Personally: You may personally inspect 
comments at the ASC office, 1401 H Street NW., Suite 760, Washington, 
DC 20005. To make an appointment, please call Lori Schuster at (202) 
595-7578.

FOR FURTHER INFORMATION CONTACT: James R. Park, Executive Director, at 
(202) 595-7575, or Alice M. Ritter, General Counsel, at (202) 595-7577, 
Appraisal Subcommittee, 1401 H Street NW., Suite 760, Washington, DC 
20005.

SUPPLEMENTARY INFORMATION: 

I. Background

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, as amended (Title XI), established the 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.\2\ Pursuant to 
Title XI, one of the ASC's core functions is to monitor the 
requirements established by the States \3\ for certification and 
licensing of appraisers qualified to perform appraisals in connection 
with federally related transactions. This is accomplished through 
periodic ASC Compliance Reviews of each State appraiser regulatory 
program (Appraiser Program) to determine compliance or lack thereof 
with Title XI, and to assess implementation of minimum requirements for 
credentialing of appraisers as adopted by the Appraiser Qualifications 
Board (The Real Property Appraiser Qualification Criteria or AQB 
Criteria).
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    \1\ 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 [Board], Consumer Financial 
Protection Bureau [CFPB], Federal Deposit Insurance Corporation 
[FDIC], Office of the Comptroller of the Currency [OCC], and 
National Credit Union Administration [NCUA]). The other two members 
are designated by the heads of the Department of Housing and Urban 
Development (HUD) and the Federal Housing Finance Agency (FHFA).
    \2\ 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. (Title XI Sec.  1121(4), 12 U.S.C. 3350.)
    \3\ 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.
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    Title XI as amended by the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (Dodd-Frank Act) \4\ expanded the ASC's 
core functions to include monitoring of the requirements established by 
States that elect to register and supervise the operations and 
activities of appraisal management companies \5\ (AMCs). States 
electing to register and supervise AMCs must implement minimum 
requirements in accordance with the AMC Rule.\6\ As a result, States 
with an

[[Page 43967]]

AMC regulatory program (AMC Program) will be evaluated during the ASC's 
Compliance Review to determine compliance or lack thereof with Title 
XI, and to assess implementation of the minimum requirements for State 
registration and supervision of AMCs as established by the AMC Rule. 
The amendments to Title XI by the Dodd-Frank Act also allow States with 
an AMC Program to add information about AMCs in their State to the 
National Registry of AMCs (AMC Registry). The proposed Policy 
Statements include guidance to the States regarding how AMC Programs 
will be evaluated during ASC Compliance Reviews.
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    \4\ Public Law 111-203, 124 Stat. 1376.
    \5\ Title XI Sec.  1103(a)(1)(B), 12 U.S.C. 3332.
    \6\ The Dodd-Frank Act added section 1124 to Title XI, Appraisal 
Management Company Minimum Requirements, which required the OCC, 
Board, FDIC, NCUA, CFPB, and FHFA to establish, by rule, minimum 
requirements for the registration and supervision of AMCs by States 
that elect to register and supervise AMCs pursuant to Title XI and 
the rules promulgated thereunder. (Title XI Sec.  1124(a), 12 U.S.C. 
3353(a).) Those rules were finalized and published on June 9, 2015, 
at 80 Federal Register 32658 with an effective date of August 10, 
2015. (12 CFR 34.210-34.216; 12 CFR 225.190-225.196; 12 CFR 323.8-
323.14; 12 CFR 1222.20-1222.26)
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II. Overview of Proposed Policy Statements

    The ASC is issuing these proposed Policy Statements \7\ in three 
parts to provide States with the necessary information to maintain 
their Appraiser Programs and AMC Programs in compliance with Title XI 
and the rules promulgated thereunder:
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    \7\ These Policy Statements, adopted [date to be inserted when 
final], supersede all previous Policy Statements adopted by the ASC.
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    [rtarr8] Part A, Appraiser Program--Policy Statements 1 through 7 
correspond with the categories that are: (a) Evaluated during the 
Appraiser Program Compliance Review; and (b) included in the ASC's 
Compliance Review Report of the Appraiser Program.
    [rtarr8] Part B, AMC Program--Policy Statements 8 through 11 
correspond with the categories that are: (a) Evaluated during the AMC 
Program Compliance Review; and (b) included in the ASC's Compliance 
Review Report of the AMC Program.
    [rtarr8] Part C, Interim Sanctions--Policy Statement 12 sets forth 
required procedures in the event that interim sanctions are imposed 
against a State by the ASC for non-compliance in either the Appraiser 
Program or the AMC Program.
    The proposal also includes two appendices:
    1. Appendix A provides an overview of the Compliance Review 
process; and
    2. Appendix B provides a glossary of terms.

III. Statement-by-Statement

    The following provides a section by section highlight of changes 
presented in the proposed Policy Statements.

Introduction and Purpose

    The ASC proposes to expand the introduction to include the 
monitoring of States that elect to register and supervise the 
operations and activities of AMCs, and to include an explanation of the 
proposed Policy Statements' three parts and appendices.

Part A: Appraiser Program

Policy Statement 1: Statutes, Regulations, Policies and Procedures 
Governing State Appraiser Programs
    The ASC proposes to modify Policy Statement 1 to include a 
definition of trainee appraiser to better reflect how changes to Title 
XI affect Appraiser Programs with trainee requirements.
Policy Statement 2: Temporary Practice
    The ASC proposes to modify Policy Statement 2 to clarify 
requirements for temporary practice and includes requirements to track 
temporary practice permits and maintain documentation.
Policy Statement 3: National Registry of Appraisers
    The ASC proposes to modify Policy Statement 3 to clarify 
requirements regarding States' submission of registry fees and 
eligibility of appraisers for the Appraiser Registry.
    Technical edits for clarification were made to Policy Statement 3 
since the initial publication. The Summary of Requirements include the 
5-day reporting requirement for disciplinary action consistent with the 
body of the Policy Statement, and clarify the requirement for States to 
adopt and implement a policy to protect right of access to the 
Appraiser Registry.
Policy Statement 4: Application Process
    The ASC proposes to modify Policy Statement 4 to include additional 
guidance to States implementing AQB Criteria regarding the background 
of applicants for credentials and requires States to document applicant 
files with evidence supporting decisions made regarding individual 
appraisers. Policy Statement 4 as proposed also provides additional 
guidance on requirements for States to validate renewal requirements 
for appraisers and provides parameters for auditing education-related 
affidavits. Finally, Policy Statement 4 as proposed clarifies the 
requirement that States engage analysts who are knowledgeable about the 
Uniform Standards of Professional Appraisal Practice (USPAP) and 
document how the analysts are qualified.
    Technical edits for clarification were made to Policy Statement 4 
since the initial publication. The section titled Processing of 
Applications refers to ``documentation'' required rather than 
``files.'' In the section titled ``Validation Procedures, Objectives 
and Requirements,'' the subsection ``Selection of Work Product'' is 
renamed ``Experience Hours Validation'' to more accurately reflect the 
content of the subsection, and compliance with USPAP is moved to the 
following subsection titled ``USPAP Compliance''; the subsection 
``Determination of Experience Time Periods'' no longer restates AQB 
Criteria, but rather requires that time periods conform with AQB 
Criteria; and ``Supporting Documentation'' clarifies documentation 
required. The Summary of Requirements were modified to conform with 
these technical edits.
Policy Statement 5: Reciprocity
    The ASC proposes to modify Policy Statement 5 to include a 
requirement that States obtain and maintain sufficient relevant 
documentation pertaining to an application for issuance of a credential 
by reciprocity.
Policy Statement 6: Education
    The ASC proposes to modify Policy Statement 6 to clarify that 
States may not continue to accept AQB approved courses after the AQB's 
expiration date unless the course content is reviewed and approved by 
the State.
Policy Statement 7: State Agency Enforcement
    The ASC proposes to modify Policy Statement 7 to clarify the 
requirement that States consider USPAP violations when investigating a 
complaint whether or not USPAP violations were the basis for the 
complaint.
    Technical edits for clarification were made to Policy Statement 7 
since the initial publication. A footnote was added to clarify that the 
one-year period for resolution of complaints is not intended to have 
the impact of a statute of limitation.

Part B: AMC Program

    As proposed, Policy Statements 8, 9 & 10 duplicate the provisions 
of Policy Statements 1, 3 & 7 to every extent possible. The standard 
language is intentional and will create better understanding of the 
Policy Statements by the States as they will be able to anticipate how 
to comply based on their understanding of the Policy Statements they 
have been following. Differences are discussed below.
Policy Statement 8: Statutes, Regulations, Policies and Procedures 
Governing State AMC Programs
    The ASC proposes a new Policy Statement 8 to reflect the statutory 
provision that States are not required to establish an AMC Program, but 
clarify for those States that establish AMC

[[Page 43968]]

Programs the ASC oversight during ASC Compliance Reviews. As proposed, 
Policy Statement 8 reiterates that States with an AMC Program must: (1) 
Establish and maintain an AMC Program with the legal authority and 
mechanisms consistent with the AMC Rule; (2) impose requirements on 
AMCs consistent with the AMC Rule; and (3) enforce and document 
ownership limitations for State-registered AMCs. As proposed, Policy 
Statement 8 informs States that while they may have a more expansive 
definition of an AMC in their State statute, only AMCs that meet the 
federal definition in Title XI may be included on the AMC Registry.
Policy Statement 9: National Registry of AMCs (AMC Registry)
    The ASC proposes a new Policy Statement 9 to clarify requirements 
for States with an AMC Program to maintain the AMC Registry in the same 
way they maintain the Appraiser Registry.
    Technical edits for clarification were made to Policy Statement 9 
since the initial publication. The Summary of Requirements includes the 
requirement for States to adopt and implement a policy to protect right 
of access to the AMC Registry.
Policy Statement 10: State Agency Enforcement
    The ASC proposes a new Policy Statement 10 to clarify requirements 
for States' AMC enforcement programs in those States with an AMC 
Program.
Policy Statement 11: Statutory Implementation Period
    The ASC proposes a new Policy Statement 11 to clarify the statutory 
implementation period and any extensions that may be granted.

Part C: Interim Sanctions

Policy Statement 12: Interim Sanctions
    The ASC proposes a new Policy Statement 12 which modifies existing 
Policy Statement 8 to clarify interim sanctions which may be imposed on 
State Programs when those programs fail to be effective. The proposed 
procedures include due process provisions and rules of evidence, and 
would establish timeliness for proceedings.

IV. Request for Comment

    The ASC seeks comment on all aspects of the proposed Policy 
Statements. In addition, the ASC requests comments on whether the 
proposed Policy Statements provide State Programs with the necessary 
information to understand the ASC's expectations during a Compliance 
Review.
    The text of the proposed Policy Statements is as follows:

Contents
Introduction and Purpose
Part A: Appraiser Program
Policy Statement 1
Statutes, Regulations, Policies and Procedures Governing State 
Appraiser Programs
    A. State Regulatory Structure
    B. Funding and Staffing
    C. Minimum Criteria
    D. Federally Recognized Appraiser Classifications
    E. Non-Federally Recognized Credentials
    F. Appraisal Standards
    G. Exemptions
    H. ASC Staff Attendance at State Board Meetings
    I. Summary of Requirements
Policy Statement 2
Temporary Practice
    A. Requirement for Temporary Practice
    B. Excessive Fees or Burdensome Requirements
    C. Summary of Requirements
Policy Statement 3
National Registry of Appraisers
    A. Requirements for the National Registry of Appraisers
    B. Registry Fee and Invoicing Policies
    C. Access to Appraiser Registry Data
    D. Information Sharing
    E. Summary of Requirements
Policy Statement 4
Application Process
    A. Processing of Applications
    B. Qualifying Education for Initial or Upgrade Applications
    C. Continuing Education for Reinstatement and Renewal 
Applications
    D. Experience for Initial or Upgrade Applications
    E. Examination
    F. Summary of Requirements
Policy Statement 5
Reciprocity
    A. Reciprocity Policy
    B. Application of Reciprocity Policy
    C. Appraiser Compliance Requirements
    D. Well-Documented Application Files
    E. Summary of Requirements
Policy Statement 6
Education
    A. Course Approval
    B. Distance Education
    C. Summary of Requirements
Policy Statement 7
State Agency Enforcement
    A. State Agency Regulatory Program
    B. Enforcement Process
    C. Summary of Requirements
Part B: AMC Program
Policy Statement 8
Statutes, Regulations, Policies and Procedures Governing State AMC 
Programs
    A. Participating States and ASC Oversight
    B. Relation to State Law
    C. Funding and Staffing
    D. Minimum Requirements for Registration and Supervision of AMCs 
as Established by the AMC Rule
    E. Summary of Requirements
Policy Statement 9
National Registry of AMCs (AMC Registry)
    A. Requirements for the AMC Registry
    B. Registry Fee and Invoicing Policies
    C. Reporting Requirements
    D. Access to AMC Registry Data
    E. Summary of Requirements
Policy Statement 10
State Agency Enforcement
    A. State Agency Regulatory Program
    B. Enforcement Process
    C. Summary of Requirements
Policy Statement 11
Statutory Implementation Period
Part C: Interim Sanctions
Policy Statement 12
Interim Sanctions
    A. Authority
    B. Opportunity to be Heard or Correct Conditions
    C. Procedures
Appendices
Appendix A--Compliance Review Process
Appendix B--Glossary of Terms

Introduction and Purpose

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 as amended (Title XI) established the Appraisal 
Subcommittee of the Federal Financial Institutions Examination Council 
(ASC).\8\ 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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    \8\ 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, Bureau of Consumer Financial Protection, 
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 \9\ for certification and 
licensing of appraisers qualified to perform appraisals in connection 
with federally related transactions.\10\ Title XI as amended by the 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 
(Dodd-Frank Act) \11\ expanded the ASC's core functions to include 
monitoring of the requirements established by States that elect to

[[Page 43969]]

register and supervise the operations and activities of appraisal 
management companies \12\ (AMCs).\13\
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    \9\ See Appendix B, Glossary of Terms, for the definition of 
``State.''
    \10\ See Appendix B, Glossary of Terms, for the definition of 
``federally related transaction.''
    \11\ Public Law. 111-203, 124 Stat. 1376.
    \12\ Title XI Sec.  1103(a)(1)(B), 12 U.S.C. 3332.
    \13\ See Appendix B, Glossary of Terms, for the definition of 
``appraisal management company'' or AMC.
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    The ASC performs periodic Compliance Reviews \14\ of each State 
appraiser regulatory program (Appraiser Program) to determine 
compliance or lack thereof with Title XI, and to assess implementation 
of minimum requirements for credentialing of appraisers as adopted by 
the Appraiser Qualifications Board (The Real Property Appraiser 
Qualification Criteria or AQB Criteria). As a result of the Dodd-Frank 
Act amendments to Title XI, States with an AMC regulatory program (AMC 
Program) will be evaluated during the Compliance Review to determine 
compliance or lack thereof with Title XI, and to assess implementation 
of the minimum requirements for State registration and supervision of 
AMCs as established by the
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    \14\ See Appendix A, Compliance Review Process.
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    AMC Rule.\15\
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    \15\ The Dodd-Frank Act required the Office of the Comptroller 
of the Currency; Board of Governors of the Federal Reserve System; 
Federal Deposit Insurance Corporation; National Credit Union 
Administration; Bureau of Consumer Financial Protection; and Federal 
Housing Finance Agency to establish, by rule, minimum requirements 
to be imposed by a participating State appraiser certifying and 
licensing agency on AMCs doing business in the State. (Title XI 
Sec.  1124(a), 12 U.S.C. 3353(a).) Those rules were finalized and 
published on June 9, 2015, at 80 Federal Register 32658 with an 
effective date of August 10, 2015. (12 CFR 34.210-34.216; 12 CFR 
225.190-225.196; 12 CFR 323.8-323.14; 12 CFR 1222.20-1222.26.)
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    The ASC is issuing these revised Policy Statements \16\ in three 
parts to provide States with the necessary information to maintain 
their Appraiser Programs and AMC Programs in compliance with Title XI:
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    \16\ These Policy Statements, adopted [date to be inserted when 
final], supersede all previous Policy Statements adopted by the ASC.
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    [rtarr8] Part A, Appraiser Program--Policy Statements 1 through 7 
correspond with the categories that are: (a) Evaluated during the 
Appraiser Program Compliance Review; and (b) included in the ASC's 
Compliance Review Report of the Appraiser Program.
    [rtarr8] Part B, AMC Program--Policy Statements 8 through 11 
correspond with the categories that are: (a) Evaluated during the AMC 
Program Compliance Review; and (b) included in the ASC's Compliance 
Review Report of the AMC Program.
    [rtarr8] Part C, Interim Sanctions--Policy Statement 12 sets forth 
required procedures in the event that interim sanctions are imposed 
against a State by the ASC for non-compliance in either the Appraiser 
Program or the AMC Program.

Part A: Appraiser Program

Policy Statement 1

Statutes, Regulations, Policies and Procedures Governing State 
Appraiser 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.\17\ The ASC recognizes 
that each State may have legal, fiscal, regulatory or other factors 
that may influence the structure and organization of its Appraiser 
Program. Therefore, a State has flexibility to structure its Appraiser 
Program so long as it meets its Title XI-related responsibilities.
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    \17\ 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 \18\ 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, Appraiser 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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    \18\ See Appendix B, Glossary of Terms, for the definition of 
``State board.''
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B. Funding and Staffing
    The 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 Appraiser 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 an Appraiser 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. Requirements established by a State for certified residential 
or certified general appraisers, as well as requirements established 
for licensed appraisers, trainee appraisers and supervisory appraisers 
must meet or exceed applicable AQB Criteria.
D. Federally Recognized Appraiser Classifications
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.
State Licensed Appraisers
    ``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. The 
permitted scope of practice and designation for State licensed 
appraisers must be consistent with State and Federal laws, including 
regulations and supplementary guidance.
Trainee Appraisers
    ``Trainee appraisers'' means those individuals who have satisfied 
the requirements for credentialing in a State whose criteria for 
credentialing meet or exceed the applicable minimum AQB Criteria. Any 
minimum qualification requirements established by a State for 
individuals in the position of ``trainee appraiser'' or ``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. The permitted scope of 
practice and designation for trainee 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 trainee, State licensed, certified 
residential or

[[Page 43970]]

certified general 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 
\19\ must ensure that they are easily distinguished from the federally 
recognized credentials.
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    \19\ See Appendix B, Glossary of Terms, for the definition of 
``non-federally recognized credentials or designations.''
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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.\20\ States that have 
incorporated USPAP into State law should ensure that statutes or 
regulations are updated timely to adopt the current version of USPAP, 
or if State law allows, automatically incorporate the latest version of 
USPAP as it becomes effective. States should consider ASB Advisory 
Opinions, Frequently Asked Questions, and other written guidance issued 
by the ASB regarding interpretation and application of USPAP.
---------------------------------------------------------------------------

    \20\ 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.
G. Exemptions
    Title XI and the Federal financial institutions regulatory 
agencies' regulations specifically require the use of State certified 
or licensed appraisers in connection with the appraisal of certain real 
estate-related financial transactions.\21\ 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.
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    \21\ 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.
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H. ASC Staff Attendance at State Board Meetings
    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 Appraiser Program. 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. 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 concerning the privacy of individuals and any 
confidential matters.
I. Summary of Requirements
    1. States must require that appraisals be performed in accordance 
with the latest version of USPAP.\22\
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    \22\ 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.\23\
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    \23\ 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.\24\
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    \24\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    4. States must have funding and staffing sufficient to carry out 
their Title XI-related duties.\25\
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    \25\ Id; Title XI Sec.  1118(b), 12 U.S.C. 3347.
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    5. States must use proper designations and permitted scope of 
practice for certified residential; certified general; licensed; and 
trainee classifications.\26\
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    \26\ 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.\27\
---------------------------------------------------------------------------

    \27\ 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.\28\
---------------------------------------------------------------------------

    \28\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345.
---------------------------------------------------------------------------

    8. State requirements for trainee appraisers and supervisory 
appraisers must meet or exceed the AQB Criteria.
    9. State agencies must be granted adequate authority by the State 
to maintain an effective regulatory Appraiser Program in compliance 
with Title XI.\29\
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    \29\ Title XI Sec.  1118(b), 12 U.S.C. 3347.
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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 \30\ for a federally related transaction. States are not, 
however, required to grant temporary practice permits to trainee 
appraisers. 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

[[Page 43971]]

``registration'' provided such process complies with Title XI and does 
not impose ``excessive fees or burdensome requirements,'' as determined 
by the ASC.\31\ Thus, a credentialed appraiser \32\ 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 of 
Appraisers to verify credential status on applicants for temporary 
practice.
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    \30\ See Appendix B, Glossary of Terms, for the definition of 
``assignment.''
    \31\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
    \32\ See Appendix B, Glossary of Terms, for the definition of 
``credentialed appraisers.''
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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.\33\ Adherence by State agencies to the following mandates and 
prohibitions will deter the imposition of excessive fees or burdensome 
requirements.
---------------------------------------------------------------------------

    \33\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    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 permit's 
effective date;
    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 \34\ in the case of 
disciplinary action concerning a temporary practitioner;
---------------------------------------------------------------------------

    \34\ 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;
    g. track all temporary practice permits using a permit log which 
includes the name of the applicant, date application received, date 
completed application received, date of issuance, and date of 
expiration, if any (States are strongly encouraged to maintain this 
information in an electronic, sortable format); and
    h. maintain documentation sufficient to demonstrate compliance with 
this Policy Statement.
    Host State agencies may not:
    a. Limit the valid time period of a temporary practice permit to 
less than 6 months (unless the applicant requests a specific end date 
and the applicant is allowed an extension if required to complete the 
assignment, the applicant's credential is no longer in active status 
during that period of time);
    b. limit an appraiser to one temporary practice permit per calendar 
year; \35\
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    \35\ 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 for education, 
experience and/or exam upon temporary practitioners;
    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.
    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 consider and, if appropriate, take disciplinary action 
when one of its certified or licensed appraisers is disciplined by 
another State.
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.\36\
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    \36\ 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.\37\
---------------------------------------------------------------------------

    \37\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
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Policy Statement 3

National Registry of Appraisers
A. Requirements for the National Registry of Appraisers
    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 (Appraiser Registry).\38\ 
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 and certifications, sanctions, disciplinary 
actions, revocations and suspensions; and (3) the registry fee as set 
by the ASC \39\ from individuals who have received certification or 
licensing. States must notify the ASC as soon as practicable if a 
credential holder listed on the Appraiser Registry does not qualify for 
the credential held.
---------------------------------------------------------------------------

    \38\ Title XI Sec.  1103(a)(3), 12 U.S.C. 3332.
    \39\ 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.)
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    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 licensed appraisers in active 
status on the Appraiser Registry are eligible to perform appraisals in 
connection with federally related transactions. Only those appraisers 
whose registry fees have been transmitted to the ASC will be eligible 
to be on the Appraiser Registry for the period subsequent to payment of 
the fee.
    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 Appraiser 
Program must ensure that any potential user of that appraiser's 
services is aware that the appraiser is not eligible to perform 
appraisals for federally related transactions. The Appraiser Program 
must place a conspicuous notice directly on the face of any evidence of 
the appraiser's authority to appraise

[[Page 43972]]

stating, ``Not Eligible To Appraise Federally Related Transactions,'' 
and the appraiser must not be listed in active status on the Appraiser 
Registry.
    The ASC extranet application allows States to update their 
appraiser credential information directly to the Appraiser 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 Appraiser Registry entries. Designated State personnel are 
required to protect the right of access, and not share their User Name 
or Password with anyone. States 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 Appraiser Registry.
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 Appraiser 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 Appraiser Registry only for the 
number of years for which the ASC has received payment. Nonpayment by a 
State of an appraiser's registry fee may result in the status of that 
appraiser being listed as ``inactive.'' States must reconcile and pay 
registry invoices in a timely manner (45 calendar days after the 
invoice date). 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 Appraiser Registry, for whatever the 
reason, renders an appraiser ineligible to perform appraisals in 
connection with federally related transactions.
C. Access to Appraiser Registry Data
    The ASC Web site provides free access to the public portion of the 
Appraiser Registry at www.asc.gov. The public portion of the Appraiser 
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 must 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 Appraiser 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 Appraiser 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.
    States must report all disciplinary action \40\ taken against an 
appraiser to the ASC via the extranet application within 5 business 
days after the disciplinary action is final, as determined by State 
law.\41\ States not reporting via the extranet application must 
provide, in writing to the ASC, a description of the circumstances 
preventing compliance with this requirement.\42\
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    \40\ See Appendix B, Glossary of Terms, for the definition of 
``disciplinary action.''
    \41\ Id.
    \42\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    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 appraiser's status must 
be changed on the Appraiser 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.\43\
---------------------------------------------------------------------------

    \43\ Id.
---------------------------------------------------------------------------

    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 registry invoices in a timely 
manner (45 calendar days after the invoice date).\44\
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    \44\ Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  
1109(a), 12 U.S.C. 3338.
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    2. States must report all disciplinary action taken against an 
appraiser to the ASC via the extranet application within 5 business 
days after the disciplinary action is final, as determined by State 
law.\45\
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    \45\ Id.
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    3. States not reporting via the extranet application must provide, 
in writing to the ASC, a description of the circumstances preventing 
compliance with this requirement.\46\
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    \46\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    4. 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 appraiser's status must 
be changed on the Appraiser 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.\47\
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    \47\ Id.
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    5. 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.\48\
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    \48\ Id.
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    6. States must ensure that the authorization information provided 
to the ASC is updated and accurate.\49\
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    \49\ Id.
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    7. States must adopt and implement a written policy to protect the 
right of access to the Appraiser Registry, as well as the ASC issued 
User Name and Password.\50\
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    \50\ Id.

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    8. States must ensure the accuracy of all data submitted to the 
Appraiser Registry.\51\
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    \51\ Id.
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    9. States must submit appraiser data (other than discipline) 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.\52\
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    \52\ Id.
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    10. 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.\53\
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    \53\ Id.
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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 (certified, licensed, trainee and 
supervisory). 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.\54\ Effective January 
1, 2017, AQB Criteria also requires States to assess whether an 
applicant for a real property appraiser credential possesses a 
background that would not call into question public trust. The basis 
for such assessment shall be a matter left to the individual States, 
and must, at a minimum, be documented to the file.
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    \54\ Includes applications for credentialing of trainee, 
licensed, certified residential or certified general 
classifications.
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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 calendar days after receipt of a 
completed application). Any delay in the processing of applications 
must be sufficiently documented in the file to explain the delay. 
States must ensure appraiser credential applications submitted for 
processing do not contain invalid examinations as established by AQB 
Criteria.
    States must obtain and maintain sufficient relevant documentation 
pertaining to an application for issuance, upgrade and renewal of a 
credential so as to enable understanding of the facts and 
determinations in the matter and the reasons for those determinations. 
Documentation must include:
    1. Application receipt date;
    2. Education;
    3. Experience;
    4. Examination;
    5. Continuing education; and
    6. Any administrative or disciplinary action taken in connection 
with the application process, including results of any continuing 
education audit.
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.
    States may not accept an affidavit for claimed qualifying education 
from applicants for any federally recognized credential.\55\ States 
must maintain adequate documentation to support verification of 
education claimed by applicants.
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    \55\ 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.
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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.
    States may not accept an affidavit for continuing education claimed 
from applicants for reinstatement. Applicants for reinstatement must 
submit documentation to support claimed continuing education and 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 selected from each federally recognized credential 
level 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
    (1) Validation must include a prompt post-approval audit. Each 
audit of an affidavit for continuing education credit claimed must be 
completed within 60 business days from the date the credential is 
scheduled for renewal (based on the credential's expiration date). To 
ensure the audit is a statistically relevant representation, a sampling 
of credentials that were renewed after the scheduled expiration date 
and/or beyond the date the sample was selected, must also be audited to 
ensure that a credential holder may not avoid being selected for a 
continuing education audit by renewing early or late.
    (2) States must audit the continuing education-related affidavit 
for each credentialed appraiser selected in the sampling procedure.
    (3) States must determine that 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, and the appraiser has failed to 
complete any remedial action offered, 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 
within five (5) business days after taking such action in order for the 
appraiser's record on the Appraiser Registry to be updated 
appropriately.
    (5) If a Sta