Collection and Transmission of Annual AMC Registry Fees, 44493-44502 [2017-20400]

Download as PDF 44493 Rules and Regulations Federal Register Vol. 82, No. 184 Monday, September 25, 2017 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. DEPARTMENT OF HOMELAND SECURITY Office of the Secretary 6 CFR Chapter I Temporary Extension of Applicability of Regulations Governing Conduct on Federal Property Office of the Secretary, Department of Homeland Security. ACTION: Notification of temporary extension of the applicability of regulations. AGENCY: The Acting Secretary of Homeland Security, pursuant to the Homeland Security Act of 2002, has temporarily extended the applicability of certain regulations governing conduct on federal property to certain areas within the United States Border Patrol’s San Diego Sector allowing for their enforcement. This temporary administrative extension enables the Department of Homeland Security (DHS) to protect and secure Federal property at or near the project areas for border wall prototypes and fence replacement near the city of San Diego, including but not limited to, project sites, staging areas, access roads, and buildings temporarily erected to support construction activities and to carry out its statutory obligations to protect and secure the nation’s borders. The project areas for border wall prototype and fence replacement are situated within a geographic area that starts at the Pacific Ocean and extends to approximately one mile east of Border Monument 251. DATES: Pursuant to 40 U.S.C. 1315(d), the extension began on September 19, 2017 and will continue for the duration of the construction activities related to the fence replacement and border wall prototype projects near the city of San Diego. FOR FURTHER INFORMATION CONTACT: Joshua A. Vayer, Division Director, Protective Operations Division, Federal asabaliauskas on DSKBBXCHB2PROD with RULES SUMMARY: VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 Protective Service, joshua.s.vayer@ hq.dhs.gov. SUPPLEMENTARY INFORMATION: Background Pursuant to section 1706 of the Homeland Security Act of 2002, 40 U.S.C. 1315(a); Public Law 107–296, 116 Stat. 2135 (Nov. 25, 2002), the Secretary of Homeland Security is responsible for protecting the buildings, grounds, and property owned, occupied, or secured by the Federal Government (including any agency, instrumentality, or wholly owned or mixed ownership corporation thereof) and the persons on the property. To carry out this mandate, the Department is authorized to enforce the applicable Federal regulations for the protection of persons and property set forth in 41 CFR 102–74, subpart C.1 These regulations govern conduct on federal property and set forth the relevant criminal penalties. Although these regulations apply to all property under the authority of the General Services Administration and to all person entering in or on such property,2 the Secretary of Homeland Security is authorized pursuant to 40 U.S.C. 1315(d)(2)(A) to extend the applicability of and to enforce these regulations to any property owned or occupied by the Federal Government. Temporary Extension of Applicability of Regulations Governing Conduct on Federal Property to Certain Areas in the Vicinity of the Border Near the City of San Diego DHS is replacing existing border fence with bollard wall and constructing border wall prototypes near the city of San Diego in the United States Border Patrol’s San Diego Sector pursuant to several statutory and executive directives.3 In order to protect and 1 Although these regulations were issued prior to the Homeland Security Act, per section 1512 of the Act, these regulations remain the relevant regulations for purposes of the protection and administration of property owned or occupied by the Federal Government. 2 See 41 CFR 102–74.365. 3 The statutory and executive directives relating to the construction of the border wall prototypes include, but are not limited to, section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Public Law 104–208, Div. C, 110 Stat. 3009–546, 3009–554 (Sept. 30, 1996) (8 U.S.C. 1103 note), as amended by the REAL ID Act of 2005, Public Law 109–13, Div. B, 119 Stat. 231, 302, 306 (May 11, 2005) (8 U.S.C. 1103 note), as amended by the Secure Fence Act of PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 secure the property at or near the border wall prototype and fence replacement project areas, including, but not limited to, project sites, staging areas, access roads, and buildings temporarily erected to support construction activities, I temporarily extended the applicability, allowing the enforcement, of regulations governing the conduct of individuals on federal property to areas in or around the fence replacement and border wall prototype project areas, pursuant to 40 U.S.C. 1315(d)(2)(A). The project areas for border wall prototype and fence replacement are situated within a geographic area that starts at the Pacific Ocean and extends to approximately one mile east of Border Monument 251. Specifically, I temporarily extended the applicability, allowing the enforcement, of the regulations in 41 CFR part 102– 74, subpart C, to any property owned or occupied by the Federal Government at or near the fence replacement and border wall prototype project areas near the city of San Diego. The regulations in 41 CFR part 102– 74, subpart C, will remain applicable and enforceable at these locations for the duration of the construction related to the fence replacement and border wall prototypes near the city of San Diego. Elaine C. Duke, Acting Secretary of Homeland Security. [FR Doc. 2017–20383 Filed 9–22–17; 8:45 am] BILLING CODE 4410–10–P FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL 12 CFR Part 1102 [Docket No. AS17–07] Collection and Transmission of Annual AMC Registry Fees Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC). ACTION: Final rule. AGENCY: 2006, Public Law 109–367, section 3, 120 Stat. 2638 (Oct. 26, 2006) (8 U.S.C. 1103 note), as amended by the Department of Homeland Security Appropriations Act, 2008, Public Law 110–161, Div. E, Title V, section 564, 121 Stat. 2090 (Dec. 26, 2007) (8 U.S.C. 1103 note), Section 2 of the Secure Fence Act of 2006, Public Law 109–367, 120 Stat. 2638 (Oct. 26, 2006) (8 U.S.C. 1701 note), and E.O. 13767. E:\FR\FM\25SER1.SGM 25SER1 44494 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations The ASC is adopting a final rule to implement collection and transmission of appraisal management company (AMC) annual registry fees in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to be applied by State appraiser certifying and licensing agencies that elect to register and supervise AMCs, pursuant to 12 U.S.C. 3353 and the regulations promulgated thereunder. DATES: Effective date. This final rule will become effective on November 24, 2017. 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: SUMMARY: I. Background Section 1473 of the Dodd-Frank Act 1 included amendments to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 2 (Title XI). Section 1109 of Title XI,3 Roster of State certified or licensed appraisers; authority to collect and transmit fees, was amended by the Dodd-Frank Act to require States 4 that elect to register and supervise AMCs to collect: (1) From AMCs that have been in existence for more than a year an annual registry fee of $25 multiplied by the number of appraisers working for or contracting with such AMC in such State during the previous year; and (2) from AMCs that have not been in existence for more than a year, $25 multiplied by an appropriate number to be determined by the ASC. Such $25 amount may be adjusted, up to a maximum of $50, at the discretion of the ASC, if necessary to carry out the ASC’s Title XI functions.5 Section 1117 of Title XI,6 Establishment of State appraiser certifying and licensing agencies, was amended by the Dodd-Frank Act to include additional duties for States, if they so choose, to: (1) Register and supervise AMCs; and (2) add information about AMCs in their State to the National Registry of AMCs (AMC Registry).7 States electing to register and 1 Public Law 111–203, 124 Stat. 1376. Law 101–73, 103 Stat. 183. 3 12 U.S.C. 3338. 4 As of January, 2017, 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, had State appraiser certifying and licensing agencies. 5 See 12 U.S.C. 3338(a)(4)(B). 6 12 U.S.C. 3346. 7 Title XI as amended by the Dodd-Frank Act defines ‘‘appraisal management company’’ to mean, asabaliauskas on DSKBBXCHB2PROD with RULES 2 Public VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 supervise AMCs under Section 1117 must implement minimum requirements in accordance with the AMC Rule.8 Section 1103 of Title XI,9 Functions of Appraisal Subcommittee, was amended by the Dodd-Frank Act to require the ASC to maintain the AMC Registry of those AMCs that are either: (1) Registered with and subject to supervision by a State that has elected to register and supervise AMCs; or (2) are operating subsidiaries of a Federally regulated financial institution (Federally regulated AMCs). On or before the effective date of this rule, the ASC will issue an ASC Bulletin to States that will address: 1. When the AMC Registry will be open for States; and 2. Reporting requirements (information required to be submitted by States in order to register AMCs on the AMC Registry) with the effective date for compliance. Title XI as amended by the DoddFrank Act imposes a statutory restriction on performance of services by AMCs for a federally related transaction (FRT) 10 that applies after a in part, an external third party that oversees a network or panel of more than 15 appraisers, who are State certified or licensed in a State, or 25 or more appraisers nationally (two or more States) within a given year. (See 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. (See 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. 8 The Dodd-Frank Act added section 1124 to Title XI, Appraisal Management Company Minimum Requirements, which required the Office of the Comptroller of the Currency (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); National Credit Union Administration (NCUA); Bureau of Consumer Financial Protection (Bureau); and Federal Housing Finance Agency (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. The Agencies issued a final rule (AMC Rule) with an effective date of August 10, 2015. (80 FR 32658, June 9, 2015). 9 12 U.S.C. 3332. 10 A federally related transaction includes any real estate-related financial transaction which: (a) A Federal financial institutions regulatory agency engages in, contracts for, or regulates; and (b) requires the services of an appraiser. See Title XI sec. 1121 (4), 12 U.S.C. 3350), implemented by the OCC: 12 CFR 34.42(f) and 34.43(a); Board: 12 CFR 225.62(f) and 225.63(a); FDIC: 12 CFR 323.2(f) and 323.3(a); and NCUA: 12 CFR 722.2(f) and 722.3(a). Based on 2014 Home Mortgage Disclosure Act (HMDA) data, at least 90 percent of residential mortgage loan originations are not subject to the PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 36-month period that began when the AMC Rule became effective (Implementation Period).11 The ASC recognizes that States electing to register and supervise AMCs may need to amend their rules and/or regulations, or revise their operating procedures in order to implement AMC registry fees. Given the limited period of time between publication of this final rule and the expiration of the Implementation Period, States may not be able to implement the AMC registry fees within the Implementation Period. As discussed further below in the subsection Collection and transmission of annual AMC registry fees, only those AMCs whose registry fees have been transmitted to the ASC are eligible to be on the AMC Registry. While the ASC encourages States that elect to register and supervise AMCs to begin collecting fees from registered AMCs as soon as possible in accordance with the requirements of Section 1109 of Title XI so that those AMCs may be entered on the AMC Registry, the restriction on performance of services for FRTs will not impact an AMC so long as the AMC is registered with a State that has elected to register and supervise AMCs, or is subject to oversight by a Federal financial institutions regulatory agency. On May 20, 2016, the ASC published a proposed rule with a 60-day public comment period on implementation of the annual AMC registry fee that States would collect and transmit to the ASC if they elect to register and supervise AMCs.12 This final rule sets the fee formula that States would apply in collecting annual AMC registry fees and transmitting those fees to the ASC. II. The Final Rule The final rule: (1) Establishes the annual AMC registry fee in section 1109 of Title XI for AMCs in those States electing to register and supervise AMCs; and (2) implements collection and transmission of AMC registry fees as required by section 1109. The final rule sets forth the ASC’s interpretation of the phrase ‘‘working for or contracting with’’ for purposes of calculating the annual AMC registry fee. Title XI appraisal regulations. (FFIEC report to Congress, Economic Growth and Regulatory Paperwork Reduction Act, 82 FR 15900 (March 30, 2017). 11 See 12 U.S.C. 3353(f)(1). In summary, beginning 36 months from the effective date of the AMC Rule, an AMC, as defined by Title XI, may not provide services for FRTs in a State unless the AMC is registered with the State pursuant to a registration and supervision program established under Section 1117, or is subject to oversight by a Federal financial institutions regulatory agency. 12 81 FR 31868 (May 20, 2016). E:\FR\FM\25SER1.SGM 25SER1 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations For the reasons discussed in section III of this SUPPLEMENTARY INFORMATION, the final rule adopts the rule substantially as proposed. The final rule contains technical, nonsubstantive changes. asabaliauskas on DSKBBXCHB2PROD with RULES III. The Final Rule and Public Comments on the Proposed Rule The following is a section-by-section review of the proposed rule and a discussion of the public comments received by the ASC concerning the proposal. The ASC received 104 comment letters in response to the published proposal. These comment letters were received from State appraiser certifying and licensing agencies, AMCs, appraiser and real estate trade associations, professional associations, appraisal firms and appraisers. A. Section 1102.401 Definitions The ASC requested comment on all aspects of the proposed rule. The following is a discussion of the definitions, related public comments and issues relating to those definitions. Definitions on which the ASC did not receive comment are not discussed below and are adopted without change in the final rule. The ASC is adopting the definitions substantially as proposed, including cross-references to the definitions established in the AMC Rule. Several commenters requested that the crossreferenced definitions be included in the final rule rather than as proposed by cross reference to definitions in the AMC Rule. However, if the ASC were to adopt the approach suggested by these commenters, in the event those AMC Rule definitions are amended by the interagency process in the future, definitions included in this rule would become inaccurate and inconsistent. To avoid that circumstance, the ASC is adopting the definitions as proposed with cross-reference to those definitions established by the AMC Rule. One commenter expressed concern over the definition of ‘‘appraiser panel’’ stating AMCs should not be penalized over other providers of appraisal services, and included discussion on appraisal firms and AMCs. This commenter quoted language from the AMC Rule on appraisal firms. Another commenter expressed concern that the definition of ‘‘appraiser panel’’ should only include independent contractors and not employees. The issues raised by these commenters were determined in the interagency AMC Rule during that rulemaking process. Proposed § 1102.401(d) defined performance of an appraisal. Proposed VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 § 1102.401(d) is being corrected to define performed an appraisal, which conforms to the actual phrase used throughout the rule, to mean the appraisal service requested of an appraiser by the AMC was provided to the AMC. The ASC is adopting this definition without substantive change as § 1102.401(d) in the final rule. One commenter questioned whether this referred to initial submission of the report or when the appraisal has been reviewed and accepted by the client in its final form. The ASC recognizes that the issue may be complicated by the ongoing debate within the profession concerning when an appraisal is complete. The ASC is adopting the definition as proposed, intending for the terms to remain subject to a plain English interpretation. Another commenter requested a definition of ‘‘appraisal service’’ be included in the final rule. The ASC recognizes that various appraisal services could be requested, including an appraisal review, and therefore declines to define the phrase, recognizing that States can be more restrictive. In general, commenters supported the proposed definition. Establishing the Annual AMC Registry Fee The ASC is adopting proposed § 1102.402 without change. Section 1102.402 establishes the annual AMC registry fee for States that elect to register and supervise AMCs as follows: (1) In the case of an AMC that has been in existence for more than a year, $25 multiplied by the number of appraisers who have performed an appraisal for the AMC on a covered transaction in such State during the previous year; and (2) in the case of an AMC that has not been in existence for more than a year, $25 multiplied by the number of appraisers who have performed an appraisal for the AMC on a covered transaction in such State since the AMC commenced doing business. For AMCs that have been in existence for more than a year, section 1109 of Title XI provides that the annual AMC registry fee is based on the number of appraisers ‘‘working for or contracting with’’ an AMC in a State during a 12month period multiplied by $25, but where such $25 amount may be adjusted up to a maximum of $50.13 The final rule adopts the minimum fee of $25 as set by statute and interprets the phrase ‘‘working for or contracting with’’ to mean those appraisers on an AMC appraiser panel that performed an 13 See Title XI sec. 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B). PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 44495 appraisal for the AMC on a covered transaction during the previous year in a particular State. For AMCs that have not been in existence for more than a year, the statute requires a determination by the ASC of an appropriate multiplier to calculate registry fees for those AMCs. The ASC proposed to use the same factors of $25 multiplied by the number of appraisers that performed an appraisal for the AMC on a covered transaction, but the fee would be based on the actual period of time since the AMC commenced doing business rather than 12 months. For example, if an AMC has been operating for 6 months, the fee would be calculated by multiplying $25 by the number of appraisers that performed an appraisal for the AMC on a covered transaction during that 6-month period. One commenter stated the ASC should identify what it will do with revenue from AMC registry fees and suggested the ASC should consider decreasing the fee to less than $25 which would still allow the ASC plenty of funds to perform its Title XI-related functions. The commenter asserted the ASC has discretion to do so. However, section 1109(a)(4), by its plain terms, sets the minimum fee allowed under the statutory framework at $25. The statute did provide latitude for the ASC to establish an appropriate number to multiply by $25 for AMCs that have not been in existence for more than a year. Using the actual period of time since the AMC commenced doing business will maintain some consistency in the calculation of AMC registry fees to reduce administrative burden for the States. Based on the ASC’s anticipated costs of overseeing States that elect to register and supervise AMCs, as well as the ASC’s anticipated costs of maintaining the AMC Registry, the ASC believes the proposed annual AMC registry fee would cover those costs while supporting other Title XI functions of the ASC as mandated by Congress, and in particular, further development of its grant programs, particularly to support States as funds are available. The ASC considered three options with respect to interpreting the phrase ‘‘working for or contracting with.’’ Under the first option, the phrase ‘‘working for or contracting with’’ would have been interpreted to include every appraiser on an AMC appraiser panel during the reporting period 14 in 14 In the case of AMCs that have been in existence for more than a year, the reporting period would be 12 months. In the case of an AMC that has not been E:\FR\FM\25SER1.SGM Continued 25SER1 asabaliauskas on DSKBBXCHB2PROD with RULES 44496 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations a particular State. The multiplier in this option would have included all appraisers on an AMC’s appraiser panel in a particular State, including appraisers accepted by the AMC for consideration for future appraisal assignments. One commenter stated this option would likely penalize AMCs for adding appraisers to their roster for future use, and would also be burdensome for States. Another commenter stated the interpretation under the first option would be the easiest for States. The ASC remains concerned that this option would impose the most burden to AMCs and impose the highest registry fees. Under the second option, the phrase ‘‘working for or contracting with’’ would have been interpreted to include those appraisers engaged by the AMC to perform an appraisal on a covered transaction during the reporting period in a particular State. Under this option, those appraisers engaged by the AMC to perform an appraisal, regardless of whether the appraiser completed the appraisal during the reporting period, would be included in the calculation of the AMC’s registry fees. The ASC requested comment on the second option’s interpretation of the phrase ‘‘working for or contracting with’’ and whether this would be an easier interpretation for the States to administer. (See Question 3 in the proposal.) Several commenters expressed concern over this option. One commenter stated that AMCs could reduce their panel sizes, thereby creating slower turnaround times and utilizing fewer appraisers. Another commenter stated the interpretation under the second option would not be easier to implement and States would have to rely on AMCs self reporting this information. Another commenter expressed concern that the second option could penalize AMCs if an order is accepted and assigned but later cancelled and neither the AMC or the appraiser receive any compensation, and could also be burdensome for States to enforce without having a status of assignments and their completion during a given timeframe. Under the third option, which is adopted in the final rule, the phrase ‘‘working for or contracting with’’ includes those appraisers that performed an appraisal for the AMC on a covered transaction during the reporting period in a particular State. This option excludes appraisers accepted by the AMC for consideration in existence for more than a year, the reporting period would be since the AMC commenced doing business. VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 for future appraisal assignments as well as appraisers who performed appraisals in the past, but did not perform any appraisals in the reporting period. The AMC registry fee is not intended to result in an appraiser being counted twice in calculating the fee, regardless of how many appraisals that appraiser performed in a single State during a reporting period. A few commenters misunderstood the proposed application of the fee and thought the fee would be calculated based on the total number of individual appraisers on an AMC panel, or that the fee would be imposed based on individual appraisals, neither of which is consistent with the proposal or the final rule. Several commenters expressed support for the third option as having the least economic impact to an AMC, the least burden for appraisers and preferable from a State administrative point of view. A few commenters expressed support for the third option but believed it would be a burden for States to collect information from AMCs. One commenter, while stating the third option is costly to AMCs, stated that the third option would be the most equitable as it applies to those appraisers who had completed appraisal assignments, and that the first two options may cause AMCs to pare their appraiser panels. One commenter stated the third option would also simplify the queries that States would need to run to report all registered AMCs that have completed appraisal reports during a specific year or timeframe. Another commenter stated AMCs may use fewer appraisers for appraisal assignments to keep AMC registry fees down. The ASC anticipates there may well be such responses by AMCs to reduce their registry fees, but under the statutory framework, it is seemingly unavoidable. The ASC requested comment on the ASC’s interpretation of the phrase ‘‘working for or contracting with.’’ (See Question 2 in the proposal.) One commenter expressed concern that for AMCs in business less than 12 months, determining how many appraisals have been performed could be difficult. Another commenter suggested ‘‘working for’’ and ‘‘contracting with’’ should be properly defined with specifics and parameters. One commenter requested clarification of the term ‘‘working for,’’ and another commenter, while supporting the third option, commented the term ‘‘performed’’ needs clarity, suggesting appraisals could be considered ‘‘performed’’ when delivered by the AMC to the client. The ASC recognizes that because the AMC is acting as an agent of the appraiser’s client, delivery of an appraisal to the PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 AMC could also be deemed delivery to the client. The ASC is adopting the interpretation as proposed, intending for the terms to remain subject to a plain English interpretation. The ASC also requested comment on what aspects of the proposed rule, if any, would be challenging for States to implement and any alternative approaches that would make implementation easier, while maintaining consistency with the statute. (See Question 8 in the proposal.) Several commenters expressed concern that the proposed rule would create significant administrative burden on the State to calculate and verify registry fees, and would also result in expenditures to administer and transmit the registry fees. Some commenters are opposed to the fee in general, while a few expressed opposition to AMCs. A few commenters suggested no action should be taken until the Dodd-Frank Act is amended. One commenter stated the ASC should seek legislative changes to 12 U.S.C. 3338 asserting it is fundamentally flawed, and requested withdrawal of the proposed rule until the federal statute is changed. The ASC, however, is charged with implementation of the statute as passed by Congress. One commenter stated that the 500 hours of regulatory burden is understated, and added States should be reimbursed for expenses in collecting and transmitting registry fees. Another commenter also stated that the 500 hours is underestimated stating the ASC failed to consider administrative costs and expenses for creating and maintaining a database, and for the staff time to run the program. The ASC is working to minimize such burden in simplifying the reporting requirements for AMCs. As stated in the proposal, the ASC will issue a Bulletin to address reporting requirements with the effective date for compliance. Another commenter foresees several barriers to collecting reliable data on how many appraisers are on an AMC panel and how many have done work for the AMC in the previous 12 months, including the necessity to adopt new rules, create new forms and update current IT systems to collect and maintain this data, all of which will result in increased labor costs for staff needed for implementation of the proposed rule. As stated in the proposed rule, the ASC anticipates further development of its grants program, particularly in support of the States as funds are available. The statutory purpose of ASC grants to the States is to provide funds to assist States in compliance with Title XI. Therefore, as E:\FR\FM\25SER1.SGM 25SER1 asabaliauskas on DSKBBXCHB2PROD with RULES Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations funds are available, the ASC could consider establishing a grant to assist States in registry reporting requirements and transmission of registry fees for both appraisers and AMCs. Another commenter suggested the ASC should provide a revenue projection as well as costs to develop the AMC Registry. The ASC has included those expenses in its budget process and will continue to do so on an annual basis. Another commenter opposed the interpretation of ‘‘working for or contracting with,’’ stating it will create an entirely new regulatory criterion for States to implement and validate, thereby requiring audits. It should be noted that there is no federal requirement for States to audit AMCs to determine validity of information submitted to the State. A State may determine to periodically audit, or not to exercise such authority at all, or alternatively, a State may rely on the complaint/investigation process to determine if and when an audit is warranted. By far the majority of comments received expressed concern over these additional fees and the impact on appraisers if the fee is passed on to them by the AMCs. More specifically, these commenters requested that the final rule prohibit AMCs from passing the fee on to appraisers. While the ASC shares in the concern expressed over the fee being passed on to appraisers, such regulation of AMCs is outside of the authority of the ASC. The ASC notes the fee imposed by statute is not a fee assessed on appraisers, but rather on AMCs. Some commenters identified certain States are already attempting to regulate this at the State level. One commenter, however, stated the choice to pass the fee on to the appraiser should be left to the AMC, and that appraisers have a choice whether to participate on an AMC panel. Some commenters expressed concern that AMCs hide their appraisal management fees from borrowers by including them as part of the fee paid to appraisers, and requested that the final rule require fees be disclosed to the borrower. This, however, is outside the authority of the ASC. Comments were also received expressing concern over AMCs not paying customary and reasonable fees to appraisers, or charging appraisers various fees to be on an AMC panel. This too is outside the authority of the ASC. One commenter suggested consideration of a de minimis exception, stating the ASC should allow AMCs to use the IRS 1099 threshold and thus exclude those appraisers to whom it pays less than $600 during a tax year, VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 which would include appraisers who performed only one appraisal assignment, and perhaps up to three. The commenter suggests its proposal as an alternative to potentially reduce AMC registry fees. However, the ASC would not have authority under the statute to provide such an exception, particularly in the case of AMCs that have been in existence for more than a year. Furthermore, the ASC is concerned there would be undesirable consequences. For example, there could be a reduction in appraiser fees in order to avoid the proposed threshold. Additionally, AMCs might select appraisers in a manner to avoid the threshold rather than basing a selection on competency. The ASC will continue to work with States to address increased burden and will continue to explore means to provide additional grant funding to the States to support State programs as funds are available and additional grant policies and procedures are developed and approved. A few commenters expressed preference for a flat fee to avoid any need to verify that AMCs are sending in the correct amount, another commenter suggested a two-tiered system and another commenter suggested a tiered structure based on the size of the appraiser panel and/or the volume of appraisals brokered by an AMC. The ASC considered these various options to calculating the AMC registry fee, but concluded that such options were not supported by the statute. Also, the ASC notes, in response to several commenters expressing concern over the honor system versus auditing AMCs on information provided to the State by AMCs, that it is up to the State to determine whatever process the State deems appropriate. Two commenters stated the AMC registry fee should be calculated based on FRTs, not covered transactions. The ASC believes the proposal is consistent with the AMC Rule and the statute. The AMC Rule defined a covered transaction as any consumer credit transaction secured by the consumer’s principal dwelling.15 As stated in the AMC Rule preamble, the definition did not limit the definition of covered transaction to FRTs, even though Title XI and its implementing regulations have applied historically only to appraisals for FRTs. The AMC Rule, through the interagency process, determined that defining ‘‘covered transaction’’ as such reflected the statutory text of section 1121(11), which defines the term ‘‘appraisal management company,’’ as in pertinent part, ‘‘any external third party authorized either by a creditor of a consumer credit transaction secured by the consumer’s principal dwelling or by an underwriter of or other principal in the secondary mortgage markets.’’ 16 It was further stated in the AMC Rule preamble that applying coverage of the AMC Rule beyond FRTs was consistent with the structure and text of other parts of Title XI, section 1124, most of which address appraisals generally rather than appraisals only for FRTs, and in particular, the text of section 1124(a)(4) of Title XI indicates that one of the chief purposes of the minimum requirements for AMCs is to ensure compliance with the valuation independence standards established pursuant to section 129E of the Truth and Lending Act (TILA) (15 U.S.C. 1639e).17 The preamble of the AMC Rule concluded that those standards apply to AMCs whenever they engage in a consumer credit transaction secured by the consumer’s principal dwelling, regardless of whether the transaction is a FRT.18 Another commenter questioned the benefit of the AMC Registry to the industry as a whole. The ASC notes the requirement for the ASC to maintain the AMC Registry is statutory. The benefit of the Registry initially will be to promote information sharing between States on AMCs. The Registry will also allow lenders, AMCs and other stakeholders to identify AMCs that are located in participating States, and therefore subject to State registration and supervision. In addition, the Registry will identify AMCs that are Federally regulated AMCs. Collection and Transmission of Annual AMC Registry Fees The ASC is adopting § 1102.403(a) and (b) substantially as proposed regarding collection and transmission of annual AMC registry fees. On or before the effective date of this rule, the ASC will issue an ASC Bulletin to States that will address: 1. When the AMC Registry will be open for States; and 2. Reporting requirements (information required to be submitted by States in order to register AMCs on the AMC Registry) with the effective date for compliance. Section 1102.403(a) and (b) implement collection and transmission of annual AMC registry fees for States that elect to register and supervise AMCs following the statutory scheme 16 See 80 FR 32658, 32664 (June 9, 2015). Title XI sec. 1124(a)(4), 12 U.S.C. 3353(a)(4). 18 See 80 FR 32658, 32664 (June 9, 2015). 17 See 15 See 12 CFR 34.211(h); 12 CFR 225.191(h); 12 CFR 323.9(h); 12 CFR 1222.21(h) (2015). PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 44497 E:\FR\FM\25SER1.SGM 25SER1 asabaliauskas on DSKBBXCHB2PROD with RULES 44498 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations set forth in sections 1109 and 1117 of Title XI as amended by the Dodd-Frank Act. The final rule requires AMC registry fees to be collected and transmitted to the ASC on an annual basis by States that elect to register and supervise AMCs. Only those AMCs whose registry fees have been transmitted to the ASC are eligible to be on the AMC Registry. The ASC requested comment on all aspects of proposed collection and transmission of annual AMC registry fees. (See Question 4 in the proposal.) One commenter stated that while it is understandable that States should have some flexibility in connection with the collection of registry fees, some boundaries or guidelines should be implemented within the final rule because varying State expiration dates could be financially and logistically challenging for AMCs. One commenter stated that the staggered renewal dates could complicate the reporting process and may be a burden to AMCs and States to maintain records. The commenter suggested the reporting period should be the same for every State. As proposed, the ASC recognizes that States should have the flexibility to align a one-year period with any 12month period, which may or may not be based on the calendar year. Based on annual fees paid by the States historically for appraiser registry fees, the ASC recognizes States require flexibility to determine the period for reporting and collection of registry fees dependent on their budget cycles, rules and statutes. States vary greatly on the 12-month cycle as well as renewal cycles, which in some States may be 2 years or more. Just as many States do not use a calendar year for their existing appraiser credentialing process, the ASC believes that allowing States to set the 12-month period provides appropriate flexibility and will help States comply with the collection and transmission of AMC fees and reduce regulatory burden for State governments. States may choose to do this in a similar manner as they currently do for their appraisers, meaning some States have a date certain every year, while other States use, for example, the appraiser’s date of birth (States could use AMC registration date similarly). The registration cycle is left to the individual States to determine, but the ASC notes that the statutory requirement in section 1109(a)(4) requires States to submit AMC registry fees to the ASC annually.19 Several other commenters expressed concern over the additional burden on 19 See Title XI sec. 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B). VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 States to collect and transmit information and fees to the ASC and the need for additional funding and staff. Another commenter stated the ASC should consider implementing a centralized computer system for collecting AMC registry fees, and use some of the fees to provide grants to States to set up and run their AMC programs. The ASC will continue to work with States to address increased burden and will continue to explore means to provide additional grant funding to the States to support State programs as funds are available and additional grant policies and procedures are developed and approved. One commenter objected to States levying additional fees on AMCs to cover the costs of collecting and transmitting fees to the ASC. This commenter referenced the AMC Rule stating in its preamble the option for States to collect administrative fees from Federally regulated AMCs to offset the cost of collecting the AMC Registry fee and the information related to the fee. The ASC understands the basis for the concern, but recognizes this is a matter left to the States. The ASC requested comment on Federally regulated AMCs operating in a State that does not elect to register and supervise AMCs, and whether the ASC should collect information and fees directly from those Federally regulated AMCs. (See Question 5 in the proposal.) The ASC received a number of comments in response to this question. One commenter expressed concerns about collecting fees from Federally regulated AMCs which are exempt from registration with the State. Another commenter stated that Federally regulated AMCs operating in a State that does not have an AMC program should report and submit fees directly to the ASC. A few commenters stated that the State would not have authority to collect fees from entities that are exempt from State licensure and they do not have authority to require that those entities submit data to the State Board and requested that the ASC collect the fees from those entities directly. Several commenters stated the ASC should collect fees directly from Federally regulated AMCs rather than the State acting as a pass-through. One commenter stated if the ASC sets up a program to collect fees from Federally regulated AMCs in States that do not register and supervise AMCs, the ASC should consider the same for States with an AMC program. Another commenter stated that States could choose to opt out due to the reported low percentage of FRTs compared to overall transactions, which would result in a PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 barrier to collection of fees in those States. The ASC considered commenters’ concerns, but recognizes the authority to impose requirements on Federally regulated AMCs lies with the Agencies.20 The ASC will work with the Agencies to address these concerns. Some commenters expressed concern that even though they elect to register and supervise AMCs, they would have no authority over Federally regulated AMCs, and therefore no ability to accept information or fees from those AMCs. The ASC recognizes this may present a challenge for some States. However, for States that elect to register and supervise AMCs, the requirement to collect fees from Federally regulated AMCs is statutory. The Agencies 21 involved with issuing the AMC Rule recognized that practical challenges may arise as the minimum requirements are adopted in States and reporting requirements take effect and the Agencies committed to monitor these issues. The ASC will monitor these issues as well and will continue to explore means to provide additional grant funding to the States to support State programs as funds are available and additional grant policies and procedures are developed and approved. The ASC requested comment on what barriers, if any, exist that would make it difficult for a State to implement the collection and transmission of AMC registry fees (see Question 6 in the proposal) and what costs, both direct in terms of fees and indirect in terms of administrative costs, would be associated with collection and transmission of AMC registry fees (see Question 7 in the proposal). One commenter estimated that the burden for a State’s program would be 25 hours per month of staff time to complete and would cost approximately $6000 to design a database and $700/month for staff to maintain. Another commenter stated the proposed rule could negatively affect AMCs, consumers and real estate appraisers, as well as create burden for States. This commenter also stated AMCs will likely pass on fees to clients and therefore consumers. Another commenter stated costs may negatively affect smaller AMCs causing consolidation of AMCs. Another concern was that AMCs may pare down appraiser panels. The ASC recognizes the collection and transmission to the ASC of AMC registry fees by the States would create some recordkeeping, reporting and compliance requirements. 20 OCC, Board, FDIC, NCUA, Bureau, and FHFA (see footnote 8). 21 Id. E:\FR\FM\25SER1.SGM 25SER1 asabaliauskas on DSKBBXCHB2PROD with RULES Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations However, these collection and transmission requirements are imposed by the statute. The ASC will continue to work with States to address increased burden and will continue to explore means to provide additional grant funding to the States to support State programs as funds are available and additional grant policies and procedures are developed and approved. Several commenters requested that States should be allowed to send in multi-year registry fees rather than annually. Another commenter expressed concern that States could incur significant administrative costs to implement programming changes to their computer systems if they have to collect fees annually rather than multiyear fees as they do now for appraisers. If a State can assess on a multi-year basis, the ASC would not object. However, the ASC notes that the statutory requirement in section 1109(a)(4) requires States that elect to register and supervise AMCs to submit AMC registry fees to the ASC annually.22 For clarification purposes, language that was included at the end of proposed section 1102.403(b) referencing the ‘‘12-month period subsequent to payment of the fee’’ has been removed to avoid conflict should a State assess the fee on a multi-year basis. Another commenter expressed the desire for the ASC to continue to accept data files for AMCs. Historically, the ASC accepted data files, and continues to do so on a limited basis for the Appraiser Registry. However, this method of transmitting rosters is obsolete and time consuming. The ASC has continued to improve the Appraiser Registry using more up-to-date transmission methods such as the extranet application and Simple Object Access Protocol (SOAP) in order to provide more real-time information on the National Registries. While the ASC recognizes this may impose additional burden on States, the ASC will continue to explore means to provide grant funding to the States to support State programs as funds are available and additional grant policies and procedures are developed and approved. Another commenter was concerned with specific collection and transmission scenarios and how various scenarios would impact determination of fees, calculation of panel size, transmission of fees, verification of fee calculation and audit requirements. Several of this commenter’s concerns deal with logistics and will be part of 22 See Title XI sec. 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B). VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 the ASC Bulletin concerning reporting requirements which will be issued after this final rule. This commenter also wanted to know what timeline the ASC is considering between verification and remittance, similar to another commenter who stated there should be flexibility with the timing of payment of fees and the actual transmission of the fees, and that the final rule should add additional language that clearly addresses these potential gaps in order to avoid any unintended consequences. This is a matter that will be left to the States to administer within the following parameters: (1) AMC registry fees must be collected and transmitted to the ASC on an annual basis by States that elect to register and supervise AMCs; and (2) only those AMCs whose registry fees have been transmitted to the ASC are eligible to be on the AMC Registry. IV. Regulatory Analysis Paperwork Reduction Act Certain provisions of the final rule contain ‘‘information collection’’ requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501 et seq.). Under the PRA, the ASC may not conduct or sponsor, and, notwithstanding any other provision of law, a person is not required to respond to, an information collection unless the information collection displays a valid Office of Management and Budget (OMB) control number. The information collection requirements contained in this final rule were submitted to OMB for review and approval at the proposed rule stage by the ASC pursuant to section 3506 of the PRA and section 1320.11 of the OMB’s implementing regulations (5 CFR part 1320). OMB instructed the ASC to examine public comment in response to the proposed rule and describe in the supporting statement of their next collections any public comments received regarding the collection as well as why (or why it did not) incorporate the commenter’s recommendation. The ASC received 12 public comments regarding the collection and concern of burden on States, and two comments voiced concern that the ASC did not perform a cost benefit analysis. The ASC described the comments in the supporting statement above and the discussion below on the Regulatory Flexibility Act, and addressed why the ASC did not incorporate commenters’ recommendations. The collection of information requirements in the final rule are found in §§ 1102.400–1102.403. This information is required to PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 44499 implement section 1473 of the DoddFrank Act. Title of Information Collection: Collection and Transmission of Annual AMC Registry Fees. OMB Control Nos.: The ASC will be seeking new control numbers for these collections. Frequency of Response: Event generated. Affected Public: States; businesses or other for-profit and not-for-profit organizations. Abstract State Recordkeeping Requirements States that elect to register and supervise AMCs are required to collect and transmit annual AMC registry fees to the ASC. Section 1102.402 establishes the annual AMC registry fee for States that elect to register and supervise AMCs as follows: (1) In the case of an AMC that has been in existence for more than a year, $25 multiplied by the number of appraisers who have performed an appraisal for the AMC on a covered transaction in such State during the previous year; and (2) in the case of an AMC that has not been in existence for more than a year, $25 multiplied by the number of appraisers who have performed an appraisal for the AMC on a covered transaction in such State since the AMC commenced doing business. Section 1102.403 requires AMC registry fees to be collected and transmitted to the ASC on an annual basis by States that elect to register and supervise AMCs. Only those AMCs whose registry fees have been transmitted to the ASC will be eligible to be on the AMC Registry. Section 1102.403 clarifies that States may align a one-year period with any 12-month period, which may, or may not, be based on the calendar year. The registration cycle is left to the individual States to determine. State Reporting Burden Section 1103 of Title XI, Functions of Appraisal Subcommittee, was amended by the Dodd-Frank Act to require the ASC to maintain a registry of AMCs that are either: (1) Registered with and subject to supervision by a State; or (2) Federally regulated AMCs. On or before the effective date of this rule, the ASC will issue an ASC Bulletin to States that will address: 1. When the AMC Registry will be open for States; and 2. Reporting requirements (information required to be submitted by States in order to register AMCs on the AMC Registry) with the effective date for compliance. E:\FR\FM\25SER1.SGM 25SER1 44500 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations Burden Estimates: Total Number of Respondents: 500 AMCs, 55 States. Burden Total: 500 hours. asabaliauskas on DSKBBXCHB2PROD with RULES Regulatory Flexibility Act The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., generally requires that, in connection with a rulemaking, an agency prepare and make available for public comment a regulatory flexibility analysis that describes the impact of the proposed rule on small entities. However, the regulatory flexibility analysis otherwise required under the RFA is not required if an agency certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a brief explanatory statement in the Federal Register together with the rule. Based on its analysis, and for the reasons stated below, the ASC believes that the rule will not have a significant economic impact on a substantial number of small entities. Section 1109 of Title XI provides that State appraiser certifying and licensing agencies that elect to register and supervise AMCs shall collect (1) from AMCs that have been in existence for more than a year, annual AMC registry fees in the amount of $25 (up to a maximum of $50) multiplied by the number of appraisers ‘‘working for or contracting with’’ an AMC in a State during the previous year; and (2) from AMCs that have not been in existence for more than a year, annual AMC registry fees in the amount of $25 (up to a maximum of $50) multiplied by an appropriate number to be determined by the ASC.23 The purpose of the statutory fee is to support the ASC’s functions under Title XI. Because the ASC believes the minimum fee required by the statute would be adequate to support its functions, the rule adopts the minimum fee of $25 as set by statute. The rule also interprets the phrase ‘‘working for or contracting with’’ to mean those appraisers that performed an appraisal for the AMC on a covered transaction during the reporting period. For AMCs that have existed for more than a year, the formula is $25 multiplied by the number of appraisers who have performed an appraisal for the AMC on a covered transaction during the previous year. For AMCs that have not existed for more than a year, the $25 fee is multiplied by the number of appraisers that performed an appraisal for the AMC on a covered 23 See 12 U.S.C. 3338(a)(4)(B). VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 transaction since the AMC commenced doing business. Regarding the fee for AMCs that have been in existence for more than a year, the ASC believes the rule imposes the minimum fee allowed under the statutory provisions of section 1109. The ASC did not exercise statutory discretion granted to the ASC to increase the fee above $25. Further, the ASC interprets ‘‘working for or contracting with’’ to mean only those appraisers who actually performed an appraisal for the AMC, as opposed to all appraisers on the AMC’s panel or all appraisers engaged, regardless of whether the assignment was completed. The ASC believes this formula results in the lowest fee allowed by the statute and the ASC chose not to exercise its authority to increase this minimum fee. Therefore, any burden produced is the result of statutory and not regulatory requirements. The ASC has also decided to adopt the statutory minimum fee of $25 for AMCs that have not existed for more than a year. As required by statute, the ASC adopted an appropriate number against which to multiply the $25 fee. The ASC adopted the same multiple as used for AMCs that have existed for more than a year (i.e., the number of appraisers that have performed appraisal assignments for the AMC). It is possible that the ASC may have been able to adopt a multiple that would have resulted in a lower fee and would still be deemed appropriate. In this regard, the rule may have created a burden for AMCs that have not existed for more than a year, beyond the burden created by the statutory requirements alone. However, using the actual period of time since the AMC commenced doing business will maintain some consistency in the calculation of AMC registry fees to reduce administrative burden for the States. One commenter stated the proposed rule would have a large financial impact on smaller AMCs and community banks and credit unions, as well as appraisers, and asserted that the RFA requires analysis when the rule directly regulates small entities. This commenter stated that as an owner of a small AMC, regulatory fees proposed are burdensome, and as a national AMC, is opposed to paying for the same appraiser in different States, especially given that the AMC registry fee is on top of other State fees required by the States, and regulatory oversight seems ‘‘duplicitous.’’ Another commenter stated the proposed rule would affect thousands of small appraisal businesses as a result of AMCs passing the registry fee on to appraisers, and that the ASC PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 should do extensive analysis on how the proposed rule will affect residential appraisers. The ASC shares in the concern but has no authority to regulate that issue. A few commenters indicated that some States are looking at regulating this issue at the State level. In support of those States, the ASC notes the fee imposed by statute is not a fee assessed on appraisers, but rather on AMCs. This commenter, similar to the previous commenter, also did not believe the requirements of section 609(a) of the RFA have been met and that the fee may force small AMCs out of business, as well as impact sole proprietorships that accept assignments from AMCs. This commenter went on to state that while the ASC is not required to adhere to Executive Order 12866 or issue cost benefit analysis, this commenter believes it is sound best practice. The ASC carefully considered these matters and concluded requirements under the rule are imposed by the statute, not the rule, and further, the requirements apply to those States that elect to register and supervise AMCs following the statutory scheme set forth in section 1473 of the Dodd-Frank Act. In addition, the RFA does not require an agency to conduct a small-entity impact analysis when the agency does not regulate the affected entities (AMCs, lenders, appraisers). The ASC’s statutory oversight extends to State certifying and licensing agencies. Section 1109 of Title XI provides the framework and minimum fee to collect from AMCs for States that elect to register and supervise AMCs. The ASC believes the rule as proposed imposes the minimum fee of $25 allowed under the statutory provisions of section 1109. The statute did provide latitude for the ASC to establish an appropriate number to multiply by $25 for AMCs that have not been in existence for a year. Using the actual period of time since the AMC commenced doing business will maintain some consistency in the calculation of AMC registry fees to reduce administrative burden for the States. The ASC did not exercise statutory discretion granted to the ASC to increase the fee above $25. Therefore, any burden produced is the result of statutory and not regulatory requirements. While some burden beyond the statutory requirements may have resulted from the rule for AMCs that have not existed for more than a year, the ASC does not believe the rule will have a significant economic impact on a substantial number of small entities. There are only approximately 500 AMCs operating in the United States. The E:\FR\FM\25SER1.SGM 25SER1 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations annual regulatory burden will only apply to new AMCs that have not existed for more than a year. Given the small number of AMCs currently in operation, it is unlikely that there will be a substantial number of AMCs that commence doing business in any given year. Further, the ASC adopted the lowest possible fee of $25. Therefore, the ASC does not believe that the exercise of its discretion in setting the fee formula for such AMCs will have a significant economic impact on a substantial number of small entities. The collection and transmission to the ASC of AMC registry fees by the States would create some recordkeeping, reporting and compliance requirements. However, these collection and transmission requirements are imposed by the statute, not the rule. Further, the RFA requires an agency to perform a regulatory flexibility analysis of small entity impacts when the agency’s rule directly regulates the small entities.24 Based on its analysis, and for the reasons stated above, the ASC believes that the rule will not have a significant economic impact on a substantial number of small entities. Therefore, the ASC certifies that the final rule will not have a significant economic impact on a substantial number of small entities. asabaliauskas on DSKBBXCHB2PROD with RULES Unfunded Mandates Reform Act of 1995 Determination The ASC has analyzed the final rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the ASC considered whether the final rule includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation). For the following reasons, the ASC finds that the final rule does not trigger the $100 million UMRA threshold. The costs specifically related to requirements set forth in statute are excluded from expenditures under the 24 For purposes of assessing the impacts of the proposed rule on small entities, ‘‘small entities’’ is defined in the RFA to include small businesses, small not-for-profit organizations, and small government jurisdictions. See 5 U.S.C. 601(6). A ‘‘small business’’ is determined by application of SBA regulations and reference to the North American Industry Classification System (NAICS) classifications and size standards. See 5 U.S.C. 601(3). A ‘‘small organization’’ is any ‘‘not-for-profit enterprise which is independently owned and operated and is not dominant in its field.’’ 5 U.S.C. 601(4). A ‘‘small governmental jurisdiction’’ is the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000. See 5 U.S.C. 601(5). Given these definitions, States that elect to establish licensing and certification authorities are not small entities and the burden on them is not relevant to this analysis. VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 UMRA. Given that the final rule reflects requirements that arise from section 1473 of the Dodd-Frank Act, the UMRA cost estimate for the proposed rule is zero. For this reason, and for the other reasons cited above, the ASC has determined that this final rule will not result in expenditures by State, local, and tribal governments, or the private sector, of $100 million or more in any one year. Accordingly, this proposed rule is not subject to section 202 of the UMRA. List of Subjects in 12 CFR Part 1102 Administrative practice and procedure, Appraisers, Banks, Banking, Freedom of information, Mortgages, Reporting and recordkeeping requirements. Authority and Issuance For the reasons set forth in the preamble, the ASC amends 12 CFR part 1102 as follows: PART 1102—APPRAISER REGULATION 1. The authority citation for part 1102 is revised to read as follows: ■ Authority: 12 U.S.C. 3348(a), 3332, 3335, 3338 (a)(4)(B), 3348(c), 5 U.S.C. 552a, 553(e); Executive Order 12600, 52 FR 23781 (3 CFR, 1987 Comp., p. 235). 2. Subpart E to part 1102 is added to read as follows: ■ Subpart E—Collection and Transmission of Appraisal Management Company (AMC) Registry Fees Sec. 1102.400 Authority, purpose, and scope. 1102.401 Definitions. 1102.402 Establishing the annual AMC registry fee. 1102.403 Collection and transmission of annual AMC registry fees. Subpart E—Collection and Transmission of Appraisal Management Company (AMC) Registry Fees § 1102.400 Authority, purpose, and scope. (a) Authority. This subpart is issued by the Appraisal Subcommittee (ASC) under sections 1106 and 1109 (a)(4)(B) of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) (Pub. L. 111–203, 124 Stat. 1376 (2010)), 12 U.S.C. 3335, 3338 (a)(4)(B)). (b) Purpose. The purpose of this subpart is to implement section 1109 (a)(4)(B) of Title XI, 12 U.S.C. 3338. (c) Scope. This subpart applies to States that elect to register and PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 44501 supervise appraisal management companies pursuant to 12 U.S.C. 3346 and 3353, and the regulations promulgated thereunder. § 1102.401 Definitions. For purposes of this subpart: (a) AMC Registry means the national registry maintained by the ASC of those AMCs that meet the Federal definition of AMC, as defined in 12 U.S.C. 3350(11), are registered by a State or are Federally regulated, and have paid the annual AMC registry fee. (b) AMC Rule means the interagency final rule on minimum requirements for 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). (c) ASC means the Appraisal Subcommittee of the Federal Financial Institutions Examination Council established under section 1102 (12 U.S.C. 3310) as it amended the Federal Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3301 et seq.) by adding section 1011. (d) Performed an appraisal means the appraisal service requested of an appraiser by the AMC was provided to the AMC. (e) State means any State, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the United States Virgin Islands, and American Samoa. (f) Other terms. Definitions of: Appraisal management company (AMC); appraisal management services; appraisal panel; consumer credit; covered transaction; dwelling; Federally regulated AMC are incorporated from the AMC Rule by reference. § 1102.402 Establishing the annual AMC registry fee. The annual AMC registry fee to be applied by States that elect to register and supervise AMCs is established as follows: (a) In the case of an AMC that has been in existence for more than a year, $25 multiplied by the number of appraisers who have performed an appraisal for the AMC in connection with a covered transaction in such State during the previous year; and (b) In the case of an AMC that has not been in existence for more than a year, $25 multiplied by the number of appraisers who have performed an appraisal for the AMC in connection with a covered transaction in such State since the AMC commenced doing business. E:\FR\FM\25SER1.SGM 25SER1 44502 Federal Register / Vol. 82, No. 184 / Monday, September 25, 2017 / Rules and Regulations § 1102.403 Collection and transmission of annual AMC registry fees. (a) Collection of annual AMC registry fees. States that elect to register and supervise AMCs pursuant to the AMC Rule shall collect an annual registry fee as established in § 1102.402 from AMCs eligible to be on the AMC Registry. (b) Transmission of annual AMC registry fee. States that elect to register and supervise AMCs pursuant to the AMC Rule shall transmit AMC registry fees as established in § 1102.402 to the ASC on an annual basis. States may align a one-year period with any 12month period, which may, or may not, be based on the calendar year. Only those AMCs whose registry fees have been transmitted to the ASC will be eligible to be on the AMC Registry. By the Appraisal Subcommittee. Dated: September 13, 2017. Arthur Lindo, Chairman. [FR Doc. 2017–20400 Filed 9–22–17; 8:45 am] BILLING CODE 6700–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2017–0639; Product Identifier 2017–CE–016–AD; Amendment 39–19052; AD 2017–19–22] RIN 2120–AA64 Airworthiness Directives; British Aerospace Regional Aircraft Airplanes Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. AGENCY: We are superseding Airworthiness Directive (AD) 2014–07– 09 for British Aerospace Regional Aircraft Jetstream Series 3101 and Jetstream Model 3201 airplanes. This AD results from mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as both the need for newly added inspections for corrosion, which includes the door hinges/supporting structure and attachment bolts for the main spar joint and engine support, and inadequate existing instructions for inspection for corrosion for several areas including the rudder hinge location on the vertical stabilizer. We are issuing this AD to require actions to address the unsafe condition on these products. asabaliauskas on DSKBBXCHB2PROD with RULES SUMMARY: VerDate Sep<11>2014 16:53 Sep 22, 2017 Jkt 241001 This AD is effective October 30, 2017. The Director of the Federal Register approved the incorporation by reference of certain publications listed in the AD as of October 30, 2017. ADDRESSES: You may examine the AD docket on the Internet at http:// www.regulations.gov by searching for and locating Docket No. FAA–2017– 0395; or in person at Document Management Facility, U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. For service information identified in this AD, contact BAE Systems (Operations) Limited, Customer Information Department, Prestwick International Airport, Ayrshire, KA9 2RW, Scotland, United Kingdom; telephone: +44 1292 675207; fax: +44 1292 675704; email: RApublications@ baesystems.com; Internet: http:// www.baesystems.com/Businesses/ RegionalAircraft/. You may view this referenced service information at the FAA, Policy and Innovation Division, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329–4148. It is also available on the Internet at http:// www.regulations.gov by searching for Docket No. FAA–2017–0639. FOR FURTHER INFORMATION CONTACT: Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Standards Branch, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329– 4059; fax: (816) 329–4090; email: doug.rudolph@faa.gov. SUPPLEMENTARY INFORMATION: DATES: Discussion We issued AD 2014–07–09, Amendment 39–17823 (79 FR 22367; April 22, 2014) (‘‘AD 2014–07–09’’). That AD required actions intended to address an unsafe condition on British Aerospace Regional Aircraft Model Jetstream Series 3101 and Jetstream Model 3201 airplanes and was based on mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country. Since we issued AD 2014–07–09, more extensive reports of corrosion have been received, resulting in the need to inspect additional areas. We issued a notice of proposed rulemaking (NPRM) (82 FR 28592; June 23, 2017) to amend 14 CFR part 39 by adding an AD that would apply to British Aerospace Regional Aircraft Model Jetstream Series 3101 and PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 Jetstream Model 3201 airplanes and supersede AD 2014–07–09. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD No.: 2017–0073, dated April 27, 2017 (referred to after this as ‘‘the MCAI’’), to correct an unsafe condition for the specified products. The MCAI states: Maintenance instructions for BAE Jetstream 3100 and 3200 aeroplanes, which are approved by EASA, are currently defined and published in the BAE Systems (Operations) Ltd Jetstream Series 3100 & 3200 Corrosion Prevention and Control Programme (CPCP) document, JS/CPCP/01. These instructions have been identified as mandatory for continued airworthiness. Failure to accomplish these instructions could result in an unsafe condition. EASA issued AD 2012–0036 to require operators to comply with the inspection instructions as contained in the CPCP at Revision 6. Since that AD was issued, reports have been received of finding extensive corrosion. While affected areas are covered by an existing zonal inspection, it has been determined that this inspection is inadequate to identify the corrosion in those areas. Consequently, new inspection items 52–11– 002 C1, 200/EX/01 C2, 500/IN/02 C1, 600/IN/ 04 C1 and 700/IN/04 C1 have been added to the CPCP at Revision 8. For the reason described above, this [EASA] AD retains the requirements of EASA AD 2012–0036, which is superseded, and requires accomplishment of the actions specified in BAE Systems (Operations) Ltd Jetstream Series 3100 & 3200 CPCP, JS/CPCP/ 01, Revision 8 (hereafter referred to as ‘the CPCP’ in this AD). The MCAI can be found in the AD docket on the Internet at: https:// www.regulations.gov/ document?D=FAA-2017-0639-0002. Comments We gave the public the opportunity to participate in developing this AD. The following presents the comment received on the NPRM and the FAA’s response to the comment. Summary Clarification Kenneth MacKinnon of BAE Systems Regional Aircraft stated that the Summary and Reason, paragraph (e) of this AD, both list corrosion issues that were introduced at Revision 6, which he assumes was mandated by AD 2014–07– 09. He assumes this is an error and that both sections should summarize the changes introduced at Revisions 7 and 8, as detailed in the BAE SYSTEMS Certification Plans AWR/768/J3I and AWR/815/J31 respectively. BAE wants the summary to better reflect the changes since FAA AD 2014–07–09. We partially agree with this comment. The Summary and Reason, paragraph (e) E:\FR\FM\25SER1.SGM 25SER1

Agencies

[Federal Register Volume 82, Number 184 (Monday, September 25, 2017)]
[Rules and Regulations]
[Pages 44493-44502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20400]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

12 CFR Part 1102

[Docket No. AS17-07]


Collection and Transmission of Annual AMC Registry Fees

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

ACTION: Final rule.

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[[Page 44494]]

SUMMARY: The ASC is adopting a final rule to implement collection and 
transmission of appraisal management company (AMC) annual registry fees 
in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) to be applied by State appraiser certifying and licensing 
agencies that elect to register and supervise AMCs, pursuant to 12 
U.S.C. 3353 and the regulations promulgated thereunder.

DATES: Effective date. This final rule will become effective on 
November 24, 2017.

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

    Section 1473 of the Dodd-Frank Act \1\ included amendments to Title 
XI of the Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 \2\ (Title XI). Section 1109 of Title XI,\3\ Roster of State 
certified or licensed appraisers; authority to collect and transmit 
fees, was amended by the Dodd-Frank Act to require States \4\ that 
elect to register and supervise AMCs to collect: (1) From AMCs that 
have been in existence for more than a year an annual registry fee of 
$25 multiplied by the number of appraisers working for or contracting 
with such AMC in such State during the previous year; and (2) from AMCs 
that have not been in existence for more than a year, $25 multiplied by 
an appropriate number to be determined by the ASC. Such $25 amount may 
be adjusted, up to a maximum of $50, at the discretion of the ASC, if 
necessary to carry out the ASC's Title XI functions.\5\
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    \1\ Public Law 111-203, 124 Stat. 1376.
    \2\ Public Law 101-73, 103 Stat. 183.
    \3\ 12 U.S.C. 3338.
    \4\ As of January, 2017, 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, had State appraiser certifying and licensing 
agencies.
    \5\ See 12 U.S.C. 3338(a)(4)(B).
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    Section 1117 of Title XI,\6\ Establishment of State appraiser 
certifying and licensing agencies, was amended by the Dodd-Frank Act to 
include additional duties for States, if they so choose, to: (1) 
Register and supervise AMCs; and (2) add information about AMCs in 
their State to the National Registry of AMCs (AMC Registry).\7\ States 
electing to register and supervise AMCs under Section 1117 must 
implement minimum requirements in accordance with the AMC Rule.\8\
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    \6\ 12 U.S.C. 3346.
    \7\ 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, 
who are State certified or licensed in a State, or 25 or more 
appraisers nationally (two or more States) within a given year. (See 
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. (See 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.
    \8\ The Dodd-Frank Act added section 1124 to Title XI, Appraisal 
Management Company Minimum Requirements, which required the Office 
of the Comptroller of the Currency (OCC); Board of Governors of the 
Federal Reserve System (Board); Federal Deposit Insurance 
Corporation (FDIC); National Credit Union Administration (NCUA); 
Bureau of Consumer Financial Protection (Bureau); and Federal 
Housing Finance Agency (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. The Agencies issued a final rule 
(AMC Rule) with an effective date of August 10, 2015. (80 FR 32658, 
June 9, 2015).
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    Section 1103 of Title XI,\9\ Functions of Appraisal Subcommittee, 
was amended by the Dodd-Frank Act to require the ASC to maintain the 
AMC Registry of those AMCs that are either:
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    \9\ 12 U.S.C. 3332.
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    (1) Registered with and subject to supervision by a State that has 
elected to register and supervise AMCs; or (2) are operating 
subsidiaries of a Federally regulated financial institution (Federally 
regulated AMCs). On or before the effective date of this rule, the ASC 
will issue an ASC Bulletin to States that will address:
    1. When the AMC Registry will be open for States; and
    2. Reporting requirements (information required to be submitted by 
States in order to register AMCs on the AMC Registry) with the 
effective date for compliance.
    Title XI as amended by the Dodd-Frank Act imposes a statutory 
restriction on performance of services by AMCs for a federally related 
transaction (FRT) \10\ that applies after a 36-month period that began 
when the AMC Rule became effective (Implementation Period).\11\ The ASC 
recognizes that States electing to register and supervise AMCs may need 
to amend their rules and/or regulations, or revise their operating 
procedures in order to implement AMC registry fees. Given the limited 
period of time between publication of this final rule and the 
expiration of the Implementation Period, States may not be able to 
implement the AMC registry fees within the Implementation Period. As 
discussed further below in the subsection Collection and transmission 
of annual AMC registry fees, only those AMCs whose registry fees have 
been transmitted to the ASC are eligible to be on the AMC Registry. 
While the ASC encourages States that elect to register and supervise 
AMCs to begin collecting fees from registered AMCs as soon as possible 
in accordance with the requirements of Section 1109 of Title XI so that 
those AMCs may be entered on the AMC Registry, the restriction on 
performance of services for FRTs will not impact an AMC so long as the 
AMC is registered with a State that has elected to register and 
supervise AMCs, or is subject to oversight by a Federal financial 
institutions regulatory agency.
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    \10\ A federally related transaction includes any real estate-
related financial transaction which: (a) A Federal financial 
institutions regulatory agency engages in, contracts for, or 
regulates; and (b) requires the services of an appraiser. See Title 
XI sec. 1121 (4), 12 U.S.C. 3350), implemented by the OCC: 12 CFR 
34.42(f) and 34.43(a); Board: 12 CFR 225.62(f) and 225.63(a); FDIC: 
12 CFR 323.2(f) and 323.3(a); and NCUA: 12 CFR 722.2(f) and 
722.3(a). Based on 2014 Home Mortgage Disclosure Act (HMDA) data, at 
least 90 percent of residential mortgage loan originations are not 
subject to the Title XI appraisal regulations. (FFIEC report to 
Congress, Economic Growth and Regulatory Paperwork Reduction Act, 82 
FR 15900 (March 30, 2017).
    \11\ See 12 U.S.C. 3353(f)(1). In summary, beginning 36 months 
from the effective date of the AMC Rule, an AMC, as defined by Title 
XI, may not provide services for FRTs in a State unless the AMC is 
registered with the State pursuant to a registration and supervision 
program established under Section 1117, or is subject to oversight 
by a Federal financial institutions regulatory agency.
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    On May 20, 2016, the ASC published a proposed rule with a 60-day 
public comment period on implementation of the annual AMC registry fee 
that States would collect and transmit to the ASC if they elect to 
register and supervise AMCs.\12\ This final rule sets the fee formula 
that States would apply in collecting annual AMC registry fees and 
transmitting those fees to the ASC.
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    \12\ 81 FR 31868 (May 20, 2016).
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II. The Final Rule

    The final rule: (1) Establishes the annual AMC registry fee in 
section 1109 of Title XI for AMCs in those States electing to register 
and supervise AMCs; and (2) implements collection and transmission of 
AMC registry fees as required by section 1109. The final rule sets 
forth the ASC's interpretation of the phrase ``working for or 
contracting with'' for purposes of calculating the annual AMC registry 
fee.

[[Page 44495]]

    For the reasons discussed in section III of this SUPPLEMENTARY 
INFORMATION, the final rule adopts the rule substantially as proposed. 
The final rule contains technical, nonsubstantive changes.

III. The Final Rule and Public Comments on the Proposed Rule

    The following is a section-by-section review of the proposed rule 
and a discussion of the public comments received by the ASC concerning 
the proposal. The ASC received 104 comment letters in response to the 
published proposal. These comment letters were received from State 
appraiser certifying and licensing agencies, AMCs, appraiser and real 
estate trade associations, professional associations, appraisal firms 
and appraisers.

A. Section 1102.401 Definitions

    The ASC requested comment on all aspects of the proposed rule. The 
following is a discussion of the definitions, related public comments 
and issues relating to those definitions. Definitions on which the ASC 
did not receive comment are not discussed below and are adopted without 
change in the final rule.
    The ASC is adopting the definitions substantially as proposed, 
including cross-references to the definitions established in the AMC 
Rule. Several commenters requested that the cross-referenced 
definitions be included in the final rule rather than as proposed by 
cross reference to definitions in the AMC Rule. However, if the ASC 
were to adopt the approach suggested by these commenters, in the event 
those AMC Rule definitions are amended by the interagency process in 
the future, definitions included in this rule would become inaccurate 
and inconsistent. To avoid that circumstance, the ASC is adopting the 
definitions as proposed with cross-reference to those definitions 
established by the AMC Rule.
    One commenter expressed concern over the definition of ``appraiser 
panel'' stating AMCs should not be penalized over other providers of 
appraisal services, and included discussion on appraisal firms and 
AMCs. This commenter quoted language from the AMC Rule on appraisal 
firms. Another commenter expressed concern that the definition of 
``appraiser panel'' should only include independent contractors and not 
employees. The issues raised by these commenters were determined in the 
interagency AMC Rule during that rulemaking process.
    Proposed Sec.  1102.401(d) defined performance of an appraisal. 
Proposed Sec.  1102.401(d) is being corrected to define performed an 
appraisal, which conforms to the actual phrase used throughout the 
rule, to mean the appraisal service requested of an appraiser by the 
AMC was provided to the AMC. The ASC is adopting this definition 
without substantive change as Sec.  1102.401(d) in the final rule. One 
commenter questioned whether this referred to initial submission of the 
report or when the appraisal has been reviewed and accepted by the 
client in its final form. The ASC recognizes that the issue may be 
complicated by the ongoing debate within the profession concerning when 
an appraisal is complete. The ASC is adopting the definition as 
proposed, intending for the terms to remain subject to a plain English 
interpretation. Another commenter requested a definition of ``appraisal 
service'' be included in the final rule. The ASC recognizes that 
various appraisal services could be requested, including an appraisal 
review, and therefore declines to define the phrase, recognizing that 
States can be more restrictive. In general, commenters supported the 
proposed definition.
Establishing the Annual AMC Registry Fee
    The ASC is adopting proposed Sec.  1102.402 without change. Section 
1102.402 establishes the annual AMC registry fee for States that elect 
to register and supervise AMCs as follows:
    (1) In the case of an AMC that has been in existence for more than 
a year, $25 multiplied by the number of appraisers who have performed 
an appraisal for the AMC on a covered transaction in such State during 
the previous year; and (2) in the case of an AMC that has not been in 
existence for more than a year, $25 multiplied by the number of 
appraisers who have performed an appraisal for the AMC on a covered 
transaction in such State since the AMC commenced doing business.
    For AMCs that have been in existence for more than a year, section 
1109 of Title XI provides that the annual AMC registry fee is based on 
the number of appraisers ``working for or contracting with'' an AMC in 
a State during a 12-month period multiplied by $25, but where such $25 
amount may be adjusted up to a maximum of $50.\13\ The final rule 
adopts the minimum fee of $25 as set by statute and interprets the 
phrase ``working for or contracting with'' to mean those appraisers on 
an AMC appraiser panel that performed an appraisal for the AMC on a 
covered transaction during the previous year in a particular State.
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    \13\ See Title XI sec. 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B).
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    For AMCs that have not been in existence for more than a year, the 
statute requires a determination by the ASC of an appropriate 
multiplier to calculate registry fees for those AMCs. The ASC proposed 
to use the same factors of $25 multiplied by the number of appraisers 
that performed an appraisal for the AMC on a covered transaction, but 
the fee would be based on the actual period of time since the AMC 
commenced doing business rather than 12 months. For example, if an AMC 
has been operating for 6 months, the fee would be calculated by 
multiplying $25 by the number of appraisers that performed an appraisal 
for the AMC on a covered transaction during that 6-month period.
    One commenter stated the ASC should identify what it will do with 
revenue from AMC registry fees and suggested the ASC should consider 
decreasing the fee to less than $25 which would still allow the ASC 
plenty of funds to perform its Title XI-related functions. The 
commenter asserted the ASC has discretion to do so. However, section 
1109(a)(4), by its plain terms, sets the minimum fee allowed under the 
statutory framework at $25. The statute did provide latitude for the 
ASC to establish an appropriate number to multiply by $25 for AMCs that 
have not been in existence for more than a year. Using the actual 
period of time since the AMC commenced doing business will maintain 
some consistency in the calculation of AMC registry fees to reduce 
administrative burden for the States. Based on the ASC's anticipated 
costs of overseeing States that elect to register and supervise AMCs, 
as well as the ASC's anticipated costs of maintaining the AMC Registry, 
the ASC believes the proposed annual AMC registry fee would cover those 
costs while supporting other Title XI functions of the ASC as mandated 
by Congress, and in particular, further development of its grant 
programs, particularly to support States as funds are available.
    The ASC considered three options with respect to interpreting the 
phrase ``working for or contracting with.'' Under the first option, the 
phrase ``working for or contracting with'' would have been interpreted 
to include every appraiser on an AMC appraiser panel during the 
reporting period \14\ in

[[Page 44496]]

a particular State. The multiplier in this option would have included 
all appraisers on an AMC's appraiser panel in a particular State, 
including appraisers accepted by the AMC for consideration for future 
appraisal assignments. One commenter stated this option would likely 
penalize AMCs for adding appraisers to their roster for future use, and 
would also be burdensome for States. Another commenter stated the 
interpretation under the first option would be the easiest for States. 
The ASC remains concerned that this option would impose the most burden 
to AMCs and impose the highest registry fees.
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    \14\ In the case of AMCs that have been in existence for more 
than a year, the reporting period would be 12 months. In the case of 
an AMC that has not been in existence for more than a year, the 
reporting period would be since the AMC commenced doing business.
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    Under the second option, the phrase ``working for or contracting 
with'' would have been interpreted to include those appraisers engaged 
by the AMC to perform an appraisal on a covered transaction during the 
reporting period in a particular State. Under this option, those 
appraisers engaged by the AMC to perform an appraisal, regardless of 
whether the appraiser completed the appraisal during the reporting 
period, would be included in the calculation of the AMC's registry 
fees.
    The ASC requested comment on the second option's interpretation of 
the phrase ``working for or contracting with'' and whether this would 
be an easier interpretation for the States to administer. (See Question 
3 in the proposal.) Several commenters expressed concern over this 
option. One commenter stated that AMCs could reduce their panel sizes, 
thereby creating slower turnaround times and utilizing fewer 
appraisers. Another commenter stated the interpretation under the 
second option would not be easier to implement and States would have to 
rely on AMCs self reporting this information. Another commenter 
expressed concern that the second option could penalize AMCs if an 
order is accepted and assigned but later cancelled and neither the AMC 
or the appraiser receive any compensation, and could also be burdensome 
for States to enforce without having a status of assignments and their 
completion during a given timeframe.
    Under the third option, which is adopted in the final rule, the 
phrase ``working for or contracting with'' includes those appraisers 
that performed an appraisal for the AMC on a covered transaction during 
the reporting period in a particular State. This option excludes 
appraisers accepted by the AMC for consideration for future appraisal 
assignments as well as appraisers who performed appraisals in the past, 
but did not perform any appraisals in the reporting period. The AMC 
registry fee is not intended to result in an appraiser being counted 
twice in calculating the fee, regardless of how many appraisals that 
appraiser performed in a single State during a reporting period. A few 
commenters misunderstood the proposed application of the fee and 
thought the fee would be calculated based on the total number of 
individual appraisers on an AMC panel, or that the fee would be imposed 
based on individual appraisals, neither of which is consistent with the 
proposal or the final rule.
    Several commenters expressed support for the third option as having 
the least economic impact to an AMC, the least burden for appraisers 
and preferable from a State administrative point of view. A few 
commenters expressed support for the third option but believed it would 
be a burden for States to collect information from AMCs. One commenter, 
while stating the third option is costly to AMCs, stated that the third 
option would be the most equitable as it applies to those appraisers 
who had completed appraisal assignments, and that the first two options 
may cause AMCs to pare their appraiser panels. One commenter stated the 
third option would also simplify the queries that States would need to 
run to report all registered AMCs that have completed appraisal reports 
during a specific year or timeframe. Another commenter stated AMCs may 
use fewer appraisers for appraisal assignments to keep AMC registry 
fees down. The ASC anticipates there may well be such responses by AMCs 
to reduce their registry fees, but under the statutory framework, it is 
seemingly unavoidable.
    The ASC requested comment on the ASC's interpretation of the phrase 
``working for or contracting with.'' (See Question 2 in the proposal.) 
One commenter expressed concern that for AMCs in business less than 12 
months, determining how many appraisals have been performed could be 
difficult. Another commenter suggested ``working for'' and 
``contracting with'' should be properly defined with specifics and 
parameters. One commenter requested clarification of the term ``working 
for,'' and another commenter, while supporting the third option, 
commented the term ``performed'' needs clarity, suggesting appraisals 
could be considered ``performed'' when delivered by the AMC to the 
client. The ASC recognizes that because the AMC is acting as an agent 
of the appraiser's client, delivery of an appraisal to the AMC could 
also be deemed delivery to the client. The ASC is adopting the 
interpretation as proposed, intending for the terms to remain subject 
to a plain English interpretation.
    The ASC also requested comment on what aspects of the proposed 
rule, if any, would be challenging for States to implement and any 
alternative approaches that would make implementation easier, while 
maintaining consistency with the statute. (See Question 8 in the 
proposal.) Several commenters expressed concern that the proposed rule 
would create significant administrative burden on the State to 
calculate and verify registry fees, and would also result in 
expenditures to administer and transmit the registry fees. Some 
commenters are opposed to the fee in general, while a few expressed 
opposition to AMCs. A few commenters suggested no action should be 
taken until the Dodd-Frank Act is amended. One commenter stated the ASC 
should seek legislative changes to 12 U.S.C. 3338 asserting it is 
fundamentally flawed, and requested withdrawal of the proposed rule 
until the federal statute is changed. The ASC, however, is charged with 
implementation of the statute as passed by Congress.
    One commenter stated that the 500 hours of regulatory burden is 
understated, and added States should be reimbursed for expenses in 
collecting and transmitting registry fees. Another commenter also 
stated that the 500 hours is underestimated stating the ASC failed to 
consider administrative costs and expenses for creating and maintaining 
a database, and for the staff time to run the program. The ASC is 
working to minimize such burden in simplifying the reporting 
requirements for AMCs. As stated in the proposal, the ASC will issue a 
Bulletin to address reporting requirements with the effective date for 
compliance.
    Another commenter foresees several barriers to collecting reliable 
data on how many appraisers are on an AMC panel and how many have done 
work for the AMC in the previous 12 months, including the necessity to 
adopt new rules, create new forms and update current IT systems to 
collect and maintain this data, all of which will result in increased 
labor costs for staff needed for implementation of the proposed rule. 
As stated in the proposed rule, the ASC anticipates further development 
of its grants program, particularly in support of the States as funds 
are available. The statutory purpose of ASC grants to the States is to 
provide funds to assist States in compliance with Title XI. Therefore, 
as

[[Page 44497]]

funds are available, the ASC could consider establishing a grant to 
assist States in registry reporting requirements and transmission of 
registry fees for both appraisers and AMCs. Another commenter suggested 
the ASC should provide a revenue projection as well as costs to develop 
the AMC Registry. The ASC has included those expenses in its budget 
process and will continue to do so on an annual basis.
    Another commenter opposed the interpretation of ``working for or 
contracting with,'' stating it will create an entirely new regulatory 
criterion for States to implement and validate, thereby requiring 
audits. It should be noted that there is no federal requirement for 
States to audit AMCs to determine validity of information submitted to 
the State. A State may determine to periodically audit, or not to 
exercise such authority at all, or alternatively, a State may rely on 
the complaint/investigation process to determine if and when an audit 
is warranted.
    By far the majority of comments received expressed concern over 
these additional fees and the impact on appraisers if the fee is passed 
on to them by the AMCs. More specifically, these commenters requested 
that the final rule prohibit AMCs from passing the fee on to 
appraisers. While the ASC shares in the concern expressed over the fee 
being passed on to appraisers, such regulation of AMCs is outside of 
the authority of the ASC. The ASC notes the fee imposed by statute is 
not a fee assessed on appraisers, but rather on AMCs. Some commenters 
identified certain States are already attempting to regulate this at 
the State level. One commenter, however, stated the choice to pass the 
fee on to the appraiser should be left to the AMC, and that appraisers 
have a choice whether to participate on an AMC panel.
    Some commenters expressed concern that AMCs hide their appraisal 
management fees from borrowers by including them as part of the fee 
paid to appraisers, and requested that the final rule require fees be 
disclosed to the borrower. This, however, is outside the authority of 
the ASC. Comments were also received expressing concern over AMCs not 
paying customary and reasonable fees to appraisers, or charging 
appraisers various fees to be on an AMC panel. This too is outside the 
authority of the ASC.
    One commenter suggested consideration of a de minimis exception, 
stating the ASC should allow AMCs to use the IRS 1099 threshold and 
thus exclude those appraisers to whom it pays less than $600 during a 
tax year, which would include appraisers who performed only one 
appraisal assignment, and perhaps up to three. The commenter suggests 
its proposal as an alternative to potentially reduce AMC registry fees. 
However, the ASC would not have authority under the statute to provide 
such an exception, particularly in the case of AMCs that have been in 
existence for more than a year. Furthermore, the ASC is concerned there 
would be undesirable consequences. For example, there could be a 
reduction in appraiser fees in order to avoid the proposed threshold. 
Additionally, AMCs might select appraisers in a manner to avoid the 
threshold rather than basing a selection on competency. The ASC will 
continue to work with States to address increased burden and will 
continue to explore means to provide additional grant funding to the 
States to support State programs as funds are available and additional 
grant policies and procedures are developed and approved.
    A few commenters expressed preference for a flat fee to avoid any 
need to verify that AMCs are sending in the correct amount, another 
commenter suggested a two-tiered system and another commenter suggested 
a tiered structure based on the size of the appraiser panel and/or the 
volume of appraisals brokered by an AMC. The ASC considered these 
various options to calculating the AMC registry fee, but concluded that 
such options were not supported by the statute. Also, the ASC notes, in 
response to several commenters expressing concern over the honor system 
versus auditing AMCs on information provided to the State by AMCs, that 
it is up to the State to determine whatever process the State deems 
appropriate.
    Two commenters stated the AMC registry fee should be calculated 
based on FRTs, not covered transactions. The ASC believes the proposal 
is consistent with the AMC Rule and the statute. The AMC Rule defined a 
covered transaction as any consumer credit transaction secured by the 
consumer's principal dwelling.\15\ As stated in the AMC Rule preamble, 
the definition did not limit the definition of covered transaction to 
FRTs, even though Title XI and its implementing regulations have 
applied historically only to appraisals for FRTs. The AMC Rule, through 
the interagency process, determined that defining ``covered 
transaction'' as such reflected the statutory text of section 1121(11), 
which defines the term ``appraisal management company,'' as in 
pertinent part, ``any external third party authorized either by a 
creditor of a consumer credit transaction secured by the consumer's 
principal dwelling or by an underwriter of or other principal in the 
secondary mortgage markets.'' \16\ It was further stated in the AMC 
Rule preamble that applying coverage of the AMC Rule beyond FRTs was 
consistent with the structure and text of other parts of Title XI, 
section 1124, most of which address appraisals generally rather than 
appraisals only for FRTs, and in particular, the text of section 
1124(a)(4) of Title XI indicates that one of the chief purposes of the 
minimum requirements for AMCs is to ensure compliance with the 
valuation independence standards established pursuant to section 129E 
of the Truth and Lending Act (TILA) (15 U.S.C. 1639e).\17\ The preamble 
of the AMC Rule concluded that those standards apply to AMCs whenever 
they engage in a consumer credit transaction secured by the consumer's 
principal dwelling, regardless of whether the transaction is a FRT.\18\
---------------------------------------------------------------------------

    \15\ See 12 CFR 34.211(h); 12 CFR 225.191(h); 12 CFR 323.9(h); 
12 CFR 1222.21(h) (2015).
    \16\ See 80 FR 32658, 32664 (June 9, 2015).
    \17\ See Title XI sec. 1124(a)(4), 12 U.S.C. 3353(a)(4).
    \18\ See 80 FR 32658, 32664 (June 9, 2015).
---------------------------------------------------------------------------

    Another commenter questioned the benefit of the AMC Registry to the 
industry as a whole. The ASC notes the requirement for the ASC to 
maintain the AMC Registry is statutory. The benefit of the Registry 
initially will be to promote information sharing between States on 
AMCs. The Registry will also allow lenders, AMCs and other stakeholders 
to identify AMCs that are located in participating States, and 
therefore subject to State registration and supervision. In addition, 
the Registry will identify AMCs that are Federally regulated AMCs.
Collection and Transmission of Annual AMC Registry Fees
    The ASC is adopting Sec.  1102.403(a) and (b) substantially as 
proposed regarding collection and transmission of annual AMC registry 
fees. On or before the effective date of this rule, the ASC will issue 
an ASC Bulletin to States that will address:
    1. When the AMC Registry will be open for States; and
    2. Reporting requirements (information required to be submitted by 
States in order to register AMCs on the AMC Registry) with the 
effective date for compliance.
    Section 1102.403(a) and (b) implement collection and transmission 
of annual AMC registry fees for States that elect to register and 
supervise AMCs following the statutory scheme

[[Page 44498]]

set forth in sections 1109 and 1117 of Title XI as amended by the Dodd-
Frank Act. The final rule requires AMC registry fees to be collected 
and transmitted to the ASC on an annual basis by States that elect to 
register and supervise AMCs. Only those AMCs whose registry fees have 
been transmitted to the ASC are eligible to be on the AMC Registry.
    The ASC requested comment on all aspects of proposed collection and 
transmission of annual AMC registry fees. (See Question 4 in the 
proposal.) One commenter stated that while it is understandable that 
States should have some flexibility in connection with the collection 
of registry fees, some boundaries or guidelines should be implemented 
within the final rule because varying State expiration dates could be 
financially and logistically challenging for AMCs. One commenter stated 
that the staggered renewal dates could complicate the reporting process 
and may be a burden to AMCs and States to maintain records. The 
commenter suggested the reporting period should be the same for every 
State. As proposed, the ASC recognizes that States should have the 
flexibility to align a one-year period with any 12-month period, which 
may or may not be based on the calendar year. Based on annual fees paid 
by the States historically for appraiser registry fees, the ASC 
recognizes States require flexibility to determine the period for 
reporting and collection of registry fees dependent on their budget 
cycles, rules and statutes. States vary greatly on the 12-month cycle 
as well as renewal cycles, which in some States may be 2 years or more. 
Just as many States do not use a calendar year for their existing 
appraiser credentialing process, the ASC believes that allowing States 
to set the 12-month period provides appropriate flexibility and will 
help States comply with the collection and transmission of AMC fees and 
reduce regulatory burden for State governments. States may choose to do 
this in a similar manner as they currently do for their appraisers, 
meaning some States have a date certain every year, while other States 
use, for example, the appraiser's date of birth (States could use AMC 
registration date similarly). The registration cycle is left to the 
individual States to determine, but the ASC notes that the statutory 
requirement in section 1109(a)(4) requires States to submit AMC 
registry fees to the ASC annually.\19\
---------------------------------------------------------------------------

    \19\ See Title XI sec. 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B).
---------------------------------------------------------------------------

    Several other commenters expressed concern over the additional 
burden on States to collect and transmit information and fees to the 
ASC and the need for additional funding and staff. Another commenter 
stated the ASC should consider implementing a centralized computer 
system for collecting AMC registry fees, and use some of the fees to 
provide grants to States to set up and run their AMC programs. The ASC 
will continue to work with States to address increased burden and will 
continue to explore means to provide additional grant funding to the 
States to support State programs as funds are available and additional 
grant policies and procedures are developed and approved.
    One commenter objected to States levying additional fees on AMCs to 
cover the costs of collecting and transmitting fees to the ASC. This 
commenter referenced the AMC Rule stating in its preamble the option 
for States to collect administrative fees from Federally regulated AMCs 
to offset the cost of collecting the AMC Registry fee and the 
information related to the fee. The ASC understands the basis for the 
concern, but recognizes this is a matter left to the States.
    The ASC requested comment on Federally regulated AMCs operating in 
a State that does not elect to register and supervise AMCs, and whether 
the ASC should collect information and fees directly from those 
Federally regulated AMCs. (See Question 5 in the proposal.) The ASC 
received a number of comments in response to this question. One 
commenter expressed concerns about collecting fees from Federally 
regulated AMCs which are exempt from registration with the State. 
Another commenter stated that Federally regulated AMCs operating in a 
State that does not have an AMC program should report and submit fees 
directly to the ASC. A few commenters stated that the State would not 
have authority to collect fees from entities that are exempt from State 
licensure and they do not have authority to require that those entities 
submit data to the State Board and requested that the ASC collect the 
fees from those entities directly. Several commenters stated the ASC 
should collect fees directly from Federally regulated AMCs rather than 
the State acting as a pass-through. One commenter stated if the ASC 
sets up a program to collect fees from Federally regulated AMCs in 
States that do not register and supervise AMCs, the ASC should consider 
the same for States with an AMC program. Another commenter stated that 
States could choose to opt out due to the reported low percentage of 
FRTs compared to overall transactions, which would result in a barrier 
to collection of fees in those States. The ASC considered commenters' 
concerns, but recognizes the authority to impose requirements on 
Federally regulated AMCs lies with the Agencies.\20\ The ASC will work 
with the Agencies to address these concerns.
---------------------------------------------------------------------------

    \20\ OCC, Board, FDIC, NCUA, Bureau, and FHFA (see footnote 8).
---------------------------------------------------------------------------

    Some commenters expressed concern that even though they elect to 
register and supervise AMCs, they would have no authority over 
Federally regulated AMCs, and therefore no ability to accept 
information or fees from those AMCs. The ASC recognizes this may 
present a challenge for some States. However, for States that elect to 
register and supervise AMCs, the requirement to collect fees from 
Federally regulated AMCs is statutory. The Agencies \21\ involved with 
issuing the AMC Rule recognized that practical challenges may arise as 
the minimum requirements are adopted in States and reporting 
requirements take effect and the Agencies committed to monitor these 
issues. The ASC will monitor these issues as well and will continue to 
explore means to provide additional grant funding to the States to 
support State programs as funds are available and additional grant 
policies and procedures are developed and approved.
---------------------------------------------------------------------------

    \21\ Id.
---------------------------------------------------------------------------

    The ASC requested comment on what barriers, if any, exist that 
would make it difficult for a State to implement the collection and 
transmission of AMC registry fees (see Question 6 in the proposal) and 
what costs, both direct in terms of fees and indirect in terms of 
administrative costs, would be associated with collection and 
transmission of AMC registry fees (see Question 7 in the proposal). One 
commenter estimated that the burden for a State's program would be 25 
hours per month of staff time to complete and would cost approximately 
$6000 to design a database and $700/month for staff to maintain. 
Another commenter stated the proposed rule could negatively affect 
AMCs, consumers and real estate appraisers, as well as create burden 
for States. This commenter also stated AMCs will likely pass on fees to 
clients and therefore consumers. Another commenter stated costs may 
negatively affect smaller AMCs causing consolidation of AMCs. Another 
concern was that AMCs may pare down appraiser panels. The ASC 
recognizes the collection and transmission to the ASC of AMC registry 
fees by the States would create some recordkeeping, reporting and 
compliance requirements.

[[Page 44499]]

However, these collection and transmission requirements are imposed by 
the statute. The ASC will continue to work with States to address 
increased burden and will continue to explore means to provide 
additional grant funding to the States to support State programs as 
funds are available and additional grant policies and procedures are 
developed and approved.
    Several commenters requested that States should be allowed to send 
in multi-year registry fees rather than annually. Another commenter 
expressed concern that States could incur significant administrative 
costs to implement programming changes to their computer systems if 
they have to collect fees annually rather than multi-year fees as they 
do now for appraisers. If a State can assess on a multi-year basis, the 
ASC would not object. However, the ASC notes that the statutory 
requirement in section 1109(a)(4) requires States that elect to 
register and supervise AMCs to submit AMC registry fees to the ASC 
annually.\22\ For clarification purposes, language that was included at 
the end of proposed section 1102.403(b) referencing the ``12-month 
period subsequent to payment of the fee'' has been removed to avoid 
conflict should a State assess the fee on a multi-year basis.
---------------------------------------------------------------------------

    \22\ See Title XI sec. 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B).
---------------------------------------------------------------------------

    Another commenter expressed the desire for the ASC to continue to 
accept data files for AMCs. Historically, the ASC accepted data files, 
and continues to do so on a limited basis for the Appraiser Registry. 
However, this method of transmitting rosters is obsolete and time 
consuming. The ASC has continued to improve the Appraiser Registry 
using more up-to-date transmission methods such as the extranet 
application and Simple Object Access Protocol (SOAP) in order to 
provide more real-time information on the National Registries. While 
the ASC recognizes this may impose additional burden on States, the ASC 
will continue to explore means to provide grant funding to the States 
to support State programs as funds are available and additional grant 
policies and procedures are developed and approved.
    Another commenter was concerned with specific collection and 
transmission scenarios and how various scenarios would impact 
determination of fees, calculation of panel size, transmission of fees, 
verification of fee calculation and audit requirements. Several of this 
commenter's concerns deal with logistics and will be part of the ASC 
Bulletin concerning reporting requirements which will be issued after 
this final rule. This commenter also wanted to know what timeline the 
ASC is considering between verification and remittance, similar to 
another commenter who stated there should be flexibility with the 
timing of payment of fees and the actual transmission of the fees, and 
that the final rule should add additional language that clearly 
addresses these potential gaps in order to avoid any unintended 
consequences. This is a matter that will be left to the States to 
administer within the following parameters: (1) AMC registry fees must 
be collected and transmitted to the ASC on an annual basis by States 
that elect to register and supervise AMCs; and (2) only those AMCs 
whose registry fees have been transmitted to the ASC are eligible to be 
on the AMC Registry.

IV. Regulatory Analysis

Paperwork Reduction Act

    Certain provisions of the final rule contain ``information 
collection'' requirements within the meaning of the Paperwork Reduction 
Act (PRA) of 1995 (44 U.S.C. 3501 et seq.). Under the PRA, the ASC may 
not conduct or sponsor, and, notwithstanding any other provision of 
law, a person is not required to respond to, an information collection 
unless the information collection displays a valid Office of Management 
and Budget (OMB) control number. The information collection 
requirements contained in this final rule were submitted to OMB for 
review and approval at the proposed rule stage by the ASC pursuant to 
section 3506 of the PRA and section 1320.11 of the OMB's implementing 
regulations (5 CFR part 1320). OMB instructed the ASC to examine public 
comment in response to the proposed rule and describe in the supporting 
statement of their next collections any public comments received 
regarding the collection as well as why (or why it did not) incorporate 
the commenter's recommendation. The ASC received 12 public comments 
regarding the collection and concern of burden on States, and two 
comments voiced concern that the ASC did not perform a cost benefit 
analysis. The ASC described the comments in the supporting statement 
above and the discussion below on the Regulatory Flexibility Act, and 
addressed why the ASC did not incorporate commenters' recommendations. 
The collection of information requirements in the final rule are found 
in Sec. Sec.  1102.400-1102.403. This information is required to 
implement section 1473 of the Dodd-Frank Act.
    Title of Information Collection: Collection and Transmission of 
Annual AMC Registry Fees.
    OMB Control Nos.: The ASC will be seeking new control numbers for 
these collections.
    Frequency of Response: Event generated.
    Affected Public: States; businesses or other for-profit and not-
for-profit organizations.
Abstract
State Recordkeeping Requirements
    States that elect to register and supervise AMCs are required to 
collect and transmit annual AMC registry fees to the ASC. Section 
1102.402 establishes the annual AMC registry fee for States that elect 
to register and supervise AMCs as follows: (1) In the case of an AMC 
that has been in existence for more than a year, $25 multiplied by the 
number of appraisers who have performed an appraisal for the AMC on a 
covered transaction in such State during the previous year; and (2) in 
the case of an AMC that has not been in existence for more than a year, 
$25 multiplied by the number of appraisers who have performed an 
appraisal for the AMC on a covered transaction in such State since the 
AMC commenced doing business.
    Section 1102.403 requires AMC registry fees to be collected and 
transmitted to the ASC on an annual basis by States that elect to 
register and supervise AMCs. Only those AMCs whose registry fees have 
been transmitted to the ASC will be eligible to be on the AMC Registry. 
Section 1102.403 clarifies that States may align a one-year period with 
any 12-month period, which may, or may not, be based on the calendar 
year. The registration cycle is left to the individual States to 
determine.
State Reporting Burden
    Section 1103 of Title XI, Functions of Appraisal Subcommittee, was 
amended by the Dodd-Frank Act to require the ASC to maintain a registry 
of AMCs that are either: (1) Registered with and subject to supervision 
by a State; or (2) Federally regulated AMCs. On or before the effective 
date of this rule, the ASC will issue an ASC Bulletin to States that 
will address:
    1. When the AMC Registry will be open for States; and
    2. Reporting requirements (information required to be submitted by 
States in order to register AMCs on the AMC Registry) with the 
effective date for compliance.

[[Page 44500]]

    Burden Estimates:
    Total Number of Respondents: 500 AMCs, 55 States.
    Burden Total: 500 hours.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., 
generally requires that, in connection with a rulemaking, an agency 
prepare and make available for public comment a regulatory flexibility 
analysis that describes the impact of the proposed rule on small 
entities. However, the regulatory flexibility analysis otherwise 
required under the RFA is not required if an agency certifies that the 
proposed rule will not have a significant economic impact on a 
substantial number of small entities and publishes its certification 
and a brief explanatory statement in the Federal Register together with 
the rule. Based on its analysis, and for the reasons stated below, the 
ASC believes that the rule will not have a significant economic impact 
on a substantial number of small entities.
    Section 1109 of Title XI provides that State appraiser certifying 
and licensing agencies that elect to register and supervise AMCs shall 
collect (1) from AMCs that have been in existence for more than a year, 
annual AMC registry fees in the amount of $25 (up to a maximum of $50) 
multiplied by the number of appraisers ``working for or contracting 
with'' an AMC in a State during the previous year; and (2) from AMCs 
that have not been in existence for more than a year, annual AMC 
registry fees in the amount of $25 (up to a maximum of $50) multiplied 
by an appropriate number to be determined by the ASC.\23\ The purpose 
of the statutory fee is to support the ASC's functions under Title XI. 
Because the ASC believes the minimum fee required by the statute would 
be adequate to support its functions, the rule adopts the minimum fee 
of $25 as set by statute. The rule also interprets the phrase ``working 
for or contracting with'' to mean those appraisers that performed an 
appraisal for the AMC on a covered transaction during the reporting 
period. For AMCs that have existed for more than a year, the formula is 
$25 multiplied by the number of appraisers who have performed an 
appraisal for the AMC on a covered transaction during the previous 
year. For AMCs that have not existed for more than a year, the $25 fee 
is multiplied by the number of appraisers that performed an appraisal 
for the AMC on a covered transaction since the AMC commenced doing 
business.
---------------------------------------------------------------------------

    \23\ See 12 U.S.C. 3338(a)(4)(B).
---------------------------------------------------------------------------

    Regarding the fee for AMCs that have been in existence for more 
than a year, the ASC believes the rule imposes the minimum fee allowed 
under the statutory provisions of section 1109. The ASC did not 
exercise statutory discretion granted to the ASC to increase the fee 
above $25. Further, the ASC interprets ``working for or contracting 
with'' to mean only those appraisers who actually performed an 
appraisal for the AMC, as opposed to all appraisers on the AMC's panel 
or all appraisers engaged, regardless of whether the assignment was 
completed. The ASC believes this formula results in the lowest fee 
allowed by the statute and the ASC chose not to exercise its authority 
to increase this minimum fee. Therefore, any burden produced is the 
result of statutory and not regulatory requirements.
    The ASC has also decided to adopt the statutory minimum fee of $25 
for AMCs that have not existed for more than a year. As required by 
statute, the ASC adopted an appropriate number against which to 
multiply the $25 fee. The ASC adopted the same multiple as used for 
AMCs that have existed for more than a year (i.e., the number of 
appraisers that have performed appraisal assignments for the AMC). It 
is possible that the ASC may have been able to adopt a multiple that 
would have resulted in a lower fee and would still be deemed 
appropriate. In this regard, the rule may have created a burden for 
AMCs that have not existed for more than a year, beyond the burden 
created by the statutory requirements alone. However, using the actual 
period of time since the AMC commenced doing business will maintain 
some consistency in the calculation of AMC registry fees to reduce 
administrative burden for the States.
    One commenter stated the proposed rule would have a large financial 
impact on smaller AMCs and community banks and credit unions, as well 
as appraisers, and asserted that the RFA requires analysis when the 
rule directly regulates small entities. This commenter stated that as 
an owner of a small AMC, regulatory fees proposed are burdensome, and 
as a national AMC, is opposed to paying for the same appraiser in 
different States, especially given that the AMC registry fee is on top 
of other State fees required by the States, and regulatory oversight 
seems ``duplicitous.'' Another commenter stated the proposed rule would 
affect thousands of small appraisal businesses as a result of AMCs 
passing the registry fee on to appraisers, and that the ASC should do 
extensive analysis on how the proposed rule will affect residential 
appraisers. The ASC shares in the concern but has no authority to 
regulate that issue. A few commenters indicated that some States are 
looking at regulating this issue at the State level. In support of 
those States, the ASC notes the fee imposed by statute is not a fee 
assessed on appraisers, but rather on AMCs. This commenter, similar to 
the previous commenter, also did not believe the requirements of 
section 609(a) of the RFA have been met and that the fee may force 
small AMCs out of business, as well as impact sole proprietorships that 
accept assignments from AMCs. This commenter went on to state that 
while the ASC is not required to adhere to Executive Order 12866 or 
issue cost benefit analysis, this commenter believes it is sound best 
practice.
    The ASC carefully considered these matters and concluded 
requirements under the rule are imposed by the statute, not the rule, 
and further, the requirements apply to those States that elect to 
register and supervise AMCs following the statutory scheme set forth in 
section 1473 of the Dodd-Frank Act. In addition, the RFA does not 
require an agency to conduct a small-entity impact analysis when the 
agency does not regulate the affected entities (AMCs, lenders, 
appraisers). The ASC's statutory oversight extends to State certifying 
and licensing agencies. Section 1109 of Title XI provides the framework 
and minimum fee to collect from AMCs for States that elect to register 
and supervise AMCs. The ASC believes the rule as proposed imposes the 
minimum fee of $25 allowed under the statutory provisions of section 
1109. The statute did provide latitude for the ASC to establish an 
appropriate number to multiply by $25 for AMCs that have not been in 
existence for a year. Using the actual period of time since the AMC 
commenced doing business will maintain some consistency in the 
calculation of AMC registry fees to reduce administrative burden for 
the States. The ASC did not exercise statutory discretion granted to 
the ASC to increase the fee above $25. Therefore, any burden produced 
is the result of statutory and not regulatory requirements.
    While some burden beyond the statutory requirements may have 
resulted from the rule for AMCs that have not existed for more than a 
year, the ASC does not believe the rule will have a significant 
economic impact on a substantial number of small entities. There are 
only approximately 500 AMCs operating in the United States. The

[[Page 44501]]

annual regulatory burden will only apply to new AMCs that have not 
existed for more than a year. Given the small number of AMCs currently 
in operation, it is unlikely that there will be a substantial number of 
AMCs that commence doing business in any given year. Further, the ASC 
adopted the lowest possible fee of $25. Therefore, the ASC does not 
believe that the exercise of its discretion in setting the fee formula 
for such AMCs will have a significant economic impact on a substantial 
number of small entities.
    The collection and transmission to the ASC of AMC registry fees by 
the States would create some recordkeeping, reporting and compliance 
requirements. However, these collection and transmission requirements 
are imposed by the statute, not the rule. Further, the RFA requires an 
agency to perform a regulatory flexibility analysis of small entity 
impacts when the agency's rule directly regulates the small 
entities.\24\
---------------------------------------------------------------------------

    \24\ For purposes of assessing the impacts of the proposed rule 
on small entities, ``small entities'' is defined in the RFA to 
include small businesses, small not-for-profit organizations, and 
small government jurisdictions. See 5 U.S.C. 601(6). A ``small 
business'' is determined by application of SBA regulations and 
reference to the North American Industry Classification System 
(NAICS) classifications and size standards. See 5 U.S.C. 601(3). A 
``small organization'' is any ``not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
5 U.S.C. 601(4). A ``small governmental jurisdiction'' is the 
government of a city, county, town, township, village, school 
district, or special district with a population of less than 50,000. 
See 5 U.S.C. 601(5). Given these definitions, States that elect to 
establish licensing and certification authorities are not small 
entities and the burden on them is not relevant to this analysis.
---------------------------------------------------------------------------

    Based on its analysis, and for the reasons stated above, the ASC 
believes that the rule will not have a significant economic impact on a 
substantial number of small entities. Therefore, the ASC certifies that 
the final rule will not have a significant economic impact on a 
substantial number of small entities.

Unfunded Mandates Reform Act of 1995 Determination

    The ASC has analyzed the final rule under the factors in the 
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this 
analysis, the ASC considered whether the final rule includes a Federal 
mandate that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation). For 
the following reasons, the ASC finds that the final rule does not 
trigger the $100 million UMRA threshold. The costs specifically related 
to requirements set forth in statute are excluded from expenditures 
under the UMRA. Given that the final rule reflects requirements that 
arise from section 1473 of the Dodd-Frank Act, the UMRA cost estimate 
for the proposed rule is zero. For this reason, and for the other 
reasons cited above, the ASC has determined that this final rule will 
not result in expenditures by State, local, and tribal governments, or 
the private sector, of $100 million or more in any one year. 
Accordingly, this proposed rule is not subject to section 202 of the 
UMRA.

List of Subjects in 12 CFR Part 1102

    Administrative practice and procedure, Appraisers, Banks, Banking, 
Freedom of information, Mortgages, Reporting and recordkeeping 
requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the ASC amends 12 CFR 
part 1102 as follows:

PART 1102--APPRAISER REGULATION

0
1. The authority citation for part 1102 is revised to read as follows:

    Authority:  12 U.S.C. 3348(a), 3332, 3335, 3338 (a)(4)(B), 
3348(c), 5 U.S.C. 552a, 553(e); Executive Order 12600, 52 FR 23781 
(3 CFR, 1987 Comp., p. 235).


0
2. Subpart E to part 1102 is added to read as follows:
Subpart E--Collection and Transmission of Appraisal Management Company 
(AMC) Registry Fees
Sec.
1102.400 Authority, purpose, and scope.
1102.401 Definitions.
1102.402 Establishing the annual AMC registry fee.
1102.403 Collection and transmission of annual AMC registry fees.

Subpart E--Collection and Transmission of Appraisal Management 
Company (AMC) Registry Fees


Sec.  1102.400   Authority, purpose, and scope.

    (a) Authority. This subpart is issued by the Appraisal Subcommittee 
(ASC) under sections 1106 and 1109 (a)(4)(B) of Title XI of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(Title XI), as amended by the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 
1376 (2010)), 12 U.S.C. 3335, 3338 (a)(4)(B)).
    (b) Purpose. The purpose of this subpart is to implement section 
1109 (a)(4)(B) of Title XI, 12 U.S.C. 3338.
    (c) Scope. This subpart applies to States that elect to register 
and supervise appraisal management companies pursuant to 12 U.S.C. 3346 
and 3353, and the regulations promulgated thereunder.


Sec.  1102.401   Definitions.

    For purposes of this subpart:
    (a) AMC Registry means the national registry maintained by the ASC 
of those AMCs that meet the Federal definition of AMC, as defined in 12 
U.S.C. 3350(11), are registered by a State or are Federally regulated, 
and have paid the annual AMC registry fee.
    (b) AMC Rule means the interagency final rule on minimum 
requirements for 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).
    (c) ASC means the Appraisal Subcommittee of the Federal Financial 
Institutions Examination Council established under section 1102 (12 
U.S.C. 3310) as it amended the Federal Financial Institutions 
Examination Council Act of 1978 (12 U.S.C. 3301 et seq.) by adding 
section 1011.
    (d) Performed an appraisal means the appraisal service requested of 
an appraiser by the AMC was provided to the AMC.
    (e) State means any State, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, the United States Virgin Islands, and American Samoa.
    (f) Other terms. Definitions of: Appraisal management company 
(AMC); appraisal management services; appraisal panel; consumer credit; 
covered transaction; dwelling; Federally regulated AMC are incorporated 
from the AMC Rule by reference.


Sec.  1102.402   Establishing the annual AMC registry fee.

    The annual AMC registry fee to be applied by States that elect to 
register and supervise AMCs is established as follows:
    (a) In the case of an AMC that has been in existence for more than 
a year, $25 multiplied by the number of appraisers who have performed 
an appraisal for the AMC in connection with a covered transaction in 
such State during the previous year; and
    (b) In the case of an AMC that has not been in existence for more 
than a year, $25 multiplied by the number of appraisers who have 
performed an appraisal for the AMC in connection with a covered 
transaction in such State since the AMC commenced doing business.

[[Page 44502]]

Sec.  1102.403   Collection and transmission of annual AMC registry 
fees.

    (a) Collection of annual AMC registry fees. States that elect to 
register and supervise AMCs pursuant to the AMC Rule shall collect an 
annual registry fee as established in Sec.  1102.402 from AMCs eligible 
to be on the AMC Registry.
    (b) Transmission of annual AMC registry fee. States that elect to 
register and supervise AMCs pursuant to the AMC Rule shall transmit AMC 
registry fees as established in Sec.  1102.402 to the ASC on an annual 
basis. States may align a one-year period with any 12-month period, 
which may, or may not, be based on the calendar year. Only those AMCs 
whose registry fees have been transmitted to the ASC will be eligible 
to be on the AMC Registry.

    By the Appraisal Subcommittee.

     Dated: September 13, 2017.
Arthur Lindo,
Chairman.
[FR Doc. 2017-20400 Filed 9-22-17; 8:45 am]
 BILLING CODE 6700-01-P