[Federal Register Volume 60, Number 176 (Tuesday, September 12, 1995)]
[Notices]
[Pages 47365-47368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22518]



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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS95-1]


Appraisal Subcommittee; Appraisal Regulation; Temporary Practice 
and Reciprocity

AGENCY: Appraisal Subcommittee, Federal Financial Institutions 
Examination Council.

ACTION: Notice.

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SUMMARY: The Appraisal Subcommittee (``ASC'') of the Federal Financial 
Institutions Examination Council is publishing this Notice to solicit 
public comments on how it should implement section 315 of the Riegle 
Community Development and Regulatory Improvement Act of 1994 
(``CDRIA''). The ASC anticipates that the comments generated during 
this process will facilitate the establishment of a more efficient and 
uniform system for providing temporary practice and reciprocity to 
State certified and licensed appraisers.

DATES: Comments must be received on or before December 11, 1995.

ADDRESSES: Persons wishing to submit written comments should file them 
with Edwin W. Baker, Executive Director, Appraisal Subcommittee, 2100 
Pennsylvania Avenue NW., Suite 200, Washington, D.C. 20037. Comments 
may be forwarded via fax to (202) 634-6555 or by Internet e-mail to 
[email protected]. All comment letters, including those filed electronically, 
should refer to Docket No. AS95-1. All comment letters will be 
available for public inspection and copying at the ASC's offices. 
Comments submitted electronically also will be publicly available in 
the ASC Forum on Appraisal Profession Online at (703) 478-5502.

FOR FURTHER INFORMATION CONTACT:
Edwin W. Baker, Executive Director, or Marc L. Weinberg, General 
Counsel, at (202) 634-6520, Appraisal Subcommittee, 2100 Pennsylvania 
Avenue NW., Suite 200, Washington, D.C. 20037.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

    Since January 1, 1993, Title XI of the Financial Institutions 
Reform, Recovery and Enforcement Act of 1989 (``Title XI''), as 
amended,\1\ has required all federally regulated financial institutions 
to use State licensed or certified real estate appraisers, as 
appropriate, to perform appraisals in federally related transactions. 
See Sec. 1119(a) of Title XI, 12 U.S.C. 3348(a). In response to Title 
XI, each State, territory and the District of Columbia (``State'') has 
established a regulatory program for certifying, licensing and 
supervising real estate appraisers. In turn, the ASC has been closely 
monitoring State programs to ensure their compliance with Title XI.

    \1\ Pub. L. 101-73, 103 Stat. 183 (1989), as amended by Pub. L. 
102-233, 105 Stat. 1792 (1991), Pub. L. 102-242, 105 Stat. 2386 
(1991), Pub. L. 102-550, 106 Stat. 3672 (1992), Pub. L. 102-485, 106 
Stat. 2771 (1992), and Pub. L. 103-325, 108 Stat. 2222 (1994).
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    While Title XI authorizes each State to certify, license, and 
supervise real estate appraisers within its jurisdiction, the Title 
also provides a means for appraisers licensed or certified in one State 
to practice on a temporary basis in another State. Section 1122(a)(1) 
of Title XI, 12 U.S.C. 3351(a)(1), specifically requires ``[a] State 
appraiser certifying or licensing agency [to] recognize on a temporary 
basis the certification or license of an appraiser issued by another 
State if--(A) the property to be appraised is part of a federally 
related transaction, (B) the appraiser's business is of a temporary 
nature, and (C) the appraiser registers with the appraiser certifying 
or licensing agency in the State of temporary practice.''
    As discussed in more detail below, reciprocity provides appraisers 
certified or licensed in one State with a means to practice in another 
State on a permanent basis. While Title XI, until recently, did not 
specifically mention reciprocity, the ASC encouraged States to enter 
into reciprocal appraiser licensing and certification agreements and 
arrangements.
    In September 1994, Section 315 of CDRIA was enacted. Pub. L. 103-
325, 108 Stat. 2160, 2222 (1994). CDRIA amended Section 1122(a) of 
Title XI by adding new subparagraph (2) pertaining to temporary 
practice and new paragraph (b) regarding reciprocity:


[[Page 47366]]

    (2) Fees for temporary practice. A State appraiser certifying or 
licensing agency shall not impose excessive fees or burdensome 
requirements, as determined by the Appraisal Subcommittee, for 
temporary practice under this subsection.
* * * * *
    (b) Reciprocity. The Appraisal Subcommittee shall encourage the 
States to develop reciprocity agreements that readily authorize 
appraisers who are licensed or certified in one State (and who are 
in good standing with their State appraiser certifying or licensing 
agency) to perform appraisals in other States.

    The Senate Report to accompany S. 1275, issued on October 28, 1994, 
by the Senate Committee on Banking, Housing, and Urban Affairs, said:

    The Committee's intent is to enable qualified appraisers to 
practice in a number of States without anticompetitive restrictions. 
S. Rep. No. 103-169, 103d Cong., 2d Sess. 53 (1994), reprinted in 
1994 U.S. Code Cong. & Admin. News 1937.

II. ASC Policies Regarding, and Current Status of, Temporary 
Practice

    Soon after the full implementation of Title XI in January 1993, and 
based on the ASC's reviews of State appraiser regulatory programs, the 
ASC issued Policy Statements Regarding State Certification and 
Licensing of Real Estate Appraisers (August 1993). Policy Statement 5 
specifically addressed temporary practice issues. The Statement, among 
other things: (1) Recognized that a certified or licensed appraiser 
from State A, who has an assignment concerning a federally related 
transaction in State B, has a statutory right to enter State B, 
register with the State agency in State B and perform the assignment; 
and (2) informed States that: (a) they could not unreasonably hamper 
the exercise of temporary practice rights, (b) out-of-State certified 
or licensed appraisers should register for temporary practice prior to 
performing the subject appraisal, and (c) temporary practice systems 
should process registrations promptly and efficiently. The ASC 
suggested that an acceptable model for temporary practice procedures 
would include a nominal per assignment fee, proof of a valid license or 
certificate and the completion of a reasonable temporary practice 
registration form. The Statement covered several technical matters, 
such as defining the terms, ``assignment'' and ``temporary'' and 
providing guidance on permissible State limitations on temporary 
practice.
    The Statement addressed how States should enforce their statutes 
and regulations regarding appraisers who perform appraisals as 
temporary practitioners. For example, out-of-State certified or 
licensed appraisers need to be subject to the host State's full 
regulatory jurisdiction and, therefore, must comply with the State's 
real estate appraisal statutes and regulations. Moreover, the State 
should treat temporary practitioners like any other appraisers 
certified or licensed by the State who wish to perform appraisals in 
federally related transactions. In addition, the Statement noted that 
the host State agency should take jurisdiction of any complaints 
regarding the temporary practicing appraiser's appraisal activities 
within the State.
    As a matter of policy, the ASC, as part of the field review 
process, has written States agencies about temporary practice fees of 
$100 or more or permits issued on less than a per assignment basis, 
first requesting the basis for the restrictions and then, if 
appropriate, requesting liberalization of the restrictions. Some States 
have been responsive to the ASC's recommendations; others have not. 
While the ASC believes that Policy Statement 5 and its field review 
program have been effective in helping to ensure a certified or 
licensed appraiser's ability to engage in temporary practice, issues 
remain. Two States still do not permit temporary practice. Of the 
States that do, some impose short time limits on length of permits. In 
addition, almost 40 States require temporary practice registrants to 
file a ``letter of good standing,'' which must be obtained from the 
home State agency. This requirement often has resulted in unnecessary 
delays in the issuance of temporary practice permits. Moreover, States 
charge insurance fees, ranging from $5 to $40, per letter. Frequently, 
the charges must be paid by certified check, which results in further 
delays.

III. ASC Policies Regarding, and Current Status of, Reciprocity

    The ASC, in Statement 6 of its Policy Statements, endorsed 
reciprocity and urged the States to establish permanent reciprocity 
arrangements promptly to address the needs of certified or licensed 
appraisers who practice on a non-temporary, multistate basis.\2\ Many 
interested parties, including lenders and appraisers, have commented 
that reciprocity is at least as critical as temporary practice. As 
noted above, reciprocity involves a permanent recognition of another 
State's certified or licensed appraisers. It generally means that a 
host State will credential a person based upon that person having been 
credentialed by his or her home State. It also could involve mutual 
agreements or understandings among States for their certified or 
licensed appraisers to operate freely within those States without any 
further registration, credentialing, or administrative action. At this 
time, no States have implemented reciprocity agreements of this nature.

    \2\ The ASC suggested in the Policy ``that States consider 
implementing, at a minimum, the following features in their 
reciprocity policies:
     A simple application;
     No reexamination;
     No additional review of an applicant's education or 
experience;
     Reciprocal licensing or certification fees similar in 
amount to the corresponding fees for `home' State appraisers; and
     The collection and forwarding to the ASC of the 
National Registry [of State Certified or Licensed Real Estate 
Appraisers (``National Registry'')] fee for each reciprocally 
licensed or certified appraiser.''
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    Reciprocity, as practiced today, requires that an appraiser who is 
certified or licensed in State A and reciprocally certified or licensed 
in State B must comply with both States' appraiser laws, including 
those requiring continuing education and the payment of certification, 
licensing and Federal fees. Generally, the appraiser is not required to 
take and pass State B's certification or licensing examinations. The 
appraiser, however, usually must submit, to State B, a copy of his or 
her credentials, a statement of good standing, a consent to local 
service of process and the payment of appropriate fees. Or, State B 
might grant the requested certificate or license ``by endorsement'' 
upon payment of State's B's certification or licensing fee. Many States 
use both methods. A few States may accept the examination results of 
other States, but require the applicant to complete the remainder of 
the application, which then is fully reviewed by the State agency. As 
of December 31, 1994, all but one State had some sort of reciprocity 
program in place.
    Differences in reciprocity procedures and requirements remain 
problematic. While some regions of the United States have successfully 
arrived at regional reciprocity agreements, others have not, in part 
because some States have higher education and experience requirements 
for applicants than those promulgated by the Appraiser Qualifications 
Board (``AQB''). Other States require letters of good standing from 
each State of certification or licensing. In the ASC's view, these 
differences continue to burden the free movement of certified or 
licensed appraisers across State lines and to cause confusion among 
appraisers and users of appraisal services.
    The ASC believes that States should accept other States' 
certifications and licenses without reexamining 

[[Page 47367]]
applicants' underlying education or experience, as long as each State 
has appraiser qualification criteria that meet the minimum standards 
for certification and licensure as determined by the AQB, uses 
appraiser certification and licensing examinations that are AQB 
endorsed and continues to perform education and experience reviews 
competently.

IV. Alternatives

    The ASC is publishing this Notice to solicit public comments on how 
it should implement Congress's directives as set forth in CDRIA. The 
ASC anticipates that the comments generated during this process will 
facilitate the establishment of a more efficient and uniform system for 
providing temporary practice and reciprocity to State certified and 
licensed appraisers. The following sections present for public 
consideration and comment several possible approaches.

A. A Universal ``Drivers License'' Approach to Both Temporary Practice 
and Reciprocity

    While a State's licensing or certification of professionals, such 
as appraisers, differs in substantial ways from awarding persons 
permits to drive vehicles, a ``drivers license'' approach to both 
reciprocity and temporary practice seems to warrant serious 
consideration. States have successfully worked out procedures to honor 
valid drivers licenses of non-resident drivers and to prosecute their 
illegal driving activities under local law.
    As applied to real estate appraisers, this approach would enable a 
real estate appraiser with a valid certification or license \3\ to 
perform his or her appraisal functions in any State. To enforce 
violations, State agencies would have ready access to one or more 
systems to allow them to determine the status of any single certificate 
or license holder. Such a system could be based on records from, either 
the appraiser's home State of certification or licensure or the 
National Registry.

    \3\ The appraiser would have only one license or certification. 
Because the single credential would enable the appraiser to practice 
in more than one State, States would no longer charge separate fees 
for temporary practice or reciprocity, and appraisers would have to 
pay only one annual National Registry fee to the ASC through their 
home State agency.
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    More specifically, an appraiser certified or licensed in State A 
could travel to State B and perform an appraisal without notifying 
State B's appraiser regulatory agency. While in State B, the appraiser 
would need to perform his or her duties in accordance with State B's 
appraiser statutes and regulations. If a complaint were filed with 
State B's appraiser regulatory agency respecting the activities of the 
appraiser while in State B, the complaint would be investigated and 
handled by State B, with that State sending a copy of the complaint to 
State A's appraiser regulatory agency. State A's agency would be 
encouraged to assist State B actively in its investigation, and State A 
could also take any independent disciplinary action within its power. 
Consistent with legal principles guiding interstate relations, State A 
would honor State B's final decision pertaining to the complaint.

B. Other Temporary Practice Alternatives

1. Specific Standards
    This approach would establish specific guidelines for temporary 
practice fee levels and practices and procedures. The standards could:
     Make temporary practice available only on a ``per 
assignment'' basis;
     Prohibit time limitations of less than six months on the 
duration of temporary practice permits;
     Allow temporary practitioners to have one permit 
extension;
     Prohibit a State from charging a fee exceeding a fixed 
amount, e.g., $50, for each temporary practice permit;
     Enable an appraiser to have at least two temporary 
practice permits per year;
     Prohibit mandatory affiliation requirements for temporary 
practitioners;
     Require a State's acceptance of an out-of-State 
appraiser's qualifications strictly on the basis of the presentation of 
his or her license or certification and sworn statement that it is in 
good standing in all States of certification or licensure. Existing 
State requirements for appraisers to obtain home State letters of good 
standing would be eliminated. Instead, an appraiser's status would be 
validated through the use of the National Registry (perhaps via 
electronic access) or the relevant State appraiser registry;
     Require out-of-State appraisers to register, rather than 
apply, for temporary practice;
     Require requests for temporary practice to be processed in 
no more than five business days from receipt;
     Require the State of temporary practice to take regulatory 
responsibility for a visiting appraiser's unethical, incompetent or 
fraudulent practices performed while within the State; and
     Require the State agency in the State of temporary 
practice to cooperate with, and provide assistance to, the home State 
agency in its investigation of the appraiser's practices.
2. Self-certification of Compliance with Specific Standards
    This approach would incorporate the specific standards presented 
above, but would shift from the ASC to States and their State agencies 
the ongoing duty of ascertaining whether their temporary practice 
statutes, regulations, procedures, fees and practices are consistent 
with the ASC's standards. In essence, it would create a ``safe harbor'' 
for States and State agencies that conform to the ASC's standards. This 
safe harbor would vanish upon a determination by the State or the ASC 
that an element of the State's temporary practice program appears to 
unreasonably burden the free movement of certified or licensed 
appraisers across State lines.
3. General Standards
    This approach would avoid specific standards of any kind and 
basically would incorporate Title XI's language into the ASC's written 
guidance to the States. Thus, the ASC would require States:
     To recognize on a temporary basis the certification or 
license of an appraiser issued by another State, if the property to be 
appraised is part of a federally related transaction, the appraiser's 
business is of a temporary nature and the appraiser registers with the 
State agency in the State of temporary practice; and
     Not to impose excessive fees or burdensome requirements 
for temporary practice, as determined by the ASC.
C. Other Reciprocity Approaches

    The ASC is required by Title XI to ``encourage the States to 
develop reciprocity agreements,'' and those agreements need to 
``readily authorize'' out-of-State licensed or certified appraisers 
(who are in good standing with their State) ``to perform appraisals in 
other States.'' The following approaches could be used separately or in 
tandem:
1. Create a General Federal Duty
    The ASC could create a duty for each State and State agency to work 
expeditiously and conscientiously with other States and State agencies 
with a view toward satisfying the purposes of the statutory language. 
The ASC would monitor each State's progress and could take positive 
steps to work with and encourage States to work out issues and 
difficulties whenever appropriate.

[[Page 47368]]

2. Request States to Create and File Plans
    The ASC could request each State to draft and file with the ASC a 
plan to accomplish reciprocity with at least all contiguous States by a 
specific time. For States not sharing geographically contiguous borders 
with any other State, such as Alaska and Hawaii, those States would 
need to draft a plan to include States that certify or license 
appraisers who perform a significant number of appraisals in Alaska and 
Hawaii. The ASC would review each State's plan as part of its State 
agency monitoring function, and, wherever appropriate, work with the 
State and surrounding States to resolve issues and arrive at mutually 
satisfactory arrangements.

V. Request for Comments

A. In General

    The ASC requests comment on all aspects of implementing the new 
legislation from interested members of the public, including 
appraisers, States and their State appraiser regulatory agencies, users 
of appraisal services and industry groups. The approaches set forth 
above are intended only to be starting points for discussion and 
comment, and the ASC welcomes variations or combinations of these 
approaches and the recommendation of other alternatives.

B. Specific Questions

    (1) In your view, what are the most serious impediments to 
temporary practice or reciprocity? Please provide your best estimates 
of their costs in time and money, if possible.
    (2) Do you beleive that these impediments warrant ASC action?
    (3) Are any of the alternatives presented in Part IV especially 
well suited to removing the impediments, and what are your reasons for 
your choice?
    (4) Do other alternatives exist? If so, please describe them.
    (5) Are there any other issues related to temporary practice or 
reciprocity that should be brought to the ASC's attention?

    By the Appraisal Subcommittee of the Federal Financial 
Institutions Examination Council.

    Dated: August 31, 1995.
Diana L. Garmus,
Chairperson.
[FR Doc. 95-22518 Filed 9-11-95; 8:45 am]
BILLING CODE 6201-01-M