[Federal Register Volume 61, Number 204 (Monday, October 21, 1996)]
[Notices]
[Pages 54645-54647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26933]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS96-1]


Appraisal Subcommittee; Appraisal Policy; Temporary Practice and 
Reciprocity

AGENCY: Appraisal Subcommittee, Federal Financial Institutions 
Examination Council.

ACTION: Proposal of policy statement and request for comments.

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SUMMARY: The Appraisal Subcommittee (``ASC'') of the Federal Financial 
Institutions Examination Council is proposing for public comment a new 
policy statement (``Statement'') regarding temporary practice and 
reciprocity. The Statement is intended to implement section 315 of the 
Riegle Community Development and Regulatory Improvement Act of 1994 
(``CDRIA'').

DATES: Comments must be received on or before December 5, 1996.

ADDRESSES: Persons wishing to submit written comments should file them 
with Ben Henson, Executive Director, or Marc L. Weinberg, General 
Counsel, Appraisal Subcommittee, 2100 Pennsylvania Avenue, N.W., Suite 
200, Washington, D.C. 20037. Comments may be forwarded via fax to (202) 
634-6555. All comment letters should refer to Docket No. AS96-1. All 
comment letters will be available for public inspection and copying at 
the ASC's offices.

FOR FURTHER INFORMATION CONTACT: Ben Henson, Executive Director, or 
Marc L. Weinberg, General Counsel, at (202) 634-6520, Appraisal 
Subcommittee, 2100 Pennsylvania Avenue, N.W., 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 Section 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 monitoring State programs to ensure their compliance 
with Title XI.
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    \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), Pub. L. 103-325, 108 Stat. 2222 (1994); and Pub 
L. 104-208, 110 Stat. 3009 (1996).
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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 [(`State 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.''
    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

[[Page 54646]]

to enter into reciprocal appraiser licensing and certification 
agreements and arrangements.
    In September 1994, Section 315 of CDRIA was enacted. Public Law 
103-325, 108 Stat. 2160, 2222 (1994). CDRIA amended Section 1122(a) of 
Title XI by adding new subparagraph (2) (12 U.S.C. 3351(a)(2)) 
pertaining to temporary practice and new paragraph (b) (12 U.S.C. 
3351(b)) regarding reciprocity:

    (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.

    Using this statement and the wording of the amendments, the ASC can 
define the ambiguous terms, ``excessive fees'' or ``burdensome 
requirements,'' in new section 1122(a)(2), and can interpret how they 
fit into the ASC's existing enforcement powers in Title XI. The ASC 
also may determine the meaning and application of new paragraph (b) 
regarding reciprocity. The paragraph's language, however, limits the 
ASC's range of interpretation because it only requires the ASC to 
``encourage'' the States to develop reciprocity agreements.

II. The September 1995 Notice Soliciting Comment

    On September 12, 1995, the ASC published a notice in the Federal 
Register soliciting public comments on how it should implement section 
315 of CDRIA. See 60 FR 47365. This notice, among other things, 
described Statements 5 and 6 of the ASC's August 4, 1993 Policy 
Statements Regarding State Certification and Licensing of Real Estate 
Appraisers, which respectively discussed temporary practice and 
reciprocity, described the then-current status of temporary practice 
and reciprocity and presented several alternatives for discussion and 
comment. Temporary practice alternatives included the ``universal 
drivers license approach,'' ``specific standards'' and ``general 
standards.'' Reciprocity alternatives also included the drivers license 
approach, but separately discussed creating a Federal duty and 
requesting States to create and file plans with the ASC. For details 
regarding these approaches, see 60 FR 47365 (September 12, 1995). The 
ASC additionally requested comments on all aspects of implementing the 
new legislation and welcomed variations or combinations of the 
discussed alternatives or other alternatives. Finally, the ASC asked 
the following questions:

    (1) In your view, what are the most serious impediments to 
temporary practice or reciprocity? Please provide your best 
estimates of their costs in time and money, if possible.
    (2) Do you believe that these impediments warrant ASC action?
    (3) Are any of the alternatives presented * * * 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.

    The ASC received 46 comment letters in response to the Notice: 24 
from individual appraisers; eight from trade associations; six from 
State agencies; five from financial institutions; two from individual 
real estate professionals; and one from a Federal agency.
    The commenters agreed that serious impediments to temporary 
practice and reciprocity exist, and that those impediments warrant ASC 
action. In connection with temporary practice, the commenters noted 
that the most significant impediments were: the need for an out-of-
State appraiser to obtain, and pay for, a ``letter of good standing''; 
the need for States to obtain from out-of-State appraisers signed 
consent to local service forms; short time limits on the length of 
permits; the inability to receive extensions of time on permits; the 
granting of permits on a per property or time basis, rather than on a 
per assignment basis; and a general ``protectionist'' attitude on the 
part of some State agencies. Respecting reciprocity, the commenters 
pointed to the widespread lack of uniformity in State agency-approved 
education courses for initial certification or licensing and for 
continuing education purposes and the significant length of time often 
needed by States to process reciprocity applications.
    A majority of the commenters supported adoption of the drivers 
license approach. Adopting this approach, however, would necessarily 
require the ASC to pre-empt conflicting State statutes, regulations and 
practices. The ASC concluded that pre-emption would be inappropriate. 
Instead, the ASC has decided to propose for public comment, and perhaps 
subsequently adopt, this policy statement.

III. Conclusion

    On the basis of the foregoing, the ASC is proposing for public 
comment a new policy entitled, Policy Statement Respecting Temporary 
Practice and Reciprocity, as set forth in the following appendix. If 
adopted, this Policy Statement would amend and supersede previous ASC 
guidance respecting temporary practice and reciprocity in ASC Policy 
Statements 5 and 6, which were published in August 1993.

    Dated: October 15, 1996.

    By the Appraisal Subcommittee.
Diana L. Garmus,
Chairperson.

Appendix A--Proposed Policy Statement

    ________________, 1996.

Policy Statement Respecting Temporary Practice and Reciprocity

    This Policy Statement implements amendments to Section 1122(a) 
of Title XI of the Financial Institutions Reform, Recovery and 
Enforcement Act of 1989. The amendments added subparagraph (2) (12 
U.S.C. 3351(a)(2)) pertaining to temporary practice and paragraph 
(b) (12 U.S.C. 3351(b)) regarding reciprocity, which state:
    (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 Policy Statement amends and supersedes previous ASC guidance 
respecting temporary practice and reciprocity in ASC Policy 
Statements 5 and 6, which were published in August 1993.

I. Temporary Practice

    Title XI requires a State appraiser regulatory agency (``State 
agency'') to recognize on a temporary basis the certification or 
license of an appraiser from another State provided: (1) the 
property to be appraised is part of a Federally related transaction; 
(2) the appraiser's business is of a temporary nature; and (3) the 
appraiser registers with the State appraiser regulatory agency in 
the State of temporary practice.

[[Page 54647]]

Thus, 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. Title XI does not 
require State B to offer temporary practice to persons who are not 
certified or licensed appraisers, including appraiser assistants not 
under the direct supervision of an appraiser certified or licensed 
in State A.
    Title XI also states that a State appraiser certifying or 
licensing agency shall not impose excessive fees or burdensome 
requirements, as determined by the ASC, for temporary practice. The 
ASC may consider the following fees, acts and practices of the State 
of temporary practice to be ``excessive fees'' or ``burdensome 
requirements'':
     Prohibiting temporary practice;
     Requiring temporary practitioners to obtain a permanent 
certification or license in the State of temporary practice;
     Taking more than five business days to issue a 
temporary practice permit (if issuance is required under State law) 
or to provide effective notice to the out-of-State appraiser 
regarding his or her temporary practice request;
     Requiring out-of-State appraisers requesting temporary 
practice to satisfy the host State's appraiser qualification 
requirements for certification which exceed the minimum required 
criteria for certification adopted by the Appraiser Qualification 
Board (``AQB'');
     Imposing a time frame on out-of-State certified 
appraisers to complete an appraisal assignment in a federally 
related transaction;
     Limiting out-of-State certified appraisers to a single 
temporary practice permit per calendar year;
     Requiring temporary practitioners to affiliate with an 
in-State certified or licensed appraiser;
     Failing to take regulatory responsibility for a 
visiting appraiser's unethical, incompetent or fraudulent practices 
performed while within the State; and
     Charging temporary practice fees that impede temporary 
practice. The ASC will consider fees of $150 or less as reasonable. 
The ASC may ask State agencies to justify temporary practice fees.
    In addition, the ASC may consider fees, acts and practices of 
the certified or licensed appraiser's home State to be ``excessive 
fees'' or ``burdensome requirements.'' For example, the practice of 
delaying the issuance of a written ``letter of good standing'' or 
similar document for more than five business days after the home 
State agency's receipt of the related request could be a 
``burdensome requirement.''
    This listing is not exclusive. The ASC may find other excessive 
fees or burdensome practices while performing its State agency 
monitoring functions. To help to avoid such an occurrence, the ASC 
favors that States issuing temporary practice permits use a ``post 
card'' temporary practice registration form to: (1) identify the 
appraiser; (2) provide the starting date of when the appraiser will 
be ``in-State''; (3) obtain affirmations that the appraiser 
currently is not subject to any appraiser certification or licensure 
disciplinary proceeding in any State, and that his or her license or 
certificate is fully valid; and (4) obtain the appraiser's consent 
to service in the State of temporary practice. The temporary 
practitioner would send the completed, signed and dated form to the 
State agency in the temporary practice State, together with the 
appropriate fee, and could send a copy to his or her home State 
agency. The appraiser would retain an exact copy for use in the 
State of temporary practice as evidence that the appraiser is 
eligible to perform the appraisal assignment. The ASC suggests that 
appraisers should be able to begin the appraisal assignment in the 
State of temporary practice immediately after the completed form and 
proper fee is irrevocably sent to that State's appraiser regulatory 
agency.

II. Reciprocity

    Section 1122(b) of Title XI, 12 U.S.C. 3347(b), states that the 
ASC 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. Each State should work expeditiously and conscientiously 
with other States with a view toward satisfying the purposes of the 
statutory language. The ASC will monitor each State's progress and 
will encourage States to work out issues and difficulties whenever 
appropriate.
    The ASC encourages States to enter into reciprocal agreements 
that, at a minimum, contain the following features:
     Accomplish reciprocity with at least all contiguous 
States. For States not sharing geographically contiguous borders 
with any other State, such as Alaska and Hawaii, those States should 
enter into reciprocity agreements with States that certify or 
license appraisers who perform a significant number of appraisals in 
the non-contiguous States;
     Eliminate the use of letters of good standing or 
similar documents;
     Readily accept other States' certifications and 
licenses without reexamining applicants' underlying education and 
experience, so long as the other State: (1) has appraiser 
qualification criteria that meet the minimum standards for 
certification and licensure as adopted by the AQB; and (2) uses 
appraiser certification or licensing examination that are AQB 
endorsed;
     Eliminate retesting, so long as the applicant has 
passed the appropriate AQB-endorsed appraiser certification and 
licensing examinations in the appraiser's home State;
     Recognize and accept successfully completed continuing 
education courses taken to qualify for license or certification 
renewal in the appraiser's home State; and
     Establish reciprocal licensing or certification fees 
identical in amount to the corresponding fees for home State 
appraisers.
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[FR Doc. 96-26933 Filed 10-18-96; 8:45 am]
BILLING CODE 6210-01-P