[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Notices]
[Pages 19755-19761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10545]


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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: Adoption of amended policy statements.

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SUMMARY: The Appraisal Subcommittee (``ASC'') of the Federal Financial 
Institutions Examination Council is amending Statements 5 and 6 of the 
ASC's August 4, 1993Policy Statements Regarding State Certification and 
Licensing of Real Estate Appraisers which, respectively, discussed 
temporary practice and reciprocity. Amended Statements 5 and 6 
implement section 315 of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (``CDRIA'').

EFFECTIVE DATE: Immediately.

FOR FURTHER INFORMATION CONTACT: Ben Henson, Executive Director, or 
Marc L. Weinberg, General Counsel, at (202) 634-6520, via Internet e-
mail at [email protected] and [email protected], respectively, or by U.S. Mail 
at Appraisal Subcommittee, 2100 Pennsylvania Avenue, N.W., Suite 200, 
Washington, D.C. 20037.

SUPPLEMENTARY INFORMATION:

I. Statutory basis

    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 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. 2009 (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 to enter into reciprocal appraiser licensing and 
certification agreements and arrangements.
    In September 1994, Section 315 of CDRIA, Pub. L. 103-325, 108 Stat. 
2160, 2222 (1994), 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

[[Page 19756]]

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, we can 
define the ambiguous terms, ``excessive fees'' or ``burdensome 
requirements,'' in new Sec. 1122(a)(2) and can interpret how they fit 
into the ASC's existing enforcement powers in Title XI. We 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 us to ``encourage'' the 
States to develop reciprocity agreements.

II. Prior ASC Implementation Actions

A. 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 Sec. 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 
(``1993 Policies''), 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 and reciprocity alternatives 
included the ``universal drivers license.'' For details regarding the 
alternatives, see 60 FR 47365 (September 12, 1995). We additionally 
requested comments on all aspects of implementing the new legislation 
and welcomed variations or combinations of the discussed alternatives 
or other alternatives. Finally, we 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.
    We 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 our 
action. In connection with temporary practice, the comments 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 applications for certification or licensing by 
reciprocity.
    Most commenters supported adoption of the drivers license approach 
to temporary practice and reciprocity. Adopting this approach, however, 
would necessarily require us to pre-empt conflicting State statutes, 
regulations and practices. We concluded that pre-emption would be 
inappropriate.

B. The October 21, 1996 Proposed Policy Statement (``Proposal'')

    The ASC published for public comment a proposed policy statement 
entitled, Policy Statement Respecting Temporary Practice and 
Reciprocity, in the October 21, 1996 edition of the Federal Register 
(61 FR 54645). In connection with temporary practice, the Proposal 
stated that we may consider the following fees, acts and practices of 
the State of temporary practice to be ``excessive fees'' or 
``burdensome requirements'' under Sec. 1122(b)(2) of Title XI (12 
U.S.C. 3351(b)):
     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 Qualifications 
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.
    We also stated that we may consider fees, acts and practices of the 
certified or licensed appraiser's home State to be ``excessive fees'' 
or ``burdensome requirements'' if the home State delays, or otherwise 
impedes, an appraiser from obtaining a temporary practice permit in 
another State. 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.''
    Finally, we indicated that the above listing would not be 
exclusive. The ASC may find other excessive fees or burdensome 
practices while performing its State agency monitoring functions.
    To help avoid such an occurrence, we presented for discussion a 
``post card'' temporary practice registration form which would: (1) 
identify the appraiser requesting temporary practice; (2) provide the 
starting date 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. For details, see 61 FR at 54647.
    Regarding reciprocity, we noted that, pursuant to Sec. 1122(b) of 
Title XI, 12 U.S.C. 3347(b), each State should work expeditiously and 
conscientiously with

[[Page 19757]]

other States with a view toward satisfying the purposes of the 
statutory language. We stated our intention to monitor each State's 
progress and encourage States to work out issues and difficulties 
whenever appropriate. We also specifically encouraged 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, 
provided that 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 
examinations that are AQB endorsed;
      Eliminate retesting, provided that 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 in-State appraisers.
    We stated that, if adopted, the Proposal would amend and supersede 
our earlier guidance respecting temporary practice and reciprocity in 
``Policy Statements 5 and 6 of the 1993 Policies.''

III. Analysis of Comments Received

    Twenty-four comments were received from ten individual States 
agencies; an association of State agencies; two individual real estate 
appraisers; two appraiser professional associations; four individual 
financial institutions; one financial institutions trade association; 
one national accounting firm; and three individual appraisers from one 
Federal agency.
    All commenters agreed in principle with the overall goals of Title 
XI to remove excessive temporary practice fees and burdensome 
requirements and to encourage reciprocity. Indeed, no one disagreed 
that the following were burdens on temporary practice: prohibiting 
temporary practice; requiring temporary practitioners to obtain a 
permanent certification or license in the State of temporary practice; 
requiring temporary practitioners to affiliate with an in-State 
certified or licensed appraiser; limiting out-of-State certified 
appraisers to a single temporary practice permit per calendar year; and 
failing to take regulatory responsibility for a visiting appraiser's 
unethical, incompetent or fraudulent practices performed while within 
the State. In addition, the commenters agreed with our proposals to 
encourage reciprocity, except with respect to the proposal to eliminate 
the use of letters of good standing or similar documents, as discussed 
below.
    The commenters fell into two broad camps. The State agencies 
emphasized their duties to protect the public from illegal fraudulent 
and negligent professional practitioners and argued for more 
flexibility in administering their temporary practice and reciprocity 
programs. On the other hand, financial institutions, their trade 
associations, the appraisers and their professional organizations and 
the other commenters generally desired the removal of all State 
restrictions on temporary practice and reciprocity. Most stated their 
continuing support of the drivers license approach, even though we 
clearly rejected that alternative in the Proposal.

A. Proposal to Eliminate the Use of Letters of Good Standing

    Commenters clearly stated their opinion that the use of letters of 
good standing or similar documents must be allowed for reciprocity 
purposes, at least until we provide State agencies, financial 
institutions and other interested members of the public with an easy, 
reliable method of verifying State certification and licensure, such as 
placing the ASC's National Registry of State Certified and Licensed 
Appraisers (``Registry'') on the Internet. The State agencies noted 
their responsibility to protect the public by insuring that appraisers 
with suspended or revoked licenses, or who have been disciplined in 
other States, are not permitted to cross State lines and continue to 
practice. Therefore, the proposal to eliminate letters of good standing 
for reciprocity purposes is being dropped from immediate consideration. 
The ASC currently is working towards placing the Registry on the 
Internet. Once that is accomplished, we will revisit this issue.

B. ``Postcard'' Temporary Practice Registration Procedure

    State agency commenters unanimously opposed the suggested postcard 
temporary practice registration procedure. They noted that such a 
procedure will result in administrative difficulties and would be a 
major obstacle to taking regulatory responsibility for visiting 
certified or licensed appraisers. The self-affirmation aspect of the 
suggested procedure would be especially troublesome because appraisers 
who are currently the subject of disciplinary action would not be the 
best source of information concerning their certification or licensure 
status. Upon further consideration, we agree with the commenters and 
withdraw our suggestion.

C. Taking More Than Five Business Days to Issue a Temporary Practice 
Permit or to Provide Effective Notice to the Out-of-State Appraiser 
Regarding His or Her Temporary Practice Request

    Most of the State agencies commented that five business days would 
seem to be an acceptable time frame for processing temporary practice 
requests. Many of those commenters noted, however, that the time frame 
should start running only after the requesting appraiser has completed 
the submission of his or her paperwork to the State agency. We agree 
with these comments and have modified the adopted policy accordingly.
    One State agency noted that it probably could not meet such a short 
processing deadline in all cases because of limited staff resources and 
the State law requirement that it check every request for a license or 
permit against another in-State department's database of persons 
failing to make child support payments. The commenter suggested that we 
analyze each State's temporary practice processing times, determine 
medians and 95% probability intervals nationwide and target States 
whose response times fall outside of the 95% range.
    We remind State agencies that the five-day processing time period 
is a policy, i.e., a guideline for measuring compliance; it is not law. 
We will be applying this policy, as well as the others, in a flexible 
manner, taking into consideration all pertinent facts. For example, if 
a State agency receives a complete request for a temporary practice 
permit and makes a good faith effort to process the request within five 
business days, but cannot because of a delay resulting from the need to 
comply with other provisions of State law, then we would view the State 
agency in

[[Page 19758]]

substantial compliance with the five business day processing policy. 
The State agency also will need to take appropriate steps to inform the 
requesting appraiser about the delay and to provide the appraiser with 
a realistic estimate of when processing will be completed.

D. Imposing a Time Frame on Out-of-State Certified Appraisers to 
Complete an Appraisal Assignment in a Federally Related Transaction

    Several commenters did not understand why setting a deadline for 
completing an appraisal assignment would be burdensome because most 
assignments are completed in less than a month. They indicated that, to 
regulate appraisers effectively, State agencies must have the 
flexibility to set their own policies concerning temporary practice 
either using realistic time limits or by the listing of appraisal 
assignments or properties.
    We agree in part with this statement in that States must have the 
flexibility to set their own policies concerning temporary practice. 
And, we understand State agencies' concerns about administering and 
justifying to resident appraisers a temporary practice program which 
issues temporary practice permits for an indefinite duration. On the 
other hand, the need for State agency flexibility is offset by Title 
XI, which not only created the right to temporary practice, but also 
required the ASC to ensure that the right to temporary practice not be 
unreasonably hindered by excessive fees or burdensome requirements.
    We have learned through our State agency oversight program that 
many State agencies limit the time frame of their temporary practice 
permits and provide temporary practitioners with a method of extending 
permit periods. We have not objected to these features, provided that 
the period limitation is not less than six-months and the method of 
extending a permit's time frame is easy. We, therefore, are adopting 
policy language consistent with these comments. The new policy 
prohibits State agencies from limiting temporary practice permits to 
less than six months. It also prohibits State agencies from failing to 
provide temporary practitioners with at least one extension of time, 
sufficient to complete the assignment, which will be effective upon 
receipt of a written request by the State agency, provided that the 
request includes the appraiser's reasons for the extension.
    The new policy does not conflict with our previous policies 
regarding the meaning of the terms, ``temporary'' and ``assignment,'' 
as used in Title XI. In industry practice, an assignment means a 
contractual obligation to appraise one or more specific parcels of real 
estate. And, an assignment, by its very nature, is of finite duration 
and, therefore, ``temporary.'' Therefore, even if a temporary practice 
permit is valid for six months after issuance, its validity ends when 
the assignment is completed or at the end of the six month period 
(including any extension period), whichever occurs first.
    We also recognize that, at some point, an appraiser may be abusing 
his or her right to temporary practice to the detriment of the State 
agency's ability to regulate its appraiser population effectively and 
fairly. For example, a State agency could determine that an assignment 
to appraise all commercial properties within a county or other 
significant political subdivision within the State could be an abusive 
practice and refuse to issue a temporary practice permit to the 
requesting appraiser. In this case, a State agency could determine that 
the proposed appraisal activity does not qualify as ``temporary,'' as 
that term is commonly understood and used in Title XI.

E. Requiring Out-of-State Appraisers Requesting Temporary Practice to 
Satisfy Host State Appraiser Qualification Requirements for 
Certification That Exceed AQB Qualification Criteria

    Some commenters recommended that out-of-State appraisers seeking to 
exercise their temporary practice rights should be treated in exactly 
the same manner as resident appraisers, and, if the State has adopted 
higher minimum requirements for appraiser licensing or certification, 
then the out-of-State appraisers should meet the State's higher 
requirements. Any other result would be unfair to the State's resident 
appraisers.
    While we understand the commenters' concerns, we disagree. Title 
XI's specific right to temporary practice for all certified or licensed 
appraisers when performing appraisals in connection with federally 
related transactions was intended by Congress to ensure that users of 
appraisal services have quick access to needed appraisal expertise, 
even if the expert is located out-of-State. Title XI's temporary 
practice provision struck a balance between the desirability of 
maintaining a free flow of appraisal expertise across State lines and 
the legitimate need for State appraiser regulators to oversee appraisal 
activity within their respective States. To require out-of-State 
appraisers requesting temporary practice to comply with unique State 
qualification requirements clearly would be inconsistent with the 
intent of Congress.

F. Failing To Take Regulatory Responsibility for A Visiting Appraiser's 
Unethical, Incompetent or Fraudulent Practices Performed While Within 
the State

    Two comments were received regarding this proposal. The first 
commenter noted that it was not aware of any instance where a host 
State failed to take appropriate action and suggested that we initiate 
Federal legislation to provide for Federal investigation and 
prosecution. The commenter also stated that investigatory and 
disciplinary actions that can be taken in temporary practice situations 
are limited.
    In exercising its oversight responsibility over State agencies, the 
ASC has become aware of instances where host States either failed to 
take regulatory responsibility for the actions of temporary 
practitioners or were confused about their regulatory obligations in 
those circumstances. In response, we issued Statement 10: Enforcement 
in our 1993 Policies. This policy, in part, stated that the State 
agency in the State of temporary practice needs to follow up on any 
complaints regarding the temporary practicing appraiser's appraisal 
activities within the State. If appropriate, the host State agency 
should begin a disciplinary proceeding against the appraiser for 
violations occurring in its jurisdiction and should not just forward 
the complaint for follow up to the State agency in the appraiser's home 
State. We also stated our expectations that the home State agency would 
honor the findings and judgment of the State agency in the State of 
temporary practice and would take appropriate disciplinary action 
against the appraiser.
    We understand that the State of temporary practice is somewhat 
limited in responding to unlawful activity of temporary practitioners. 
We continue to expect that the appraiser's home State agency will grant 
full faith and credit to any findings and orders from disciplinary 
proceedings in the host State and will take appropriate action.
    The second commenter suggested adding language to further clarify 
State agency regulatory obligations. The new language would require a 
host State agency to forward copies of available evidence and 
disciplinary actions against a visiting appraiser acting under a 
temporary practice permit to the appraiser's home State agency and 
would require the home State agency to

[[Page 19759]]

take appropriate disciplinary action when one of its certified or 
licensed appraisers are disciplined by another State for improper 
practice under a temporary practice permit. We agree that these 
clarifications will assist users of appraisal services, State agencies 
and appraisers by spelling out the roles of each State agency in cases 
of shared interests. Therefore, we are adopting them.

G. 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.
    We received three comments regarding temporary practice fees. The 
first commenter suggested that temporary practitioners should 
compensate the State agency on the same basis as the in-State 
appraisers. The commenter saw no reason why an appraiser should work 
from three months to a year within a State, cause the State to incur 
processing and monitoring costs, and possibly responding to complaints, 
without paying their fair share of fees. In sum, in-State appraisers 
should not subsidize out-of-State temporary appraisers. The second 
commenter noted that $150 is little enough to begin an investigation 
and falls far short of paying the investigator, let alone fees for an 
expert witness and prosecuting attorney. The commenter concluded that 
the temporary practice fee should be no less than the fee paid by 
resident appraisers. The final commenter suggested changes in the 
policy's wording which did not significantly affect the policy's 
substance.
    We agree that temporary practitioners should be required to pay a 
fair fee to exercise their temporary practice rights, and that the fee 
generally should be based on costs. We believe, however, that, as 
discussed above, temporary practitioners have special status under 
Title XI which requires them to be treated somewhat differently than 
home State appraisers. Provided that an appraiser's certificate or 
license is in good standing in his or her home State and the appraiser 
pays the appropriate fee, a host State agency essentially is required 
by Title XI to issue the temporary practice permit. The State agency 
does not review the appraiser's appraisal education or experience, and 
no significant staff resources are expended.
    In addition, we disagree with the commenter's statements regarding 
relative compliance costs. Temporary practitioners are within the State 
for a relatively short amount of time and are authorized to perform 
only a limited number of appraisal assignments. In addition, we 
understand that the number of appraisals performed by out-of-State 
certified and licensed appraisers under temporary practice permits is 
very small when compared to the number of appraisals performed by 
resident State certified and licensed appraisers. To force temporary 
practitioners to share a State agency's costs on the same basis as 
resident appraisers, in all likelihood, would cause temporary practice 
fees to jump to prohibitory levels, which would be unacceptable under 
Title XI. And, while a $150 or less temporary practice fee will do 
little to offset the costs of taking disciplinary action against a 
temporary practitioner, the same would be true, perhaps to a slightly 
lesser degree, with respect to application and renewal fees submitted 
by resident appraisers. In the end, because every State must provide 
the right to temporary practice and must comply with Title XI 
compliance requirements, temporary practice compliance costs should 
even out.
    We note that the proposed policy essentially incorporated an 
existing ASC policy that has been applied consistently during the ASC's 
State agency on-site review program. In numerous field review letters 
to State agencies during the last three years, we have noted when 
States were charging $100 or more for a temporary practice permit and 
have requested them to justify the fee level. We are increasing this 
threshold to over $150, on the basis of empirical data gathered in our 
State agency oversight program.
    We, therefore, are adopting the policy as proposed.

IV. Form of Policy Amendments

    Rather than issuing a separate, new policy statement, both amending 
and superseding Policy Statements 5 and 6 of the 1993 Policies, we 
decided to restate and amend Statements 5 and 6. Retaining the original 
format and keeping all ASC guidance regarding temporary practice and 
reciprocity in one place should facilitate the readability and 
comprehension of the amended policies.

V. Effective Date

    We are adopting amended Statements 5 and 6 effective immediately. 
We, however, recognize that a number of States and their State agencies 
may require additional time to comply with them. The ASC expects those 
States and State agencies to attain full compliance within one year 
from the date this document is published in the Federal Register. If a 
State or State agency believes that it cannot meet this deadline, it 
must notify the ASC immediately. The notification must be in writing 
and must include the specific reasons for the request, the period of 
time requested and a definitive plan to accomplish compliance within 
the requested extension period. We will consider each request on a 
case-by-case basis.

VI. Conclusion

    On the basis of the foregoing, the ASC adopts the Amended Policy 
Statements Respecting Temporary Practice and Reciprocity, attached as 
Appendix A, to be effective immediately, subject to the conditions 
discussed above.

    Dated: April 16, 1997.

    By the Appraisal Subcommittee.
Herbert S. Yolles,
Chairman.

Appendix A--Amended Policy Statements Respecting Temporary Practice and 
Reciprocity

April 23, 1997.
    This document amends Appraisal Subcommittee (``ASC'') Policy 
Statements 5 and 6, which the ASC adopted in August 1993. The changes 
to these Policy Statements implement 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)) regrading 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.
    Policy Statements 5 and 6, as amended, follow:

Statement 5: Temporary Practice

    Title XI requires a 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

[[Page 19760]]

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. 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. An out-
of-State certified or licensed appraiser should register for temporary 
practice before beginning to perform an appraisal assignment in 
connection with a federally related transaction.
    The ASC believes the ``temporary'' is best measured by one or more 
specific appraisal assignments. For temporary practice purposes, the 
ASC regards the term ``assignment'' as meaning one or more real estate 
appraisals and written appraisal reports which are covered by a 
contract to provide an appraisal.
    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 considers 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 (after receipt of a 
complete temporary practice registration request) 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 the status of 
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 Qualifications 
Board (``AQB'');
    Limiting the valid time period of a temporary practice permit to 
less than six months after its issuance date or not providing a 
temporary practitioner with an effortless method of obtaining an 
extension of the time period;
     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;
     After taking disciplinary action against a visiting 
appraiser, failing to forward copies of available evidence and final 
disciplinary orders promptly to the appraiser's home State agency; and
     Charging a temporary practice fee exceeding $150.
    In addition, the ASC will consider the following fees, acts and 
practices of the certified or licensed appraiser's home State to be 
excessive or burdensome:
     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; and
     Failing to take appropriate disciplinary action when one 
of its certified or licensed appraisers is disciplined by another State 
agency for unethical, incompetent or fraudulent practices under a 
temporary practice permit.
    This listing is not exclusive. The ASC may find other excessive 
fees or burdensome practices while performing its State agency 
monitoring functions.
    An out-of-State certified or licensed appraiser must comply with 
the host State's real estate appraisal statutes and regulations. Each 
appraiser who receives temporary practice registration is subject to 
the State's full regulatory jurisdiction and is governed by the State's 
statutes and regulations respecting appraiser certification or 
licensing. However, the out-of-State appraiser should be treated like 
any other appraiser within the State who wishes to perform an appraisal 
in a federally related transaction.
    A State agency may establish by statute or regulation a policy that 
places reasonable limits on the number of times an out-of-State 
certified or licensed appraiser may exercise his or her temporary 
practice rights in a given year. If such an overall policy is not 
established, a State agency may choose not to honor an out-of-State 
certified or licensed appraiser's temporary practice rights if it has 
made a determination that the appraiser is abusing his or her temporary 
practice rights and is regularly engaging in real estate appraisal 
within the State.
    Finally, some State agencies have sought to require that an 
appraiser register for temporary practice if the appraiser is certified 
or licensed in another State, performs a technical review of an 
appraisal in that other State and changes, or is authorized to change, 
a value in the appraisal. The ASC, however, has concluded that for 
federally related transactions the review appraiser need not register 
for temporary practice or otherwise be subjected to the regulatory 
jurisdiction of the State agency in which the appraisal was performed, 
so long as the review appraiser does not perform the technical review 
in the State within which the property is located.
* * * * *

Statement 6: Reciprocity

    Many interested parties have commented that reciprocity is at least 
as critical as temporary practice. Under reciprocal arrangements, an 
appraiser who is certified or licensed in State A and is also 
reciprocally certified or licensed in State B must comply with both 
States' appraiser laws, including those requiring the payment of 
certification, licensing and Federal registry fees and continuing 
education. Indeed, the appraiser for all intents and purposes is 
treated as if he or she were separately certified or licensed in each 
of the States.
    Methods for providing reciprocity vary from State to State. Some 
States may implement formal agreements with other States, whereby a 
certified or licensed appraiser in good standing from one State applies 
for, and is granted, certification or licensing in the other States 
upon submission to the other States of a copy of his or her 
credentials, a statement of good standing, a consent for service of 
suit and the payment of appropriate fees. Other States, without a 
formal agreement, but with similar documentation requirements, may 
grant the requested certificate or license upon the payment of the 
second State's fee. Still other States may accept the examination of 
other States, but require the remainder of the application to be 
completed by the applicant and reviewed by the State agency.
    Reciprocity's main benefit is that appraisers who qualify for 
certification or licensing in one State may freely cross into another 
State without needing to ``register'' for each appraisal assignment in 
the other State. Therefore, a duly certified or licensed appraiser in 
one State can be recognized as such in each of the other States in 
which he or she is licensed or certified by reciprocity.

[[Page 19761]]

    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 
monitors each State's progress and encourages 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 Puerto Rico, 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;
     Readily accept other States' certifications and licenses 
without reexamining applicants' underlying education and experience, 
provided that the other State: (1) has appraiser qualification criteria 
that meet or exceed the minimum standards for certification and 
licensure as adopted by the AQB; and (2) uses appraiser certification 
or licensing examinations that are AQB endorsed;
     Eliminate retesting, provided that 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 in-State appraisers.
* * * * *
[FR Doc. 97-10545 Filed 4-22-97; 8:45 am]
BILLING CODE 6201-01-M