[Federal Register Volume 66, Number 231 (Friday, November 30, 2001)]
[Proposed Rules]
[Pages 60128-60130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29681]



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Part IV





Department of Housing and Urban Development





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24 CFR Part 200



Appraiser Qualifications for Placement on FHA Single Family Appraiser 
Roster; Proposed Rule

  Federal Register / Vol. 66, No. 231 / Friday, November 30, 2001 / 
Proposed Rules  

[[Page 60128]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 200

[Docket No. FR-4620-P-01]
RIN 2502-AH59


Appraiser Qualifications for Placement on FHA Single Family 
Appraiser Roster

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would make several regulatory changes 
designed to strengthen the licensing and certification requirements for 
placement on the FHA Appraiser Roster. First, the proposed rule would 
require that appraisers on the Appraiser Roster must have professional 
credentials that are based on the minimum licensing/certification 
standards issued by the Appraiser Qualifications Board of the Appraisal 
Foundation. The proposed rule also clarifies that an appraiser may be 
removed from the Appraiser Roster if the appraiser loses his or her 
license or certification in any state due to disciplinary action, even 
if the appraiser continues to be licensed or certified in another 
state. Finally, the proposed rule provides that an appraiser who is 
licensed or certified in a single state and whose license or 
certification has expired, or has been revoked, suspended or 
surrendered as a result of a state disciplinary action, will be 
automatically suspended from the Appraiser Roster until HUD receives 
evidence demonstrating renewal or that the state imposed sanction has 
been lifted.

DATES: Comments Due Date: January 29, 2002.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW., Washington, DC 20410-0500. Communications should 
refer to the above docket number and title. Facsimile (FAX) comments 
are not acceptable. A copy of each communication submitted will be 
available for public inspection and copying between 7:30 am and 5:30 pm 
weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: Vance T. Morris, Director, Office of 
Single Family Program Development, Room 9266, U.S. Department of 
Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 
20410-8000; telephone (202) 708-2121 (this is not a toll-free number). 
Hearing- or speech-impaired individuals may access this number via TTY 
by calling the toll-free Federal Information Relay Service at 1-800-
877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    HUD has taken various steps to ensure the integrity of Federal 
Housing Administration (FHA) appraisals. In August 1999, HUD launched 
dramatic and comprehensive reforms of the FHA appraisal process through 
its Homebuyer Protection Plan. The purpose of these reforms is to 
ensure that homebuyers seeking FHA-insured mortgages receive accurate 
and complete appraisals of the homes they seek to purchase. As part of 
the Homebuyer Protection Plan, HUD has established regulatory placement 
and removal procedures for the FHA Appraiser Roster. These procedures 
are codified in subpart G of HUD's regulations at 24 CFR part 200 
(consisting of Secs. 200.200--200.206).
    HUD's Appraiser Roster lists those appraisers who are eligible to 
perform FHA single family appraisals. HUD maintains the Appraiser 
Roster to provide a means by which HUD can monitor the quality of 
appraisals performed on single family homes financed through the FHA 
single family programs and to ensure that appraisers performing FHA 
appraisals meet high competency standards. The Appraiser Roster is an 
important part of the FHA Single Family Mortgage Insurance program 
because accurate appraisals are vital to the success of the program and 
HUD's ability to protect the FHA Insurance Fund.
    This proposed rule would make several regulatory changes that are 
designed to strengthen the FHA Appraiser Roster licensing and 
certification requirements. First, the proposed rule would amend 
Sec. 200.202, which requires that an applicant for placement on the 
Appraiser Roster must be a state-licensed or state-certified appraiser. 
The proposed rule would require that the state licensed or certified 
appraiser have professional credentials that are based on the minimum 
licensing/certification standards issued by the Appraiser 
Qualifications Board (AQB) of the Appraisal Foundation. HUD believes 
that the proposed amendment will help to ensure that appraisers on the 
Appraiser Roster meet high competency standards, thereby improving the 
quality and accuracy of their FHA appraisals. For purposes of the rule, 
an appraiser would not be deemed to have professional credentials based 
on AQB standards if the state licensing/certification requirements did 
not conform to AQB criteria at the time the appraiser obtained the 
license or certification. This is true even if the state has 
subsequently adopted AQB criteria and has ``grandfathered'' previously 
licensed or certified appraisers.
    The proposed rule would also amend Sec. 200.204, which describes 
the actions HUD may take against an appraiser on the Appraiser Roster 
that does not meet HUD's established guidelines for performance, 
education, competency, and other professional criteria. Specifically, 
the proposed rule clarifies that an appraiser may be removed from the 
Appraiser Roster if the appraiser loses his or her license or 
certification in any state due to disciplinary action, even if the 
appraiser continues to be licensed or certified in another state. The 
proposed rule would also provide that an appraiser who is licensed or 
certified in a single state and whose state license or certification 
has expired, or has been revoked, suspended or surrendered as a result 
of a state disciplinary action, will be automatically suspended from 
the Appraiser Roster and prohibited from conducting FHA appraisals 
until HUD receives evidence demonstrating renewal or that the state 
imposed sanction has been lifted.

II. Findings and Certifications

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this proposed rule is a ``significant regulatory action'' as 
defined in section 3(f) of the Order (although not an economically 
significant regulatory action under the Order). Any changes made to 
this rule as a result of that review are identified in the docket file, 
which is available for public inspection in the office of the 
Department's Rules Docket Clerk, Room 10276, 451 Seventh Street, SW., 
Washington, DC 20410-0500.

Public Reporting Burden

    The information collection requirements for the FHA Appraiser 
Roster have been approved by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and 
have been assigned OMB control number 2502-0538. In accordance with the 
Paperwork Reduction Act, HUD may not

[[Page 60129]]

conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection displays a currently 
valid OMB control number.

Environmental Impact

    This proposed rule does not direct, provide for assistance or loan 
and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
proposed rule is categorically excluded from environmental review under 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Regulatory Flexibility Act

    The Secretary has reviewed this proposed rule before publication, 
and by approving it certifies, in accordance with the Regulatory 
Flexibility Act (5 U.S.C. 605(b)), that this proposed rule would not 
have a significant economic impact on a substantial number of small 
entities. The reasons for HUD's determination are as follows.
    The proposed rule would require that appraisers on the Appraiser 
Roster have professional credentials that are based on the minimum 
licensing/certification standards issued by the Appraiser 
Qualifications Board (AQB) of the Appraisal Foundation. An analysis of 
the FHA Appraiser Roster indicates that of the approximately 22,163 
appraisers currently on the Roster, only approximately 330 do not have 
licensing in conformance with the standards issued by the AQB. In most 
instances, these appraisers already have some of the hours of education 
or experience required to meet the AQB criteria, thus further 
minimizing the impacts of the proposed rule. For example, most 
appraisers on the Roster have been listed on the Roster for some time, 
and thus few of these appraisers will have difficulty providing 
evidence to their state board demonstrating acceptable experience 
levels. With regards to the education requirements, the AQB standards 
only require 120 hours of education for certification. Given the few 
number of appraisers currently on the Roster who do not have a state 
designation based on AQB criteria and the relative low time and expense 
that would be required for most of these appraisers to meet AQB 
criteria, HUD believes that the proposed rule will not have a 
significant economic impact on small entities.
    In addition to the new AQB standards, the proposed rule also 
clarifies that an appraiser may be removed from the Appraiser Roster if 
the appraiser loses his or her license or certification in any state 
due to disciplinary action, even if the appraiser continues to be 
licensed or certified in another state. The proposed rule would also 
provide that an appraiser who is licensed or certified in a single 
state and whose state license or certification has expired, or has been 
revoked, suspended or surrendered as a result of a state disciplinary 
action, will be automatically suspended from the Appraiser Roster and 
prohibited from conducting FHA appraisals until HUD receives evidence 
demonstrating renewal or that the state imposed sanction has been 
lifted. To the extent that these changes have an impact on small 
entities it will be as a result of actions taken by the appraisers 
themselves--that is, violation of applicable standards resulting in 
disciplinary action or otherwise failing to maintain their professional 
state licensing or certification.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This proposed rule would not have 
federalism implications and would not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments, and on the private sector. This proposed rule would not 
impose any Federal mandates on any state, local, or tribal governments, 
or on the private sector, within the meaning of the Unfunded Mandates 
Reform Act of 1995.

List of Subjects in 24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Home improvement, Housing standards, 
Incorporation by reference, Lead poisoning, Loan programs--housing and 
community development, Minimum property standards, Mortgage insurance, 
Organization and functions (Government agencies), Penalties, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

    Accordingly, for the reasons discussed in the preamble, HUD 
proposes to amend 24 CFR part 200 as follows:

PART 200--INTRODUCTION TO FHA PROGRAMS

    1. The authority citation for 24 CFR part 200 continues to read as 
follows:

    Authority: 12 U.S.C. 1701-1715z-18; 42 U.S.C. 3535(d).

Subpart G--Appraiser Roster

    2. Revise Sec. 200.202(b)(1) to read as follows:


Sec. 200.202  How do I apply for placement on the Appraiser Roster?

* * * * *
    (b) * * *
    (1) You must be a state-licensed or state-certified appraiser with 
professional credentials based on the minimum licensing/certification 
criteria issued by the Appraiser Qualifications Board (AQB) of the 
Appraisal Foundation (for purposes of this section, an appraiser is not 
deemed to have professional credentials based on AQB standards if the 
state licensing/certification requirements did not conform to AQB 
criteria at the time the appraiser obtained the license or 
certification. This is true even if the state has subsequently adopted 
AQB criteria and has ``grandfathered'' previously licensed or certified 
appraisers).
* * * * *
    3. Amend Sec. 200.204 as follows:
    a. Revise paragraph (a)(1);
    b. Redesignate paragraphs (c) and (d) as paragraphs (d) and (e) 
respectively; and
    c. Add new paragraph (c):


Sec. 200.204  What actions may HUD take against unsatisfactory 
appraisers on the Appraiser Roster?

* * * * *
    (a) * * *

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    (1) Cause for removal. Cause for removal includes, but is not 
limited to:
    (i) Significant deficiencies in appraisals, including non-
compliance with Civil Rights requirements regarding appraisals;
    (ii) Losing standing as a state-certified or state-licensed 
appraiser due to disciplinary action in any state in which the 
appraiser is certified or licensed;
    (iii) Prosecution for committing, attempting to commit, or 
conspiring to commit fraud, misrepresentation, or any other offense 
that may reflect on the appraiser's character or integrity;
    (iv) Failure to perform appraisal functions in accordance with 
instructions and standards issued by HUD;
    (v) Failure to comply with any agreement made between the appraiser 
and HUD or with any certification made by the appraiser;
    (vi) Being issued a final debarment, suspension, or limited denial 
of participation;
    (vii) Failure to maintain eligibility requirements for placement on 
the Appraiser Roster as set forth under this subpart or any other 
instructions or standards issued by HUD; or
    (viii) Failure to comply with HUD-imposed education requirements 
under paragraph (d) of this section within the specified period for 
complying with such education requirements.
* * * * *
    (c) Automatic suspension from Appraiser Roster. An appraiser who is 
licensed or certified in a single state and whose state licensing or 
certification has expired, or has been revoked, suspended or 
surrendered as a result of a state disciplinary action, is 
automatically suspended from the Appraiser Roster and prohibited from 
conducting FHA appraisals until HUD receives evidence demonstrating 
renewal or that the state imposed sanction has been lifted.
* * * * *

    Dated: September 10, 2001.
John C. Weicher,
Assistant Secretary for, Housing-Federal Housing Commissioner.
[FR Doc. 01-29681 Filed 11-29-01; 8:45 am]
BILLING CODE 4210-27-P