[Federal Register Volume 77, Number 169 (Thursday, August 30, 2012)]
[Notices]
[Pages 52721-52736]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21452]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS12-16]


Appraisal Subcommittee; Proposed Policy Statements

AGENCY: Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council

ACTION: Proposed policy statements and request for comments.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council requests public comment on a proposal 
to revise ASC Policy Statements (proposed Policy Statements). The 
proposed Policy Statements provide guidance to ensure State appraiser 
regulatory programs (Program) \1\ comply with Title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989, as amended. 
The proposed Policy Statements would supersede the current ASC Policy 
Statements.
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    \1\ The 50 States, the District of Columbia, and four 
Territories, which are the Commonwealth of Puerto Rico, Commonwealth 
of the Northern Mariana Islands, Guam, and United States Virgin 
Islands, have State appraiser certifying and licensing agencies with 
Programs monitored by the ASC through the Compliance Review process.

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DATES: Comments must be received on or before October 29, 2012.

ADDRESSES: You may submit comments, identified by any of the following 
methods:

[[Page 52722]]

     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-Mail: [email protected]. Include the docket number in 
the subject line of the message.
     Fax: (202) 289-4101. Include docket number on fax cover 
sheet.
     Mail: Address to Appraisal Subcommittee, Attn Lori 
Schuster, 1401 H Street NW., Suite 760, Washington, DC 20005.

All public comments will be made available on the ASC's Web site at 
http://www.asc.gov (follow link in ``What's New'') as submitted, unless 
modified for technical reasons. Accordingly, comments will not be 
edited to remove any personal identifying or contact information.

FOR FURTHER INFORMATION CONTACT: James R. Park, Executive Director, at 
(202) 595-7575, or Alice M. Ritter, General Counsel, at (202) 595-7577, 
via Internet email at [email protected] and [email protected], respectively, or 
by U.S. Mail at Appraisal Subcommittee, 1401 H Street NW., Suite 760, 
Washington, DC 20005.

SUPPLEMENTARY INFORMATION:

I. Background

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, as amended (Title XI), established the ASC.\2\ 
The purpose of Title XI is to provide protection of Federal financial 
and public policy interests by upholding Title XI requirements for 
appraisals performed for federally related transactions.\3\ Pursuant to 
Title XI, the ASC performs periodic Compliance Reviews of each State's 
Program to:
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    \2\ The ASC Board is comprised of seven members. Five members 
are designated by the heads of the FFIEC agencies (Board of 
Governors of the Federal Reserve System, Consumer Financial 
Protection Bureau, Federal Deposit Insurance Corporation, Office of 
the Comptroller of the Currency, and National Credit Union 
Administration). The other two members are designated by the heads 
of the Department of Housing and Urban Development and the Federal 
Housing Finance Agency.
    \3\ Refers to any real estate related financial transaction 
which: (a) a federal financial institutions regulatory agency 
engages in, contracts for, or regulates; and (b) requires the 
services of an appraiser. (See Title XI Sec.  1121 (4), 12 U.S.C. 
3350.)
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     Determine its compliance, or lack thereof, with Title XI, 
and
     Assess its implementation of the Real Property Appraiser 
Qualification Criteria (AQB Criteria), as adopted by the Appraiser 
Qualifications Board (AQB).
    The ASC originally adopted the Policy Statements in 1993. In 1997, 
the ASC added Policy Statements governing temporary practice and 
reciprocity. Since 1997, the Policy Statements have remained largely 
unchanged with the exception of amendments made by the ASC in 2008 to 
Policy Statement 10, Enforcement. Two recent occurrences necessitated 
revision of the Policy Statements:
    1. Passage of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act); and
    2. ASC implementation of its revised Compliance Review process in 
2009.

    States have already begun the process of implementing numerous 
statutory changes brought about by the Dodd-Frank Act.\4\ The proposed 
Policy Statements reflect both Dodd-Frank Act provisions that have been 
implemented by the States as well as provisions that are in process. As 
part of the revised Compliance Review process in 2009, the ASC changed 
the format of the Compliance Review Report issued to the States after 
the ASC completes its on-site review of a State's Program. The 
Compliance Review Report presents the findings of the ASC's on-site 
review of a State's Program, including areas of non-compliance with 
Title XI and recommendations for improvement.
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    \4\ The ASC has issued two Bulletins notifying State Programs of 
statutory requirements brought about by the Title XI amendments 
resulting from the Dodd-Frank Act:
    1. Bulletin 10-1, issued October 14, 2010, notified States that 
the ASC approved a modification of the annual National Registry fee 
to $40 from $25. To provide a reasonable transition period for 
implementation by the States, the fee increase became effective on 
January 1, 2012.
    2. Bulletin No. 2011-01, issued March 18, 2011, addressed new 
requirements concerning reciprocity, qualification requirements for 
State licensed appraisers, minimum requirements for trainee 
appraisers and supervisory appraisers, course approval program of 
the Appraisal Foundation's AQB, and funding and staffing of State 
Programs.
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    The proposed Policy Statements are intended to provide States with 
the necessary information to maintain their Programs in compliance with 
Title XI. Further, the proposed Policy Statements address the ASC's 
authority to evaluate a State Program for compliance with Title XI and 
to take sanctions against a State when its Program does not comply with 
Title XI. The proposal also excludes provisions from the current Policy 
Statements that have become outdated or lack enforceability. 
Additionally, the proposal reflects consideration of recent amendments 
to the Uniform Standards of Professional Appraisal Practice (USPAP) and 
the AQB Criteria.

II. Summary of the Proposed Policy Statements

    Proposed Policy Statements 1 thru 7 correspond with the seven 
categories evaluated during the ASC's Compliance Review process and 
included in the ASC Compliance Review Report to a State. Proposed 
Policy Statement 8 sets forth procedures in the event the ASC imposes 
interim sanctions against a State. The proposal also includes four 
appendices:
    1. Appendix A provides an overview of the Compliance Review process 
and a revised rating system;
    2. Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement;
    3. Appendix C provides a glossary of terms; and
    4. Appendix D contains previously issued ASC Bulletins and 
Supplements that provided States with guidance on compliance with the 
self-enabling provisions of the Dodd-Frank Act, including the effective 
date by which a State needed to take action.

III. Statement-by-Statement Analysis

    The following provides a statement-by-statement analysis 
highlighting the changes to the current Policy Statements reflected in 
the proposal.

Introduction and Purpose

    The proposal's introduction and purpose statement provides a brief 
overview of the ASC's authority and its monitoring function of State 
Programs to determine compliance, or lack thereof, with Title XI. Much 
of the explanatory language in the current Policy Statements, regarding 
functions of the ASC and the establishment of State Programs, is well 
known and presented in the ASC Annual Report to Congress and, 
therefore, is being omitted from the proposal. The proposal focuses 
rather on the Policy Statements' goal to provide States with necessary 
information to maintain their Programs in compliance with Title XI.

Policy Statement 1: Statutes, Regulations, Policies and Procedures 
Governing State Programs

    Proposed Policy Statement 1 will consolidate and replace the first 
four current Policy Statements (State Regulatory Structure and 
Independence of Functions; Appraiser Classifications; Appraisal 
Standards; Written Appraisal Reports) and replaces Policy Statement 7 
(Prohibition Against Discrimination). Policy Statement 1 will address 
the first area of review in the ASC Compliance Review process of a 
State Program's statutes, regulations, policies and procedures for 
compliance with Title XI.
    Since State Programs are now established, much of the language in 
the

[[Page 52723]]

current Policy Statements with instructions on the initial 
establishment of an appraiser licensing and certification program has 
been eliminated. The proposal does preserve essential language 
concerning independence and ethical standards with deference given to 
State standards. The proposal reflects the authority the Dodd-Frank Act 
granted the ASC to review State Programs for adequate funding and 
staffing. The proposal also addresses the discussion on appraiser 
classifications, addressing the Dodd-Frank Act provisions concerning 
licensed level appraisers, as well as trainees and supervisors, and 
outdated language has been removed. The proposal also addresses the 
other credential designations used by States that should be 
distinguished from the federally recognized credentials. The discussion 
on the guidance issued by Federal financial institutions regulatory 
agencies and the statutory requirements outside of Title XI in the 
current Policy statements has been eliminated in deference to those 
provisions standing on their own. The proposal reflects an amendment to 
the current Policy Statements discussion on prohibiting discrimination 
to reflect the Dodd-Frank Act provision that allows criteria 
established by the Federal financial institutions regulatory agencies 
for appraiser qualifications to include membership in a nationally 
recognized professional appraisal organization.
    The proposal addresses attendance by ASC Policy Managers at States' 
closed/executive sessions. The proposal explains how attendance at such 
meetings, except in the case of ``quasi-judicial'' proceedings 
specifically authorized by State statute, is an essential part of the 
ASC's monitoring function.

Policy Statement 2: Temporary Practice

    Proposed Policy Statement 2 will replace the current Policy 
Statement 5 (Temporary Practice) and will address the second area of 
review in the ASC Compliance Review process pertaining to temporary 
practice for compliance with Title XI.
    Proposed Policy Statement 2 provides a clear explanation of what 
the ASC will consider to determine whether a State's fees or 
requirements are excessive or burdensome to an appraiser's ability to 
work in a State on a temporary basis relative to the State's cost of 
processing and issuing a temporary practice credential. Burdensome 
requirements are specified separately for the ``Home State agency'' and 
the ``Host State.'' The proposal reflects that a fee for an initial 
permit and one extension in excess of $250 is an excessive fee. The ASC 
acknowledges that the current Policy Statement set the maximum fee of 
$150 in 1997 and recognizes that States' costs have increased over 
time. Using the Consumer Price Index Inflation Calculator from the U.S. 
Department of Labor, Bureau of Labor Statistics, the change in prices 
of all goods and services at a $150 fee in 1997 equaled about a $215 
fee as of July 2012. The ASC considered this information and based the 
proposed maximum fee of $250 on revised Policy Statement 2 becoming 
final in 2012, and remaining in effect for several years.
    The language in current Policy Statement 5 concerning the 
requirements of an appraiser to register for temporary practice in a 
State to perform a ``technical review'' is not included in the 
proposal. The ASC believes that text is outdated and unnecessary.

Policy Statement 3: National Registry

    Proposed Policy Statement 3 will replace the current Policy 
Statement 8 (National Registry of State Certified and Licensed 
Appraisers) and Policy Statement 9 (Information Sharing), and will 
address the third area of review in the ASC Compliance Review process 
of a State Program's policies and practices pertaining to the ASC's 
National Registry for compliance with Title XI.
    Proposed Policy Statement 3 addresses several Dodd-Frank Act 
amendments to Title XI concerning appraiser classifications and States' 
ASC National Registry reporting requirements. Several provisions in the 
current Policy Statements concerning the ASC National Registry are 
being updated or removed to reflect current ASC procedures. The 
proposal includes a discussion on the ASC National Registry's extranet 
application and security requirements for States (including designation 
of an Authorized Registry Official and adoption of a written policy to 
adequately protect the right of access, as well as the ASC issued 
UserName and Password). The proposal preserves the critical nature of 
information sharing among the States with regard to disciplinary 
actions taken against appraisers. The proposal requires States to 
notify the ASC as soon as practicable if it is determined that a 
credential holder listed on the National Registry does not, or did not, 
qualify for the credential held. The proposal also requires States to 
notify the ASC as soon as practicable in the event of voluntary 
surrenders, suspensions and revocations, or any action that interrupts 
a credential holder's ability to practice. Further, the proposal 
requires States to submit all ``disciplinary actions'' (as defined in 
the proposed Policy Statement) to the ASC via the extranet application 
for inclusion on the National Registry as of July 1, 2013.

Policy Statement 4: Application Process

    Proposed Policy Statement 4 will replace numerous provisions in the 
current Policy Statement 10 (Enforcement) and will address the fourth 
area of review in the ASC Compliance Review process pertaining to a 
State Program's application process for compliance with Title XI.
    Proposed Policy Statement 4 addresses requirements for:
    (1) State's general processing of applications for an appraiser 
credential;
    (2) An appraiser's qualifying education, including a State's 
verification that an applicant's education complies with AQB Criteria, 
and for verification and audit of an appraiser's continuing education 
credits for license and certification renewals;
    (3) An applicant's compliance with AQB Criteria experience 
requirements, including the State's review and validation of an 
applicant's experience claims on initial credential or upgrade 
applications; and
    (4) State's use and administration of an appropriate AQB-approved 
qualifying examination.
    The proposed Policy Statement 4 is structured according to the type 
of application being processed (that is, an initial, upgrade, 
reinstatement, or renewal application). The proposal also includes a 
discussion on the procedures that a State should have concerning the 
verification, validation and audit of information in applications.

Policy Statement 5: Reciprocity

    Proposed Policy Statement 5 will replace current Policy Statement 6 
(Reciprocity) and will address the fifth area of review in the ASC 
Compliance Review process of a State Program's reciprocity policy for 
compliance with Title XI.
    Proposed Policy Statement 5 sets forth the new reciprocity 
requirements mandated by the Dodd-Frank Act, and consequences to a 
State that fails to comply. Policy Statement 5 also provides examples 
of a State's implementation of a reciprocity process.
    Title XI now requires that in order for a State's appraisers to be 
eligible to perform appraisals for federally related transactions, the 
State must have a reciprocity policy in place that will require 
issuance of a reciprocal credential IF:
    1. the appraiser is coming from a State that is ``in compliance'';

[[Page 52724]]

    2. the appraiser holds a valid credential from that State; and
    3. the credentialing requirements of that State (as they currently 
exist) meet or exceed those of the reciprocal credentialing State (as 
they currently exist).
    Therefore, the proposal explains that appraisers relying on a 
credential from a State that does not have a compliant reciprocity 
policy in place are not eligible to perform appraisals for federally 
related transactions. A State may have a more lenient or more open door 
policy; however, States cannot impose additional impediments to 
issuance of reciprocal credentials. For purposes of implementing the 
Dodd-Frank Act's reciprocity requirements and considering the proposed 
rating criteria in Appendix A, States with an ASC Finding \5\ of 
``Poor'' would not satisfy the ``in compliance'' provision for 
reciprocity. Further, as explained in the proposal, States would not be 
required to grant a reciprocal credential to an appraiser credentialed 
in another State with a current ASC Finding of ``Poor.'' On March 18, 
2011, the ASC issued Bulletin No. 2011-01 to States that as of July 1, 
2013, a State will be evaluated by the ASC for compliance with the new 
reciprocity requirements.
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    \5\ See below, Appendix A of the proposed Policy Statements, 
Compliance Review Process, for an explanation of ASC Findings.
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Policy Statement 6: Education

    Proposed Policy Statement 6 adds new discussion that is not in the 
current Policy Statements and will address the sixth area of review in 
the ASC Compliance Review process of a State Program's administration 
of education requirements for compliance with AQB Criteria and Title 
XI.
    Proposed Policy Statement 6 provides States with specific 
requirements regarding course approval, including the approval of 
distance education courses (e.g., on-line courses), and refers to 
discussion in proposed Policy Statement 4 concerning qualifying and 
continuing education in the application process. As required by the 
Dodd-Frank Act, the proposal encourages States to accept courses 
approved by the AQB's Course Approval Program.

Policy Statement 7: State Agency Enforcement

    Proposed Policy Statement 7 will replace several provisions in 
current Policy Statement 10 (Enforcement) and will address the seventh 
area of review in the ASC Compliance Review process of a State 
Program's administration of its enforcement program for compliance with 
Title XI.
    Proposed Policy Statement 7 provides States with specific 
requirements to demonstrate that they are operating an effective and 
compliant enforcement program in addressing complaints against an 
appraiser. The proposed Policy Statement 7 addresses expectations for 
enforcement regarding: (1) Timeliness of complaint investigations and 
initiating enforcement action; (2) effectiveness of a State's 
enforcement process; (3) consistent and equitable treatment of an 
appraiser in the State's enforcement process; and (4) appropriate 
complaint documentation in a State's enforcement records, including 
specific requirements for tracking complaints of alleged appraiser 
misconduct or wrongdoing using an electronic complaint log.

Policy Statement 8: Interim Sanctions

    Proposed Policy Statement 8 establishes a new ASC policy that 
addresses interim sanction authority the Dodd-Frank Act granted the 
ASC, and outlines due process considerations in the event the ASC 
exercises such authority.
    Pursuant to the Dodd-Frank Act, the ASC has the authority to impose 
interim actions and suspensions against a State agency as an 
alternative to or in advance of a non-recognition proceeding against a 
State agency that fails to have an effective Program.\6\ The ASC is 
proposing that an ``ASC Finding'' of ``Poor'' on a State's Compliance 
Review Report would indicate that the State's Program is failing and, 
in turn, would trigger an analysis by the ASC for potential interim 
sanction. The Dodd-Frank Act's interim sanction authority specifically 
authorizes the ASC to remove a State licensed or certified appraiser 
from the National Registry on an interim basis, not to exceed 90 days, 
pending State agency action on licensing, certification, registration, 
or disciplinary proceedings. The proposed Policy Statement 8 addresses 
due process procedures that would provide a State with an opportunity 
to be heard or to correct conditions before the ASC imposes an interim 
sanction.
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    \6\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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Appendices

    The proposal includes four appendices. Proposed Appendix A provides 
an overview of the Compliance Review process, including revised ASC 
Compliance Review Findings (referred to as ASC Findings in this 
appendix) for rating a State's compliance, or lack thereof, with Title 
XI. The proposed ASC Findings rating criteria places particular 
emphasis on whether the State is maintaining an effective regulatory 
Program in compliance with Title XI. At the conclusion of the 
Compliance Review process, the ASC would assign the State's Program one 
of the five proposed ASC Findings (that is, a State's Program would be 
either ``Excellent,'' ``Good,'' ``Needs Improvement,'' ``Not 
Satisfactory,'' or ``Poor''). As proposed, the ASC also would use the 
ASC Finding to establish the Review Cycle for that State. Proposed 
Appendix B provides a summary of requirements and related 
implementation standards for each of the proposed Policy Statements. 
Proposed Appendix C provides a glossary of terms to aid in the reading 
of the proposed Policy Statements. Proposed Appendix D will contain the 
ASC Bulletins and Supplements that have already been issued to assist 
States in understanding and complying with the self-enabling provisions 
of the Dodd-Frank Act.

IV. Request for Comment

    The ASC seeks comment on all aspects of the revised Policy 
Statements, including any potential burden or cost to the States to 
comply with these Policy Statements. In addition, the ASC requests 
comments on the following specific questions:
    1. Do the proposed rating criteria in Appendix A provide sufficient 
clarity to understand the differences among the ASC Finding categories?
    2. Do the ASC Finding categories appropriately identify the degree 
of perceived risk of a Program's potential failure?
    3. Do the ASC Finding rating criteria provide enough information to 
explain the judgment factors that the ASC will use to assess whether a 
State is in compliance with Title XI?
    4. Do the revised Policy Statements achieve the ASC's goal in 
improving the understandability and enforceability of Title XI and the 
AQB Criteria?
    5. Do the revised Policy Statements provide State Programs with the 
necessary information to understand the ASC's expectations of the 
Program during a Compliance Review?
    The text of the proposed Policy Statements is as follows:

Table of Contents

Introduction and Purpose
Policy Statement 1
Statutes, Regulations, Policies and Procedures Governing State 
Programs
    A. State Regulatory Structure
    B. Funding and Staffing
    C. Minimum Criteria

[[Page 52725]]

    D. Federally Recognized Appraiser Classifications
    E. Non-Federally Recognized Credentials
    F. Appraisal Standards
    G. Prohibition Against Discrimination
    H. Exemptions
    I. ASC Staff Attendance at State Board Meetings
    J. Summary of Requirements
Policy Statement 2
Temporary Practice
    A. Requirement for Temporary Practice
    B. Excessive Fees or Burdensome Requirements
    C. Summary of Requirements
Policy Statement 3
National Registry
    A. Requirements for the National Registry
    B. Registry Fee and Invoicing Policies
    C. Access to National Registry Data
    D. Information Sharing
    E. Summary of Requirements
Policy Statement 4
Application Process
    A. Processing of Applications
    B. Qualifying Education for Initial or Upgrade Applications
    C. Continuing Education for Reinstatement and Renewal 
Applications
    D. Experience for Initial or Upgrade Applications
    E. Examination
    F. Summary of Requirements
Policy Statement 5
Reciprocity
    A. Reciprocity Policy
    B. Application of Reciprocity Policy
    C. Appraiser Compliance Requirements
    D. Summary of Requirements
Policy Statement 6
Education
    A. Course Approval
    B. Distance Education
    C. Summary of Requirements
Policy Statement 7
State Agency Enforcement
    A. State Agency Regulatory Program
    B. Enforcement Process
    C. Summary of Requirements
Policy Statement 8
Interim Sanctions
    A. Authority
    B. Interim Sanctions
    C. Opportunity To Be Heard or Correct Conditions
    D. Procedures
Appendix A--Compliance Review Process
Appendix B--Summary of Requirements
Appendix C--Glossary of Terms
Appendix D--ASC Bulletins and Supplements

Introduction and Purpose

    Title XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (FIRREA), as amended (Title XI), established 
the Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council (ASC).\7\ The purpose of Title XI is to provide 
protection of Federal financial and public policy interests by 
upholding Title XI requirements for appraisals performed for federally 
related transactions. Specifically those appraisals shall be performed 
in writing, in accordance with uniform standards, by individuals whose 
competency has been demonstrated and whose professional conduct will be 
subject to effective supervision.
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    \7\ The ASC board is made up of seven members. Five members are 
designated by the heads of the FFIEC agencies (Board of Governors of 
the Federal Reserve System, Consumer Financial Protection Bureau, 
Federal Deposit Insurance Corporation, Office of the Comptroller of 
the Currency, and National Credit Union Administration). The other 
two members are designated by the heads of the Department of Housing 
and Urban Development and the Federal Housing Finance Agency.
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    Pursuant to Title XI, one of the ASC's core functions is to monitor 
the requirements established by the States \8\ for certification and 
licensing of appraisers qualified to perform appraisals in connection 
with federally related transactions.\9\ The ASC performs periodic 
Compliance Reviews \10\ of each State appraiser regulatory program 
(Program) to determine compliance, or lack thereof, with Title XI, and 
to assess the Program's implementation of the Real Property Appraiser 
Qualification Criteria (AQB Criteria) as adopted by the Appraiser 
Qualifications Board (AQB). The 50 States, District of Columbia, and 
four Territories \11\ have State appraiser certifying and licensing 
agencies (State agency or State) monitored by the ASC through the 
Compliance Review process.
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    \8\ See Appendix C, Glossary of Terms, for the definition of 
``State.''
    \9\ See Appendix C, Glossary of Terms, for the definition of 
``federally related transaction.''
    \10\ See Appendix A, Compliance Review Process.
    \11\ The four Territories are the Commonwealth of Puerto Rico, 
Commonwealth of the Northern Mariana Islands, Guam, and United 
States Virgin Islands.
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    Pursuant to authority granted to the ASC under Title XI, the ASC is 
issuing these Policy Statements \12\ to provide States with the 
necessary information to maintain their Programs in compliance with 
Title XI. Policy Statements 1 through 7 correspond with the categories 
that are evaluated during the Compliance Review process and included in 
the ASC Compliance Review Report (Report). Policy Statement 8 entitled 
Interim Sanctions sets forth required procedures in the event that 
interim sanctions are imposed against a State by the ASC.
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    \12\ These Policy Statements, adopted ------------, 2012, 
supersede all previous Policy Statements adopted by the ASC, the 
most recent version of which was issued in October 2008.
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Policy Statement 1

Statutes, Regulations, Policies and Procedures Governing State Programs

A. State Regulatory Structure
    Title XI requires the ASC to monitor State agencies for the purpose 
of determining whether they have policies, practices and procedures 
consistent with Title XI.\13\ The ASC recognizes that each State may 
have legal, fiscal, regulatory or other factors that may influence the 
structure and organization of its Program. Therefore, a State has 
flexibility to structure its Program so long as it meets Title XI-
related responsibilities.
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    \13\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    States should maintain an organizational structure for appraiser 
certification, licensing and supervision that avoids conflicts of 
interest with other real estate-related professions. A State agency may 
be headed by a board, commission or an individual. State board \14\ or 
commission members, or employees in policy or decision-making 
positions, should understand and adhere to State statutes and 
regulations governing performance of responsibilities consistent with 
the highest ethical standards for public service. In addition, Programs 
using private entities or contractors should establish appropriate 
internal policies, procedures, and safeguards to promote compliance 
with the State agency's responsibilities under Title XI and these 
Policy Statements.
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    \14\ See Appendix C, Glossary of Terms, for the definition of 
``State board.''
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B. Funding and Staffing
    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) amended Title XI to require the ASC to determine 
whether States have sufficient funding and staffing to meet their Title 
XI requirements.\15\ On July 1, 2011, as part of its Compliance Review 
process, the ASC formally began requesting information and supporting 
documentation regarding funding and staffing of Programs. Compliance 
with this provision requires that a State must provide its Program with 
funding and staffing sufficient to carry out its Title XI-related 
duties. The ASC evaluates the sufficiency of funding and staffing as 
part of its review of all aspects of a Program's effectiveness, 
including the adequacy of State boards, committees, or commissions 
responsible for carrying out Title XI-related duties.
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    \15\ See Appendix D, Bulletin 2011-01.

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[[Page 52726]]

C. Minimum Criteria
    Title XI requires States to adopt and/or implement all relevant AQB 
Criteria. Historically, requirements established by a State for 
certified residential or certified general classifications have been 
required to meet or exceed AQB Criteria. Effective July 1, 2013, 
requirements established by a State for licensed appraisers, as well as 
for trainee and supervisory appraisers, must also meet or exceed the 
AQB Criteria, as required by the Dodd-Frank Act.\16\
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    \16\ See Appendix D, Bulletin 2011-01.
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D. Federally Recognized Appraiser Classifications
1. State Certified Appraisers
    ``State certified appraisers'' means those individuals who have 
satisfied the requirements for residential or general certification in 
a State whose criteria for certification meet or exceed the minimum AQB 
Criteria. Permitted scope of practice and designation for State 
certified residential or certified general appraisers must be 
consistent with State and Federal laws, including regulations and 
supplementary guidance.
2. State Licensed Appraisers
    As of July 1, 2013, ``State licensed appraisers'' means those 
individuals who have satisfied the requirements for licensing in a 
State whose criteria for licensing meet or exceed the minimum AQB 
Criteria.\17\ Effective July 1, 2013, the permitted scope of practice 
and designation for State licensed appraisers must be consistent with 
State and Federal laws, including regulations and supplementary 
guidance.
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    \17\ See Appendix D, Supplement to Bulletin 2011-01.
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3. Trainee Appraiser and Supervisory Appraiser
    As of July 1, 2013, any minimum qualification requirements 
established by a State for individuals in the position of ``trainee 
appraiser'' and ``supervisory appraiser'' must meet or exceed the 
minimum AQB Criteria.\18\ ASC staff will evaluate State designations 
such as ``registered appraiser,'' ``apprentice appraiser,'' 
``provisional appraiser,'' or any other similar designation to 
determine if, in substance, such designation is consistent with a 
``trainee appraiser'' designation and, therefore, administered to 
comply with Title XI. Effective July 1, 2013, the permitted scope of 
practice and designation for trainee appraisers and supervisory 
appraisers must be consistent with State and Federal laws, including 
regulations and supplementary guidance.
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    \18\ See Appendix D, Bulletin 2011-01.
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    Any State or Federal agency may impose additional appraiser 
qualification requirements for State licensed, certified residential or 
certified general classifications, or for trainee and supervisor 
classifications, if they consider such requirements necessary to carry 
out their responsibilities under Federal and/or State statutes and 
regulations, so long as the additional qualification requirements do 
not conflict with AQB Criteria.
E. Non-Federally Recognized Credentials
    States using non-federally recognized credentials or designations 
\19\ should ensure that they can be easily distinguished from the 
federally recognized credentials.
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    \19\ See Appendix C, Glossary of Terms, for the definition of 
``non-federally recognized credentials or designations.''
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F. Appraisal Standards
    Title XI and the Federal financial institutions regulatory 
agencies' regulations mandate that all appraisals performed in 
connection with federally related transactions be in written form, 
prepared in accordance with generally accepted appraisal standards as 
promulgated by the Appraisal Standards Board (ASB) in the Uniform 
Standards of Professional Appraisal Practice (USPAP), and subject to 
review for compliance with USPAP.\20\ States that have incorporated 
USPAP into State law should ensure that statutes or regulations are 
updated timely to adopt the latest version of USPAP, or if State law 
allows, automatically incorporate the latest version of USPAP. States 
should consider ASB Advisory Opinions, Frequently Asked Questions, and 
other written guidance issued by the ASB regarding interpretation and 
application of USPAP.
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    \20\ See Appendix C, Glossary of Terms for the definition of 
``Uniform Standards of Professional Appraisal Practice''.
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    Any State or Federal agency may impose additional appraisal 
standards if they consider such standards necessary to carry out their 
responsibilities, so long as additional appraisal standards do not 
conflict with USPAP for work performed for federally related 
transactions.
G. Prohibition Against Discrimination
    Title XI prohibits excluding appraisers from consideration for an 
assignment solely by virtue of their lack of membership in a nationally 
recognized professional appraisal organization.\21\ Moreover, the 
appraisal regulations of the Federal financial institutions regulatory 
agencies address the selection of an appraiser, considering appraiser 
independence, professional association membership, and competency. With 
regard to membership in a nationally recognized professional appraisal 
organization, the agencies' regulations prohibit a federally regulated 
financial institution from excluding an appraiser from consideration 
for an assignment solely by virtue of a membership or lack of 
membership in a particular organization. Such discrimination is also 
inappropriate by States in the administration of their Programs.
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    \21\ Title XI Sec.  1122(d), 12 U.S.C. 3351.
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H. Exemptions
    Title XI and the Federal financial institutions regulatory 
agencies' regulations specifically require the use of only State 
certified or licensed appraisers in connection with the appraisal of 
certain real estate-related financial transactions.\22\ A State may not 
exempt any individual or group of individuals from meeting the State's 
certification or licensing requirements if the individual or group 
member performs an appraisal when Federal statutes and regulations 
require the use of a certified or licensed appraiser. For example, an 
individual who has been exempted by the State from its appraiser 
certification or licensing requirements because he or she is an 
officer, director, employee or agent of a federally regulated financial 
institution would not be permitted to perform an appraisal in 
connection with a federally related transaction. States with exemption 
provisions must take steps to ensure that the provisions are not being 
used or interpreted in this manner.
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    \22\ Title XI Sec.  1112, 12 U.S.C. 3341; Title XI Sec.  1113, 
12 U.S.C. 3342; Title XI Sec.  1114, 12 U.S.C. 3343.
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I. ASC Staff Attendance at State Board Meetings
    As part of the on-site Compliance Review process, ASC staff 
regularly attends State board meetings, including executive and/or 
closed sessions. States are expected to permit ASC staff to attend 
State board meetings except in the case of closed sessions for ``quasi-
judicial'' proceedings specifically authorized and defined by State 
statute or regulation. The efficacy of the ASC's Compliance Review 
process rests on the ASC's ability to obtain reliable information about 
all areas of a State's Program. ASC staff is obligated to protect 
information obtained during the Compliance Review process concerning

[[Page 52727]]

the privacy of individuals and any confidential matters.
J. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of 
requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 2

Temporary Practice

A. Requirement for Temporary Practice
    Title XI requires State agencies to recognize, on a temporary 
basis, the certification or license of an out-of-State appraiser 
entering the State for the purpose of completing an appraisal 
assignment \23\ for a federally related transaction. The out-of-State 
appraiser must register with the State agency in the State of temporary 
practice (host State). Thus, a credentialed appraiser \24\ from State A 
has a statutory right to enter State B to perform an assignment 
concerning a federally related transaction, so long as the appraiser 
registers with the State agency in State B prior to performing the 
assignment. Though Title XI contemplates reasonably free movement of 
credentialed appraisers across State lines, an out-of-State appraiser 
must comply with the host State's real estate appraisal statutes and 
regulations and is subject to the host State's full regulatory 
jurisdiction. States should rely on the National Registry to verify 
credential history on applicants for temporary practice.
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    \23\ See Appendix C, Glossary of Terms, for the definition of 
``assignment.''
    \24\ See Appendix C, Glossary of Terms, for the definition of 
``credentialed appraisers.''
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    State agencies 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 a State does not have an 
established policy, a State agency may choose to refuse to honor an 
out-of-State certified or licensed appraiser's temporary practice 
rights when a State has determined that the appraiser is abusing his or 
her temporary practice rights and is regularly engaging in real estate 
appraisal within the State.
B. Excessive Fees or Burdensome Requirements
    Title XI prohibits States from imposing excessive fees or 
burdensome requirements, as determined by the ASC, for temporary 
practice.\25\ Adherence by State agencies to the following mandates and 
prohibitions will deter the imposition of excessive fees or burdensome 
requirements.
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    \25\ Title XI Sec.  1122(a) (2), 12 U.S.C. 3351.
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    1. Host State agencies must:
    a. Issue temporary practice permits on an assignment basis;
    b. Issue temporary practice permits within five business days of 
receipt of a completed application, or notify the applicant and 
document the file as to the circumstances justifying delay or other 
action;
    c. Issue temporary practice permits designating the actual date of 
issuance;
    d. Take regulatory responsibility for a temporary practitioner's 
unethical, incompetent and/or fraudulent practices performed while in 
the State;
    e. Notify the appraiser's home State agency\26\ in the case of 
disciplinary action concerning a temporary practitioner; and
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    \26\ See Appendix C, Glossary of Terms, for the definition of 
``home State agency.''
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    f. Allow at least one temporary practice permit extension through a 
streamlined process.
    2. Host State agencies may not:
    a. Limit the valid time period of a temporary practice permit to 
less than 6 months, except in the case of an appraiser not holding a 
credential in active status for at least that period of time;
    b. Limit an appraiser to one temporary practice permit per calendar 
year; \27\
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    \27\ State agencies 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 a 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 services within the State.
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    c. Charge a temporary practice permit fee exceeding $250, including 
one extension fee;
    d. Impose State appraiser qualification requirements upon temporary 
practitioners that exceed AQB Criteria for the credential held;
    e. Require temporary practitioners to obtain a certification or 
license in the State of temporary practice;
    f. Require temporary practitioners to affiliate with an in-State 
licensed or certified appraiser;
    g. Refuse to register licensed or certified appraisers seeking 
temporary practice in a State that does not have a licensed or 
certified level credential; or
    h. Prohibit temporary practice.
    3. Home State agencies may not:
    a. Delay the issuance of a written ``letter of good standing'' or 
similar document for more than five business days after receipt of a 
request; or
    b. Fail to take disciplinary action, if appropriate, 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.
C. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of 
requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 3

National Registry

A. Requirements for the National Registry
    Title XI requires the ASC to maintain a National Registry of State 
certified and licensed appraisers who are eligible to perform 
appraisals in federally related transactions.\28\ Title XI further 
requires the States to transmit to the ASC: (1) A roster listing 
individuals who have received a State certification or license in 
accordance with Title XI; (2) reports on the issuance and renewal of 
licenses and certifications, sanctions, disciplinary actions, 
revocations and suspensions; and (3) the Registry fee as set by the ASC 
\29\ from individuals who have received certification or licensing. 
States must notify the ASC upon determination if a credential holder 
listed on the National Registry does not, or did not, qualify for the 
credential held.
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    \28\ Title XI Sec.  1103(a)(3), 12 U.S.C. 3332.
    \29\ Title XI Sec.  1109, Roster of State certified or licensed 
appraisers; authority to collect and transmit fees, requires the ASC 
to consider at least once every 5 years whether to adjust the dollar 
amount of the registry fees to account for inflation. (Title XI 
Sec.  1109(a), 12 U.S.C. 3338.)
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    Roster and Registry fee requirements apply to all individuals who 
receive State certifications or licenses, originally or by reciprocity, 
whether or not the individuals are, in fact, performing or planning to 
perform appraisals in federally related transactions. If an appraiser 
is certified or licensed in more than one State, the appraiser is 
required to be on each State's roster of certified or licensed 
appraisers, and a Registry fee is due from each State in which the 
appraiser is certified or licensed.
    Only AQB-compliant certified appraisers in active status on the

[[Page 52728]]

National Registry are eligible to perform appraisals in connection with 
federally related transactions. In order for a licensed appraiser to be 
listed on the National Registry as AQB-compliant, that individual must 
satisfy requirements for licensing in a State whose criteria meet or 
exceed AQB Criteria. Beginning July 1, 2013, only AQB-compliant 
licensed appraisers in active status on the National Registry are 
eligible to perform appraisals in connection with federally related 
transactions.\30\
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    \30\ See Appendix D, Supplement to Bulletin 2011-01.
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    Some States may give State certified or licensed appraisers an 
option to not pay the Registry fee. If a State certified or licensed 
appraiser chooses not to pay the Registry fee, then the Program must 
ensure that any potential user of that appraiser's services is aware 
that the appraiser's certificate or license is limited to performing 
appraisals in connection with non-federally related transactions.\31\ 
The Program must place a conspicuous notice directly on the face of any 
evidence of the appraiser's authority to appraise stating, ``Not 
Eligible To Appraise Federally Related Transactions,'' and the 
appraiser must not be listed in active status on the National Registry.
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    \31\ See Appendix C, Glossary of Terms, for the definition of 
``non-federally related transactions.''
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    The ASC extranet application allows States to update their 
appraiser credential information directly to the National Registry. 
Only Authorized Registry Officials are allowed to request access for 
their State personnel (see section C below). The ASC will issue a 
UserName and Password to the designated State personnel responsible for 
that State's National Registry entries. Designated State personnel are 
required to protect the right of access, and not share their UserName 
or Password with anyone. State agencies must adopt and implement a 
written policy to adequately protect the right of access, as well as 
the ASC issued UserName and Password.
    For those States not using the ASC extranet application, the ASC 
has provided detailed specifications regarding the data elements on the 
National Registry and reporting procedures.\32\
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    \32\ See section D, Information Sharing, below requiring all 
States to report disciplinary action via the extranet application by 
July 1, 2013.
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    The ASC creates a National Registry number for each appraiser and 
protects each appraiser's privacy rights. The unique identification 
number is provided to appropriate State and Federal regulatory agencies 
to simplify multi-State queries regarding specific appraisers.
B. Registry Fee and Invoicing Policies
    Each State must remit to the ASC the annual Registry fee, as set by 
the ASC, for State certified or licensed appraisers within the State to 
be listed on the National Registry.\33\ Requests to prorate refunds or 
partial-year registrations will not be granted. If a State collects 
multiple-year fees for multiple-year certifications or licenses, the 
State may choose to remit to the ASC the total amount of the multiple-
year Registry fees, or to remit annually. The ASC will record 
appraisers on the National Registry only for the number of years paid. 
When a State's failure to pay a past due invoice results in appraisers 
being listed as inactive, the ASC will not change those appraisers back 
to active status until payment is received. An inactive status on the 
National Registry, for whatever the reason, renders an appraiser 
ineligible to perform appraisals in connection with federally related 
transactions.
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    \33\ See Appendix D, Bulletin 10-1, October 14, 2010. Under 
authority in the Dodd-Frank Act, the ASC approved a modification of 
the annual Registry fee to $40 (from $25) at its meeting of October 
13, 2010. The ASC raised the Registry fee to support its supervisory 
activities, including additional authority and responsibility under 
the Dodd-Frank Act.
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C. Access to National Registry Data
    The ASC Web site provides free access to the public portion of the 
National Registry at www.asc.gov. The public portion of the National 
Registry data may be downloaded using predefined queries or user-
customized applications.
    Access to the full database, which includes some non-public data 
(e.g., certain disciplinary action information), is restricted to 
authorized State and Federal regulatory agencies. States must designate 
a high ranking officer, such as an executive director, to serve as the 
State's Authorized Registry Official, and provide to the ASC, in 
writing, information regarding the designated Authorized Registry 
Official. States should ensure that the authorization information 
provided to the ASC is updated and accurate.
D. Information Sharing
    Information sharing (routine exchange of certain information among 
lenders, governmental entities, State agencies and the ASC) is 
essential for carrying out Title XI. Title XI requires the ASC, any 
other Federal agency or instrumentality, or any federally recognized 
entity to report any action of a State certified or licensed appraiser 
that is contrary to the purposes of Title XI to the appropriate State 
agency for disposition. The ASC believes that full implementation of 
this Title XI requirement is vital to the integrity of the system of 
State appraiser regulation.
    The National Registry's value and usefulness are largely dependent 
on the quality and frequency of State's data submissions. Accurate and 
frequent data submissions from all States are necessary to maintain an 
up-to-date National Registry. States must submit appraiser data to the 
ASC at least monthly. If there are no changes to the data, the State 
agency must notify the ASC of that fact in writing. States are 
encouraged to submit data as frequently as possible.
    State agencies must report expeditiously any disciplinary action 
\34\ taken against an appraiser to the ASC. As of July 1, 2013, all 
States will be required to report disciplinary action via the extranet 
application as soon as practicable for the State to do so. States not 
reporting via the extranet application will be required to provide, in 
writing to the ASC, circumstances preventing compliance with this 
requirement. Prior to July 1, 2013, at a minimum, this information must 
be submitted with the State's monthly, or more frequent, Registry data 
submission. For the most serious disciplinary actions (i.e., voluntary 
surrenders, suspensions and revocations, or any action that interrupts 
a credential holder's ability to practice), the State agency must 
notify the ASC as soon as practicable in order for the ASC to 
inactivate the appraiser's status on the National Registry, thereby 
making the appraiser ineligible to perform appraisals in connection 
with federally related transactions, or other transactions requiring 
the use of State certified or licensed appraisers.
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    \34\ See Appendix C, Glossary of Terms, for the definition of 
``disciplinary action.''
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    Title XI contemplates the reasonably free movement of certified and 
licensed appraisers across State lines. This freedom of movement 
assumes, however, that certified and licensed appraisers are, in all 
cases, held accountable and responsible for their actions while 
performing appraisal activities. To ensure this accountability, States 
should establish routine ways to communicate with each other regarding 
matters of mutual interest, including the activities and status of 
persons who are certified or licensed in multiple States.

[[Page 52729]]

E. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of 
requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 4

Application Process

    AQB Criteria sets forth the minimum education, experience and 
examination requirements for credentialing of real property appraisers. 
In the application process, States must, at a minimum, employ a 
reliable means of validating both education and experience credit 
claimed by applicants for credentialing.\35\
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    \35\ Includes applications for credentialing of State licensed, 
certified residential or certified general classifications, and 
trainee and supervisor classifications.
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A. Processing of Applications
    States must process applications in a consistent, equitable and 
well-documented manner.
    States must ensure appraiser credential applications submitted for 
processing do not contain expired examinations as established by AQB 
Criteria (24-month examination validity period).
    Applications for credentialing should be timely processed by State 
agencies (within 90 days). Any delay in the processing of applications 
should be sufficiently documented in the file to justify the delay.
B. Qualifying Education for Initial or Upgrade Applications
    States must verify that:
    (1) The applicant's claimed education courses are acceptable under 
AQB Criteria; and
    (2) The applicant has successfully completed courses consistent 
with AQB Criteria for the appraiser credential sought.
    Documentation must be provided by applicants to support education 
claimed by applicants for initial credentialing or upgrade.
    States may not accept an affidavit for education claimed from 
applicants for certification.
    Effective July 1, 2013, States may not accept an affidavit for 
education claimed from applicants for any federally recognized 
credential.\36\
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    \36\ If a State accepts education-related affidavits from 
applicants for initial licensure in any non-certified 
classification, upon the appraiser's application to upgrade to a 
certified classification, the State must require documentation to 
support the appraiser's educational qualification for the certified 
classification, not just the incremental amount of education 
required to move from the non-certified to the certified 
classification.
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    States must maintain adequate documentation to support verification 
of claimed education by applicants.
C. Continuing Education for Reinstatement and Renewal Applications
1. Reinstatement Applications
    States must verify that:
    (1) The applicant's claimed continuing education courses are 
acceptable under AQB Criteria; and
    (2) The applicant has successfully completed all continuing 
education consistent with AQB Criteria for reinstatement of the 
appraiser credential sought.
    Documentation must be provided by applicants to support continuing 
education claimed by applicants for reinstatement.
    States may not accept an affidavit for continuing education claimed 
from applicants for reinstatement.
    States must maintain adequate documentation to support verification 
of claimed education.
2. Renewal Applications
    States must ensure that continuing education courses for renewal of 
an appraiser credential are consistent with AQB Criteria.
    States must ensure that continuing education hours required for 
renewal of an appraiser credential were completed consistent with AQB 
Criteria.
    States may accept affidavits for continuing education credit 
claimed for credential renewal so long as the State implements a 
reliable validation procedure that adheres to the following objectives 
and requirements:
    a. Validation objectives--The State's validation procedures must be 
structured to permit acceptable projections of the sample results to 
the entire population of subject appraisers. Therefore, the sample must 
include an adequate number of affidavits to have an acceptable chance 
of identifying appraisers who fail to comply with AQB Criteria, and the 
sample must include a reasonable representation of the appraiser 
population being sampled.
    b. Minimum Standards--The following minimum standards apply to 
these audits:
    (1) Validation must include a prompt post-approval audit. Each 
audit of an affidavit for continuing education credit claimed must be 
completed within 60 days from the date the renewed credential is 
issued;
    (2) States must audit the continuing education-related affidavit 
for each credentialed appraiser selected in the sampling procedure;
    (3) The State must determine that the education courses claimed 
conform to AQB Criteria and that the appraiser successfully completed 
each course;
    (4) When a State determines that an appraiser's continuing 
education does not meet AQB Criteria, the State must take appropriate 
action to suspend the appraiser's eligibility to perform appraisals in 
federally related transactions until such time that the requisite 
continuing education has been completed. Also, upon such a 
determination, the State must notify the ASC as soon as practicable in 
order for the appraiser's record on the National Registry to be updated 
appropriately; and
    (5) If more than ten percent of the audited appraisers fail to meet 
the AQB Criteria, the State must take remedial action \37\ to address 
the apparent weakness of its affidavit process. The ASC will determine 
on a case-by-case basis whether remedial actions are effective and 
acceptable.
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    \37\ For example:
    (1) A State may conduct an additional audit using a higher 
percentage of audited appraisers; or
    (2) a State may publically post action taken to sanction non-
compliant appraisers to increase awareness in the appraiser 
community of the importance of compliance with continuing education 
requirements.
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    c. Documentation--States must maintain adequate documentation to 
support its affidavit renewal and audit procedures and actions.
    d. List of Education Courses--To promote accountability, the ASC 
encourages States accepting affidavits for continuing education credit 
claimed for credential renewal to require that the appraiser provide a 
list of courses to support the affidavit.
D. Experience for Initial or Upgrade Applications
    States must ensure that appraiser experience logs conform to AQB 
Criteria.
    States may not accept an affidavit for experience credit claimed 
from applicants for certification.
    Effective July 1, 2013, States may not accept an affidavit for 
experience credit claimed from applicants for any federally recognized 
credential.\38\
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    \38\ See Appendix C, Glossary of Terms, for the definition of 
``federally recognized credential.'' If prior to July 1, 2013, a 
State accepted experience-related affidavits from applicants for 
initial licensure in any non-certified classification, upon the 
appraiser's application to upgrade to a certified classification, 
the State must require experience documentation to support the 
appraiser's qualification for the certified classification, not just 
the incremental amount of experience required to move from the non-
certified to the certified classification. For example, if a State 
accepted an experience affidavit from an appraiser to support the 
appraiser's initial hours to qualify for the licensed 
classification, and subsequently that appraiser applies to upgrade 
to the certified residential classification, the State must require 
documentation to support the full experience hours required for the 
certified residential classification, not just the difference in 
hours between the two classifications.

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[[Page 52730]]

1. Validation Required
    States must implement a reliable validation procedure to verify 
that each applicant's:
    (1) Experience meets AQB Criteria;
    (2) Experience is USPAP compliant; and
    (3) Experience hours have been successfully completed consistent 
with AQB Criteria.
2. Validation Procedures, Objectives and Requirements
a. Selection of Work Product
    Program staff or State board members must select the work product 
to be analyzed for USPAP compliance; applicants may not have any role 
in selection of work product. States must analyze a representative 
sample of the applicant's work product.
b. USPAP Compliance
    For appraisal experience to be acceptable under AQB Criteria, it 
must be USPAP compliant. States must exercise due diligence in 
determining whether submitted documentation of experience or work 
product demonstrates compliance with USPAP.
    Persons analyzing work product for USPAP compliance must have 
sufficient knowledge to make that determination.
c. Determination of Experience Time Periods
    When measuring the experience time period required by AQB Criteria, 
States must review each appraiser's experience log and note the dates 
of the first and last acceptable appraisal activity performed by the 
applicant. At a minimum, the time period spanned between those 
appraisal activities must comply with the AQB Criteria.
d. Supporting Documentation
    States must maintain adequate documentation to support validation 
methods. The applicant's file, either electronic or paper, must include 
the information necessary to identify each appraisal assignment 
selected and analyzed by the State, notes, letters and/or reports 
prepared by the official(s) evaluating the report for USPAP compliance, 
and any correspondence exchanged with the applicant regarding the 
appraisals submitted. This supporting documentation may be discarded 
upon the completion of the first ASC Compliance Review performed after 
the credential issuance or denial for that applicant.
E. Examination
    States must ensure that an appropriate AQB-approved qualifying 
examination is administered for each of the federally recognized 
appraiser classifications requiring an examination.
F. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of 
requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 5

Reciprocity

A. Reciprocity Policy
    Title XI contemplates the reasonably free movement of certified and 
licensed appraisers across State lines. Beginning July 1, 2013, the ASC 
will monitor Programs for compliance with the reciprocity provision of 
Title XI as amended by the Dodd-Frank Act.\39\ Title XI requires that 
in order for a State's appraisers to be eligible to perform appraisals 
for federally related transactions, the State must have a reciprocity 
policy in place for issuing a reciprocal credential if:
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    \39\ Title XI Sec.  1122(b), 12 U.S.C. 3351.
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    a. The appraiser is coming from a State that is ``in compliance''; 
and
    b. (i) The appraiser holds a valid credential from that State; and
    (ii) The credentialing requirements of that State (as they 
currently exist) meet or exceed those of the reciprocal credentialing 
State (as they currently exist).
    An appraiser relying on a credential from a State that does not 
have such a policy in place may not perform appraisals for federally 
related transactions. A State may be more lenient in the issuance of 
reciprocal credentials by implementing a more open door policy. 
However, States cannot impose additional impediments to issuance of 
reciprocal credentials.\40\
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    \40\ Effective July 1, 2013, States will be evaluated for 
compliance with this Title XI requirement.
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    For purposes of implementing the reciprocity policy, States with an 
ASC Finding \41\ of ``Poor'' do not satisfy the ``in compliance'' 
provision for reciprocity. Therefore, States are not required to 
recognize, for purposes of granting a reciprocal credential, the 
license or certification of an appraiser credentialed in a State with 
an ASC Finding of ``Poor.''
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    \41\ See Appendix A, Compliance Review Process, for an 
explanation of ASC Findings.
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B. Application of Reciprocity Policy
    In order to assist States in implementing reciprocity in a manner 
that complies with Title XI, the following provides further 
illustration of the reciprocity policy through examples of application.
    The examples refer to the reciprocity policy requiring issuance of 
a reciprocal credential IF:
    a. The appraiser is coming from a State that is ``in compliance''; 
AND
    b. (i) The appraiser holds a valid credential from that State; AND
    (ii) The credentialing requirements of that State (as they 
currently exist) meet or exceed those of the reciprocal credentialing 
State (as they currently exist).
1. Additional Requirements Imposed on Applicants
    STATE A requires that prior to issuing a reciprocal credential, the 
applicant must certify that disciplinary proceedings are not pending 
against that applicant in any jurisdiction. Under b(ii) above, if this 
requirement is not imposed by STATE A on its own applicants for 
credentialing, STATE A cannot impose this requirement on applicants for 
reciprocal credentialing.
2. Credentialing Requirements
    An appraiser is seeking a reciprocal credential in STATE A. The 
appraiser holds a valid credential in STATE Z, even though it was 
issued in 2007. This satisfies b(i) above. However in order to satisfy 
b(ii), STATE A would evaluate STATE Z's credentialing requirements as 
they currently exist to determine whether they meet or exceed STATE A's 
current requirements for credentialing.
C. Appraiser Compliance Requirements
    Appraisers granted reciprocity must comply with the home State 
agencies' and reciprocating States' policies, rules and statutes 
governing appraisers, including requirements for payment of 
certification and licensing fees, as well as continuing education. An 
appraiser must pay a National Registry fee for each State in which a 
credential is held.
D. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of

[[Page 52731]]

requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 6

Education

    AQB Criteria sets forth minimum requirements for appraiser 
education courses. This Policy Statement addresses proper 
administration of education requirements for compliance with AQB 
Criteria. (For requirements concerning qualifying and continuing 
education in the application process, see Policy Statement 4, 
Application Process.)
A. Course Approval
    States must ensure that approved appraiser education courses are 
consistent with AQB Criteria.
    States must maintain sufficient documentation to support that 
approved appraiser education courses conform to AQB Criteria.
    States should ensure that course approval expiration dates assigned 
by the State coincide with the endorsement period assigned by the AQB's 
Course Approval Program and/or International Distance Education 
Certification Center (IDECC), or any other AQB-approved organization 
providing approval of course design and delivery.
    States should ensure that educational providers are afforded equal 
treatment in all respects.\42\ The ASC encourages States to accept 
courses approved by the AQB's Course Approval Program.
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    \42\ For example:
    (1) Consent agreements requiring additional education may not 
specify a particular course provider, thereby discriminating against 
other providers on the State's approved course listing offering the 
same course; or
    (2) courses from professional organizations may not be 
automatically approved and/or approved in a manner that is less 
burdensome than the State's normal approval process.
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B. Distance Education
    States must ensure that distance education courses meet AQB 
Criteria.
    States must ensure the delivery mechanism for distance education 
courses offered by a non-academic provider has been approved by an AQB-
approved organization (e.g. IDECC) providing approval of course design 
and delivery.
C. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of 
requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 7

State Agency Enforcement

A. State Agency Regulatory Program
    Title XI requires the ASC to monitor the States for the purpose of 
determining whether the State processes complaints and completes 
investigations in a reasonable time period, appropriately disciplines 
sanctioned appraisers and maintains an effective regulatory 
program.\43\
---------------------------------------------------------------------------

    \43\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

B. Enforcement Process
    States must ensure that the system for processing and investigating 
complaints \44\ and sanctioning appraisers is administered in a timely, 
effective, consistent, equitable, and well-documented manner.
---------------------------------------------------------------------------

    \44\ See Appendix C, Glossary of Terms, for the definition of 
``complaint.''
---------------------------------------------------------------------------

1. Timely Enforcement
    States must process complaints of appraiser misconduct or 
wrongdoing in a timely manner to ensure effective supervision of 
appraisers, and when appropriate, that incompetent or unethical 
appraisers are not allowed to continue their appraisal practice. Absent 
special documented circumstances,\45\ final administrative decisions 
regarding complaints must occur within one year (12 months) of the 
complaint filing date.
---------------------------------------------------------------------------

    \45\ See Appendix C, Glossary of Terms, for the definition of 
``special documented circumstances.''
---------------------------------------------------------------------------

2. Effective Enforcement
    Effective enforcement requires that States investigate allegations 
of appraiser misconduct or wrongdoing, and if allegations are proven, 
take appropriate disciplinary or remedial action. Dismissal of an 
alleged violation solely due to an ``absence of harm to the public'' is 
inconsistent with Title XI. Financial loss or the lack thereof is not 
an element in determining whether there is a violation. The extent of 
such loss, however, may be a factor in determining the appropriate 
level of discipline.
    Persons analyzing complaints for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP.
    States must analyze each complaint to determine whether additional 
violations, especially those relating to USPAP, should be added to the 
complaint.
    Closure of a complaint based on a State's statute of limitations 
results in dismissal of a complaint without the investigation of the 
merits of the complaint, and is inconsistent with the Title XI 
requirement that States assure effective supervision of the activities 
of credentialed appraisers.\46\
---------------------------------------------------------------------------

    \46\ Title XI Sec.  1117, 12 U.S.C. 3346.
---------------------------------------------------------------------------

3. Consistent and Equitable Enforcement
    Absent specific documented facts or considerations, substantially 
similar cases within a State should result in similar dispositions.
4. Well-Documented Enforcement
    ``Well-documented'' means that States obtain and maintain 
sufficient relevant documentation pertaining to a matter so as to 
enable understanding of the facts and determinations in the matter and 
the reasons for those determinations.
a. Complaint Files
    Complaint files must:
     Include documentation outlining the progress of the 
investigation;
     Demonstrate that appraisal reports are analyzed and all 
USPAP violations are identified;
     Include rationale for the final outcome of the case (i.e. 
dismissal or imposition of discipline);
     Include documentation explaining any delay in processing, 
investigation or adjudication;
     Contain documentation that all ordered or agreed upon 
discipline, such as probation, fine, or completion of education is 
tracked and that completion of all terms is confirmed; and
     Be organized in a manner that allows understanding of the 
steps taken throughout the complaint, investigation, and adjudicatory 
process.
b. Complaint Logs
    States must track all complaints using a complaint log. The 
complaint log must record all complaints, regardless of their 
procedural status in the investigation and/or resolution process, 
including complaints pending before the State board, Office of the 
Attorney General, other law enforcement agencies, and/or Offices of 
Administrative Hearings. The complaint log must include the following 
information in an electronic, sortable spreadsheet format:

1. Case number
2. Name of respondent
3. Actual date the complaint was received by the State
4. Source of complaint (e.g. consumer, lender, bank regulator, 
appraiser, hotline)
5. Last action taken and date taken (e.g. 1/1/10 spoke to Attorney 
General

[[Page 52732]]

and scheduled an informal conference with the Respondent to discuss 
settlement, 1/12/10 spoke to the Administrative Hearing Commission and 
scheduled a hearing date, 2/27/10 filed objection to continuance)
6. Current status of the complaint
7. Spreadsheet showing chronological record of each action taken
8. Date the complaint was closed (e.g. final disposition by the 
Administrative Hearing Agency, Office of the Attorney General, State 
Appraiser Regulatory Agency or Court of Appeals)
9. Method of disposition (e.g. dismissal, letter of warning, consent 
order, final order)
C. Summary of Requirements
    Appendix B provides a summary of requirements and related 
implementation standards for each Policy Statement. The summary of 
requirements and implementation standards sets forth expectations for a 
State to demonstrate that its Program meets Title XI mandates.

Policy Statement 8

Interim Sanctions

A. Authority
    Title XI as amended by the Dodd-Frank Act states that the ASC shall 
have the authority to impose interim actions and suspensions, as an 
alternative to or in advance of a non-recognition proceeding,\47\ 
against a State agency that fails to have an effective Program.\48\ In 
determining whether such a Program is effective, the ASC shall conduct 
an analysis as required by Title XI.\49\ An ASC Finding of ``Poor'' on 
the Report issued to a State at the conclusion of an ASC Compliance 
Review will trigger an analysis by the ASC for potential interim 
sanction(s).
---------------------------------------------------------------------------

    \47\ Title XI Sec.  1118(c), 12 U.S.C. 3347; 12 CFR, part 1102, 
subpart B.
    \48\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
    \49\ Id.
---------------------------------------------------------------------------

B. Interim Sanctions
    Title XI as amended by the Dodd-Frank Act grants the ASC authority 
to remove a State licensed or certified appraiser from the National 
Registry on an interim basis, not to exceed 90 days, pending State 
agency action on licensing, certification, registration, or 
disciplinary proceedings.\50\
---------------------------------------------------------------------------

    \50\ Id.
---------------------------------------------------------------------------

C. Opportunity To Be Heard or Correct Conditions
    The ASC shall provide the State agency with:
    1. Written notice of intention to impose an interim sanction; and
    2. Opportunity to respond or to correct the conditions causing such 
notice to the State. Notice and opportunity to respond or correct the 
conditions shall be in accordance with section D, Procedures.
D. Procedures
    This section prescribes the ASC's procedures which will be followed 
in arriving at a decision by the ASC to impose an interim sanction 
against a State agency.
1. Notice
    The ASC shall provide a written Notice of intention to impose an 
interim sanction (Notice) to the State agency. The Notice shall contain 
the ASC's analysis as required by Title XI of the State's licensing and 
certification of appraisers, the issuance of temporary licenses and 
certifications for appraisers, the receiving and tracking of submitted 
complaints against appraisers, the investigation of complaints, and 
enforcement actions against appraisers.\51\ The ASC shall verify the 
State's date of receipt, and publish both the Notice and the State's 
date of receipt in the Federal Register.
---------------------------------------------------------------------------

    \51\ Id.
---------------------------------------------------------------------------

2. State Agency Response
    Within 15 days of receipt of the Notice, the State may submit a 
response to the ASC's Executive Director. Alternatively, a State may 
submit a Notice Not to Contest with the ASC's Executive Director. The 
filing of a Notice Not to Contest shall not constitute a waiver of the 
right to a judicial review of the ASC's decision, findings and 
conclusions. Failure to file a Response within 15 days shall constitute 
authorization for the ASC to find the facts to be as presented in the 
Notice and analysis. The ASC, for good cause shown, may permit the 
filing of a Response after the prescribed time.
3. Briefs, Memoranda and Statements
    Within 45 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, the State agency may file 
with the ASC's Executive Director a written brief, memorandum or other 
statement providing factual data and policy and legal arguments 
regarding the matters set out in the Notice and analysis.
4. Oral Presentations to the ASC
    Within 45 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, the State may file a 
request with the ASC's Executive Director to make oral presentation to 
the ASC. If the State has filed a request for oral presentation, the 
matter shall be heard within 45 days. An oral presentation shall be 
considered as an opportunity to offer, emphasize and clarify the facts, 
policies and laws concerning the proceeding, and is not a Meeting \52\ 
of the ASC. On the appropriate date and time, the State agency will 
make the oral presentation before the ASC. Any ASC member may ask 
pertinent questions relating to the content of the oral presentation. 
Oral presentations will not be recorded or otherwise transcribed. 
Summary notes will be taken by ASC staff and made part of the record on 
which the ASC shall decide the matter.
---------------------------------------------------------------------------

    \52\ The proceeding is more in the nature of a Briefing not 
subject to open meeting requirements. The presentation is an 
opportunity for the State to brief the ASC--to offer, emphasize and 
clarify the facts, policies and laws concerning the proceeding, and 
for the ASC members to ask questions. Additional consideration is 
given to the fact that this stage of the proceeding is pre-
decisional.
---------------------------------------------------------------------------

5. Conduct of Interim Sanction Proceedings
    (a) Written Submissions. All aspects of the proceeding shall be 
conducted by written submissions, with the exception of oral 
presentations allowed under subsection 4 above.
    (b) Disqualification. An ASC member who deems himself or herself 
disqualified may at any time withdraw. Upon receipt of a timely and 
sufficient affidavit of personal bias or disqualification of such 
member, the ASC will rule on the matter as a part of the record.
    (c) Authority of ASC Chairperson. The Chairperson of the ASC, in 
consultation with other members of the ASC whenever appropriate, shall 
have complete charge of the proceeding and shall have the duty to 
conduct it in a fair and impartial manner and to take all necessary 
action to avoid delay in the disposition of proceedings.
    (d) Rules of Evidence. Except as is otherwise set forth in this 
section, relevant, material and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act (5 U.S.C. 551, et seq.) and other 
applicable law.
6. Decision of the ASC and Judicial Review
    Within 90 days after the date of receipt by the State agency of the 
Notice as published in the Federal Register, or in the case of oral 
presentation having been granted, within 30 days after

[[Page 52733]]

presentation, the ASC shall issue a final decision, findings and 
conclusions and shall publish the decision promptly in the Federal 
Register. The final decision shall be effective on issuance. The ASC's 
Executive Director shall ensure prompt circulation of the decision to 
the State agency. A final decision of the ASC is a prerequisite to 
seeking judicial review.
7. Computing Time
    Time computation is based on business days. The date of the act, 
event or default from which the designated period of time begins to run 
is not included. The last day is included unless it is a Saturday, 
Sunday, or Federal holiday, in which case the period runs until the end 
of the next day which is not a Saturday, Sunday or Federal holiday.
8. Documents and Exhibits
    Unless otherwise provided by statute, all documents, papers and 
exhibits filed in connection with any proceeding, other than those that 
may be withheld from disclosure under applicable law, shall be placed 
by the ASC's Executive Director in the proceeding's file and will be 
available for public inspection and copying.
9. Judicial Review
    A decision of the ASC under this section shall be subject to 
judicial review. The form of proceeding for judicial review may include 
any applicable form of legal action, including actions for declaratory 
judgments, writs of prohibitory or mandatory injunction in a court of 
competent jurisdiction.\53\
---------------------------------------------------------------------------

    \53\ 5 U.S.C. 703--Form and venue of proceeding.
---------------------------------------------------------------------------

Appendix A--Compliance Review Process

    The ASC monitors State Programs for compliance with Title XI. 
The monitoring of a State Program is largely accomplished through 
on-site visits known as a Compliance Review (Review). A Review is 
conducted over a two- to four-day period, and is scheduled to 
coincide with a meeting of the Program's decision-making body 
whenever possible. ASC staff reviews the seven compliance areas 
addressed in Policy Statements 1 through 7. Sufficient documentation 
demonstrating compliance must be maintained by a State and made 
available for inspection during the Review. ASC staff reviews a 
sampling of documentation in each of the seven compliance areas. The 
sampling is intended to be representative of the State Program in 
its entirety.
    Based on the Review, ASC staff provides the State with an ASC 
staff report detailing preliminary findings. The State is given 60 
days to respond to the ASC staff report. At the conclusion of the 
Review, a Compliance Review Report (Report) is issued to the State 
with the ASC Finding on the Program's overall compliance, or lack 
thereof, with Title XI. Deficiencies resulting in non-compliance in 
any of the seven compliance areas are cited in the Report. ``Areas 
of Concern''\54\ which potentially expose a Program to compliance 
issues in the future are also addressed in the Report. The ASC's 
final disposition is based upon the ASC staff report, the State's 
response and staff's recommendation.
---------------------------------------------------------------------------

    \54\ See Appendix C, Glossary of Terms, for the definition of 
``Areas of Concern.''
    \55\ An ASC Finding of ``Poor'' may result in significant 
consequences to the State. See Policy Statement 5, Reciprocity; see 
also Policy Statement 8, Interim Sanctions.
---------------------------------------------------------------------------

    The following chart provides an explanation of the ASC Findings 
and rating criteria for each ASC Finding category. The ASC Finding 
places particular emphasis on whether the State is maintaining an 
effective regulatory Program in compliance with Title XI.

------------------------------------------------------------------------
          ASC finding               Rating criteria       Review cycle*
------------------------------------------------------------------------
Excellent.....................   State meets    2-year.
                                 all Title XI mandates
                                 and complies with
                                 requirements of ASC
                                 Policy Statements.
                                 State
                                 maintains a strong
                                 regulatory Program..
                                 Very low risk
                                 of Program failure..
Good..........................   State meets    2-year.
                                 the majority of Title
                                 XI mandates and
                                 complies with the
                                 majority of ASC
                                 Policy Statement
                                 requirements.
                                 Deficiencies
                                 are minor in nature..
                                 State is
                                 adequately addressing
                                 deficiencies
                                 identified and
                                 correcting them in
                                 the normal course of
                                 business..
                                 State
                                 maintains an
                                 effective regulatory
                                 Program..
                                 Low risk of
                                 Program failure..
Needs Improvement.............   State does     2-year with
                                 not meet all Title XI   Follow-up
                                 mandates and does not   Review.
                                 comply with all
                                 requirements of ASC
                                 Policy Statements.
                                 Deficiencies
                                 are material but
                                 manageable and if not
                                 corrected in a timely
                                 manner pose a
                                 potential risk to the
                                 Program.
                                 State may
                                 have a history of
                                 repeated deficiencies
                                 but is showing
                                 progress toward
                                 correcting
                                 deficiencies.
                                 State
                                 regulatory Program
                                 needs improvement..
                                 Moderate risk
                                 of Program failure..
Not Satisfactory..............   State does     1-year.
                                 not meet all Title XI
                                 mandates and does not
                                 comply with all
                                 requirements of ASC
                                 Policy Statements.
                                 Deficiencies
                                 present a significant
                                 risk and if not
                                 corrected in a timely
                                 manner pose a well-
                                 defined risk to the
                                 Program.
                                 State may
                                 have a history of
                                 repeated deficiencies
                                 and requires more
                                 supervision to ensure
                                 corrective actions
                                 are progressing..
                                 State
                                 regulatory Program
                                 has substantial
                                 deficiencies..
                                 Substantial
                                 risk of Program
                                 failure..
Poor \55\.....................   State does     Continuous
                                 not meet all Title XI   monitoring.
                                 mandates and does not
                                 comply with all
                                 requirements of ASC
                                 Policy Statements.
                                 Deficiencies
                                 are significant and
                                 severe, require
                                 immediate attention
                                 and if not corrected
                                 represent critical
                                 flaws in the Program.
                                 State may
                                 have a history of
                                 repeated deficiencies
                                 and may show a lack
                                 of willingness or
                                 ability to correct
                                 deficiencies.
                                 High risk of
                                 Program failure..
------------------------------------------------------------------------
* Program history or nature of deficiency may warrant a more accelerated
  Review Cycle.


[[Page 52734]]

    The ASC has two primary Review Cycles: Two-year and one-year. 
Most States are scheduled on a two-year Review Cycle. States may be 
moved to a one-year Review Cycle if the ASC determines more frequent 
on-site Reviews are needed to ensure that the State maintains an 
effective Program. Generally, States are placed on a one-year Review 
Cycle because of non-compliance issues or serious areas of concerns 
that warrant more frequent on-site visits. Both two-year and one-
year Review Cycles include a review of all aspects of the State's 
Program.
    The ASC may conduct Follow-up Reviews. A Follow-up Review 
focuses only on specific areas identified during the previous on-
site Review. Follow-up Reviews usually occur within 6-12 months of 
the previous Review. In addition, as a risk management tool, ASC 
staff identifies State Programs that may have a significant impact 
on the nation's appraiser regulatory system in the event of Title XI 
compliance issues. For States that represent a significant 
percentage of the credentials on the National Registry, ASC staff 
performs annual on-site Priority Contact visits. The primary purpose 
of the Priority Contact visit is to review topical issues, evaluate 
regulatory compliance issues, and maintain a close working 
relationship with the State. This is not a complete Review of the 
Program. The ASC will also schedule a Priority Contact visit for a 
State when a specific concern is identified that requires special 
attention.

Appendix B--Summary of Requirements

    This Appendix B provides a summary of requirements and related 
implementation standards for Policy Statements 1 through 7. The 
summary of requirements and implementation standards sets forth 
expectations for a State to demonstrate that its Program meets Title 
XI mandates.

Policy Statement 1

Statutes, Regulations, Policies and Procedures Governing State 
Programs

    1. States must require that appraisals be performed in 
accordance with the latest version of USPAP.\56\
---------------------------------------------------------------------------

    \56\ Title XI Sec.  1101, 12 U.S.C. 3331; Title XI Sec.  
1118(a), 12 U.S.C. 3347; AQB Real Property Appraiser Qualification 
Criteria.
---------------------------------------------------------------------------

    2. States must adopt and/or implement all relevant AQB 
Criteria.\57\
---------------------------------------------------------------------------

    \57\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345; 
Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    3. States must have policies, practices and procedures 
consistent with Title XI.\58\
---------------------------------------------------------------------------

    \58\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States must have funding and staffing sufficient to carry out 
their Title XI-related duties.\59\
---------------------------------------------------------------------------

    \59\ Id; Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must use proper designations and permitted scope of 
practice for certified residential or certified general 
classifications, and as of July 1, 2013, a State must use the proper 
designations and permitted scope of practice for the licensed 
classification, and trainee and supervisor classifications.\60\
---------------------------------------------------------------------------

    \60\ Title XI Sec. Sec.  1116 (a), (c) and (e), 12 U.S.C. 3345; 
Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  1113, 12 
U.S.C. 3342; AQB Real Property Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    6. State board members, and any persons in policy or decision-
making positions, must perform their responsibilities consistent 
with Title XI.\61\
---------------------------------------------------------------------------

    \61\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    7. States' certification and licensing requirements must meet 
the minimum requirements set forth in Title XI.\62\
---------------------------------------------------------------------------

    \62\ Title XI Sec. Sec.  1116(a), (c) and (e), 12 U.S.C. 3345.
---------------------------------------------------------------------------

    8. State agencies must be granted adequate authority by the 
State to maintain an effective regulatory Program in compliance with 
Title XI.\63\
---------------------------------------------------------------------------

    \63\ Title XI Sec.  1118(b), 12 U.S.C. 3347.
---------------------------------------------------------------------------

Policy Statement 2

Temporary Practice

    1. States must recognize, on a temporary basis, appraiser 
credentials issued by another State if the property to be appraised 
is part of a federally related transaction.\64\
---------------------------------------------------------------------------

    \64\ Title XI Sec.  1122(a)(1), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    2. State agencies must adhere to mandates and prohibitions as 
determined by the ASC that deter the imposition of excessive fees or 
burdensome requirements for temporary practice.\65\
---------------------------------------------------------------------------

    \65\ Title XI Sec.  1122(a)(2), 12 U.S.C. 3351.
---------------------------------------------------------------------------

Policy Statement 3

National Registry

    1. States must reconcile and pay National Registry invoices in a 
timely manner.\66\
---------------------------------------------------------------------------

    \66\ Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  
1109(a), 12 U.S.C. 3338.
---------------------------------------------------------------------------

    2. States must submit all disciplinary actions \67\ to the ASC 
for inclusion on the National Registry.\68\
---------------------------------------------------------------------------

    \67\ See Appendix C, Glossary of Terms, for the definition of 
``disciplinary action.''
    \68\ Title XI Sec.  1118(a), 12 U.S.C. 3347; Title XI Sec.  
1109(a), 12 U.S.C. 3338.
---------------------------------------------------------------------------

    3. As of July 1, 2013, all States will be required to report 
disciplinary action via the extranet application as soon as 
practicable.\69\
---------------------------------------------------------------------------

    \69\ Id.
---------------------------------------------------------------------------

    4. States must designate a high ranking officer, such as an 
executive director, who will serve as the State's Authorized 
Registry Official, and must ensure that non-public data is 
appropriately protected.\70\
---------------------------------------------------------------------------

    \70\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. The State must provide to the ASC, in writing, information 
regarding the selected Authorized Registry Official, and any 
individual(s) authorized to act on their behalf, and should ensure 
that the authorization information provided to the ASC is kept 
current.\71\
---------------------------------------------------------------------------

    \71\ Id.
---------------------------------------------------------------------------

    6. States using the ASC extranet application must ensure that 
designated personnel with UserName and Password access protect the 
right of access, and not share the UserName or Password with 
anyone.\72\
---------------------------------------------------------------------------

    \72\ Id.
---------------------------------------------------------------------------

    7. States must adopt and implement a written policy to 
adequately protect the right of access, as well as the ASC issued 
UserName and Password.\73\
---------------------------------------------------------------------------

    \73\ Id.
---------------------------------------------------------------------------

    8. States must proactively minimize risk of clerical error that 
may result in inaccurate entries to the National Registry.\74\
---------------------------------------------------------------------------

    \74\ Id.
---------------------------------------------------------------------------

    9. States must submit appraiser data to the ASC at least 
monthly. If a State's data does not change during the month, the 
State agency must notify the ASC of that fact in writing.\75\
---------------------------------------------------------------------------

    \75\ Id.
---------------------------------------------------------------------------

    10. States must notify the ASC as soon as practicable if it is 
determined that a credential holder listed on the National Registry 
does not, or did not, qualify for the credential held.\76\
---------------------------------------------------------------------------

    \76\ Id.
---------------------------------------------------------------------------

    11. States must notify the ASC as soon as practicable in the 
event of voluntary surrenders, suspensions and revocations, or any 
action that interrupts a credential holder's ability to practice in 
order for the ASC to inactivate the appraiser's status on the 
National Registry.\77\
---------------------------------------------------------------------------

    \77\ Id.
---------------------------------------------------------------------------

    12. If a State certified or licensed appraiser chooses not to 
pay the Registry fee, then the Program must ensure that any 
potential user of that appraiser's services is aware that the 
appraiser's certificate or license is limited to performing 
appraisals in connection with non-federally related 
transactions.\78\
---------------------------------------------------------------------------

    \78\ Id.
---------------------------------------------------------------------------

Policy Statement 4

Application Process

Processing of Applications

    1. States must process applications in a consistent, equitable 
and well-documented manner.\79\
---------------------------------------------------------------------------

    \79\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. States must ensure appraiser credential applications 
submitted for processing do not contain expired examinations as 
established by AQB Criteria (24-month examination validity 
period).\80\
---------------------------------------------------------------------------

    \80\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Education

    1. States must verify that the applicant's claimed education 
courses are acceptable under AQB Criteria, whether for initial 
credentialing, renewal, upgrade or reinstatement.\81\
---------------------------------------------------------------------------

    \81\ Id.
---------------------------------------------------------------------------

    2. States must verify that the applicant has successfully 
completed courses consistent with AQB Criteria for the appraiser 
credential sought, whether for initial credentialing, renewal, 
upgrade or reinstatement.\82\
---------------------------------------------------------------------------

    \82\ Id.
---------------------------------------------------------------------------

    3. States must maintain adequate documentation to support 
verification.\83\
---------------------------------------------------------------------------

    \83\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    4. States may not accept an affidavit for education claimed from 
applicants for certification.\84\
---------------------------------------------------------------------------

    \84\ Id.
---------------------------------------------------------------------------

    5. Effective July 1, 2013, States may not accept an affidavit 
for education claimed from applicants for any federally recognized 
credential.\85\
---------------------------------------------------------------------------

    \85\ Id.

---------------------------------------------------------------------------

[[Page 52735]]

    6. States may not accept an affidavit for continuing education 
claimed from applicants for reinstatement.\86\
---------------------------------------------------------------------------

    \86\ Id.
---------------------------------------------------------------------------

    7. States may accept affidavits for continuing education credit 
claimed for credential renewal so long as the State implements a 
reliable validation procedure.\87\
---------------------------------------------------------------------------

    \87\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    8. Audits of affidavits for continuing education credit claimed 
must be completed within 60 days from the date the renewed 
credential is issued.\88\
---------------------------------------------------------------------------

    \88\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    9. States are required to take remedial action when it is 
determined that more than ten percent of audited appraiser's 
affidavits for continuing education credit claimed fail to meet the 
minimum AQB Criteria.\89\
---------------------------------------------------------------------------

    \89\ Id.
---------------------------------------------------------------------------

    10. States must require the 7-hour National USPAP Update Course 
for renewals consistent with AQB Criteria.\90\
---------------------------------------------------------------------------

    \90\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Experience

    1. States may not accept an affidavit for experience credit 
claimed from applicants for certification.\91\
---------------------------------------------------------------------------

    \91\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    2. Effective July 1, 2013, States may not accept an affidavit 
for experience credit claimed from applicants for any federally 
recognized credential.\92\
---------------------------------------------------------------------------

    \92\ Id.
---------------------------------------------------------------------------

    3. States must ensure that appraiser experience logs conform to 
AQB Criteria.\93\
---------------------------------------------------------------------------

    \93\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    4. States must use a reliable means of validating appraiser 
experience claims on all initial or upgrade applications for 
appraiser credentialing.\94\
---------------------------------------------------------------------------

    \94\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
---------------------------------------------------------------------------

    5. States must select the work product to be analyzed for USPAP 
compliance on all initial or upgrade applications for appraiser 
credentialing.\95\
---------------------------------------------------------------------------

    \95\ Id.
---------------------------------------------------------------------------

    6. States must analyze a representative sample of the 
applicant's work product on all initial or upgrade applications for 
appraiser credentialing.\96\
---------------------------------------------------------------------------

    \96\ Id.
---------------------------------------------------------------------------

    7. States must exercise due diligence in determining whether 
submitted documentation of experience or work product demonstrates 
compliance with USPAP on all initial applications for appraiser 
credentialing.\97\
---------------------------------------------------------------------------

    \97\ Id.
---------------------------------------------------------------------------

    8. Persons analyzing work product for USPAP compliance must have 
sufficient knowledge to make that determination.\98\
---------------------------------------------------------------------------

    \98\ Id.
---------------------------------------------------------------------------

Examination

    1. States must ensure that an appropriate AQB-approved 
qualifying examination is administered for each of the federally 
recognized credentials requiring an examination.\99\
---------------------------------------------------------------------------

    \99\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

Policy Statement 5

Reciprocity

    1. Effective July 1, 2013, in order for a State's appraisers to 
be eligible to perform appraisals for federally related 
transactions, the State must have a reciprocity policy in place for 
issuing a reciprocal credential to an appraiser from another State 
under the conditions specified in Title XI.\100\
---------------------------------------------------------------------------

    \100\ Title XI Sec.  1122(b), 12 U.S.C. 3351.
---------------------------------------------------------------------------

    2. States may be more lenient in the issuance of reciprocal 
credentials by implementing a more open door policy; however, States 
may not impose additional impediments to issuance of reciprocal 
credentials.\101\
---------------------------------------------------------------------------

    \101\ Id.
---------------------------------------------------------------------------

Policy Statement 6

Education

    1. States must ensure that appraiser education courses are 
consistent with AQB Criteria.\102\
---------------------------------------------------------------------------

    \102\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
---------------------------------------------------------------------------

    2. States must maintain sufficient documentation to support that 
approved appraiser courses conform to AQB Criteria.\103\
---------------------------------------------------------------------------

    \103\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    3. States must ensure the delivery mechanism for distance 
education courses offered by a non-academic provider has been 
approved by an AQB-approved organization providing approval of 
course design and delivery (e.g. IDECC).\104\
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    \104\ Title XI Sec.  1118(a), 12 U.S.C. 3347; AQB Real Property 
Appraiser Qualification Criteria.
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Policy Statement 7

State Agency Enforcement

    1. States must maintain relevant documentation to enable 
understanding of the facts and determinations in the matter and the 
reasons for those determinations.\105\
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    \105\ Title XI Sec.  1118(a), 12 U.S.C. 3347.
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    2. States must resolve all complaints filed against appraisers 
within one year (12 months) of the complaint filing date, except for 
special documented circumstances.\106\
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    \106\ Id.
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    3. States must ensure that the system for processing and 
investigating complaints and sanctioning appraisers is administered 
in an effective, consistent, equitable, and well-documented 
manner.\107\
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    \107\ Id.
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    4. States must track complaints of alleged appraiser misconduct 
or wrongdoing using an electronic complaint log.\108\
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    \108\ Id.
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    5. States must appropriately document enforcement files and 
include rationale.\109\
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    \109\ Id.
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    6. States must regulate, supervise and discipline their 
credentialed appraisers.\110\
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    \110\ Id.
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    7. Persons analyzing complaints for USPAP compliance must be 
knowledgeable about appraisal practice and USPAP.\111\
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    \111\ Id.

Appendix C--Glossary of Terms

    AQB Criteria: Refers to the Real Property Appraiser 
Qualification Criteria as established by the Appraiser 
Qualifications Board of the Appraisal Foundation setting forth 
minimum education, experience and examination requirements for the 
licensure and certification of real property appraisers, and minimum 
requirements for ``Trainee'' and ``Supervisory'' appraisers.
    Assignment: As referenced herein, for purposes of temporary 
practice, ``assignment'' means one or more real estate appraisals 
and written appraisal report(s) covered by a single contractual 
agreement.
    Complaint: As referenced herein, any document filed with, 
received by, or serving as the basis for possible inquiry by the 
State agency regarding alleged violation of Title XI, Federal or 
State law or regulation, or USPAP by a credentialed appraiser, 
appraiser applicant, or for allegations of unlicensed appraisal 
activity. A complaint may be in the form of a referral, letter of 
inquiry, or other document alleging appraiser misconduct or 
wrongdoing.
    Credentialed appraisers: Refers to State licensed, certified 
residential or certified general appraiser classifications.
    Disciplinary action: As referenced herein, corrective or 
punitive action taken by or on behalf of a State agency which may be 
formal or informal, or may be consensual or involuntary, resulting 
in any of the following:
    a. Revocation of credential
    b. Suspension of credential
    c. Written consent agreements, orders or reprimands
    d. Probation or any other restriction on the use of a credential
    e. Fine
    f. Voluntary surrender in lieu of disciplinary action
    g. Other acts as defined by State statute or regulation as 
disciplinary
    With the exception of voluntary surrender, suspension or 
revocation, such action may be exempt from reporting to the National 
Registry if defined by State statute, regulation or written policy 
as ``non-disciplinary.''
    Federally related transaction: Refers to any real estate related 
financial transaction which:
    (a) A federal financial institutions regulatory agency engages 
in, contracts for, or regulates; and
    (b) Requires the services of an appraiser. (See Title XI Sec.  
1121(4), 12 U.S.C. 3350.)
    Federal financial institutions regulatory agencies: Refers to 
the Board of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, the Office of the Comptroller of the 
Currency, and the National Credit Union Administration. (See Title 
XI Sec.  1121(6), 12 U.S.C. 3350.)
    Home State agency: As referenced herein, State agency or 
agencies that grant an appraiser a licensed or certified credential. 
Residency in the home State is not required. Appraisers may have 
more than one home State agency.
    Non-federally recognized credentials or designations: Refers to 
any State appraiser credential or designation other than State 
licensed, certified residential or certified general 
classifications, and trainee and

[[Page 52736]]

supervisor classifications as defined in Policy Statement 1, and is 
not recognized by the federal regulators for purposes of their 
appraisal regulations.
    Real estate related financial transaction: Any transaction 
involving:
    (a) The sale, lease, purchase, investment in or exchange of real 
property, including interests in property, or the financing thereof;
    (b) The refinancing of real property or interests in real 
property; and
    (c) The use of real property or interests in property as 
security for a loan or investment, including mortgage-backed 
securities. (See Title XI Sec.  1121(5), 12 U.S.C. 3350.)
    Special documented circumstances: As referenced herein, 
extenuating circumstances (fully documented) beyond the control of 
the State agency that delays normal processing of a complaint such 
as: complaints involving investigation by a law enforcement agency 
such as a criminal investigation when the investigative agency 
requests that the State refrain from proceeding; final disposition 
that has been appealed to a higher court; documented medical 
condition of the respondent; ancillary civil litigation; and complex 
fraud cases that involve multiple individuals and reports.
    State: Any State, Commonwealth, Territory, or Possession of the 
United States, the District of Columbia, the Commonwealth of Puerto 
Rico, the Commonwealth of the Northern Mariana Islands, American 
Samoa, Guam, or the United States Virgin Islands. (American Samoa 
does not have a Program.)
    State board: As referenced herein, ``State board'' means a group 
of individuals (usually appraisers, bankers, consumers, and/or real 
estate professionals) appointed by the Governor or a similarly 
positioned State official to assist State Programs. A State agency 
may be headed by a board, commission or an individual. Most States 
have a board (or commission) with responsibilities and authorities 
varying from State to State.
    Uniform Standards of Professional Appraisal Practice (USPAP): 
Refers to appraisal standards promulgated by the Appraisal Standards 
Board of the Appraisal Foundation establishing minimum requirements 
for development and reporting of appraisals, including real property 
appraisal. Title XI requires appraisals prepared by State certified 
and licensed appraisers to be performed in conformance with USPAP.

Appendix D--ASC Bulletins and Supplements

    [Appendix D will contain the following ASC Bulletins and 
Supplements that were issued to assist States in understanding and 
complying with the self-enabling provisions of the Dodd-Frank Act.]

 Bulletin No. 10-1 issued October 14, 2010 on Modification 
of Annual National Registry Fee
 Supplement to ASC Bulletin 10-1 dated Oct. 22, 2010
 Bulletin No. 2011-01 issued March 18, 2011 on Statutory 
Provisions Affecting State Appraiser Regulatory Programs
 Supplement to Bulletin No. 2011-01 issued August 11, 2011 
on Mandatory AQB Criteria for State Licensed Appraisers
* * * * *


    By the Appraisal Subcommittee,

    Dated: August 27, 2012.
Peter Gillispie,
Chairman.
[FR Doc. 2012-21452 Filed 8-29-12; 8:45 am]
BILLING CODE 6700-01-P