[Federal Register Volume 80, Number 110 (Tuesday, June 9, 2015)]
[Rules and Regulations]
[Pages 32658-32689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12719]
[[Page 32657]]
Vol. 80
Tuesday,
No. 110
June 9, 2015
Part II
Department of the Treasury
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Office of the Comptroller of the Currency
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12 CFR Part 34
Federal Reserve System
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12 CFR Parts 208 and 225
Federal Deposit Insurance Corporation
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12 CFR Parts 323 and 390
Bureau of Consumer Financial Protection
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12 CFR Part 1026
Federal Housing Finance Agency
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12 CFR Part 1222
Minimum Requirements for Appraisal Management Companies; Final Rule
Federal Register / Vol. 80 , No. 110 / Tuesday, June 9, 2015 / Rules
and Regulations
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket No. OCC-2014-0002]
RIN 1557-AD64
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Docket No. R-1486]
RIN 7100-AE15
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 323 and 390
RIN 3064-AE10
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
RIN 3170-AA44
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1222
RIN 2590-AA61
Minimum Requirements for Appraisal Management Companies
AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); National Credit Union
Administration (NCUA); Bureau of Consumer Financial Protection
(Bureau); and Federal Housing Finance Agency (FHFA).
ACTION: Final rule.
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SUMMARY: The OCC, Board, FDIC, NCUA, Bureau, and FHFA (collectively,
the Agencies) are adopting a final rule to implement the minimum
requirements in the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Dodd-Frank Act) to be applied by participating
States in the registration and supervision of appraisal management
companies (AMCs). The final rule also implements the minimum
requirements in the Dodd-Frank Act for AMCs that are subsidiaries owned
and controlled by an insured depository institution and regulated by a
Federal financial institutions regulatory agency (Federally regulated
AMCs). Under the final rule, these Federally regulated AMCs do not need
to register with a State, but are subject to the same minimum
requirements as State-regulated AMCs. The final rule also implements
the requirement for States to report to the Appraisal Subcommittee
(ASC) of the Federal Financial Institutions Examination Council (FFIEC)
the information required by the ASC to administer the new national
registry of AMCs (AMC National Registry). In conjunction with this
implementation, the FDIC is integrating its appraisal regulations for
State nonmember banks and State savings associations.
DATES: Effective date. This final rule will become effective on August
10, 2015.
Compliance date: Federally regulated AMCs must comply with the
minimum requirements for providing appraisal management services under
12 CFR 34.215(a) no later than 12 months from the effective date of
this final rule. The participating State or States in which a State-
regulated AMC operates will establish the compliance deadline for
State-regulated AMCs.
FOR FURTHER INFORMATION CONTACT:
OCC: Robert L. Parson, Appraisal Policy Specialist, (202) 649-6423,
G. Kevin Lawton, Appraiser (Real Estate Specialist), (202) 649-7152,
Mitchell E. Plave, Special Counsel, Legislative and Regulatory
Activities Division, (202) 649-5490, for persons who are deaf or hard
of hearing, TTY, (202) 649-5597, or Christopher Manthey, Special
Counsel, Bank Activities and Structure Division, (202) 649-5500.
Board: Carmen Holly, Supervisory Financial Analyst, Division of
Banking Supervision and Regulation, at (202) 973-6122, or Walter
McEwen, Senior Counsel, Legal Division, at (202) 452-3321, Board of
Governors of the Federal Reserve System, Washington, DC 20551.
FDIC: Beverlea S. Gardner, Senior Examination Specialist, Division
of Risk Management and Supervision, at (202) 898-3640, Sandra S.
Barker, Senior Policy Analyst, Division of Depository and Consumer
Protection, at (202) 898-3915, Mark Mellon, Counsel, Legal Division, at
(202) 898-3884, or Benjamin K. Gibbs, Senior Regional Attorney, at
(678) 916-2458, Federal Deposit Insurance Corporation, 550 17th Street
NW., Washington, DC 20429.
NCUA: John Brolin or Pamela Yu, Staff Attorneys, Office of General
Counsel, at (703) 518-6540, or Vincent Vieten, Program Officer, Office
of Examination and Insurance, at (703) 518-6360, or 1775 Duke Street,
Alexandria, Virginia, 22314.
Bureau: Owen Bonheimer, Counsel, Office of Regulations, and David
Friend, Counsel, Office of Regulations, 1700 G Street NW., Washington,
DC 20552, at (202) 435-7000.
FHFA: Robert Witt, Senior Policy Analyst, Office of Housing and
Regulatory Policy, (202) 649-3128, or Ming-Yuen Meyer-Fong, Assistant
General Counsel, Office of General Counsel, (202) 649-3078, Federal
Housing Finance Agency, 400 Seventh Street SW., Washington, DC 20024.
SUPPLEMENTARY INFORMATION:
I. Background
AMC Minimum Requirements
Section 1473 of the Dodd-Frank Act \1\ added a new section 1124 to
Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 \2\ (FIRREA) that established minimum
requirements to be applied by States in the registration and
supervision of AMCs. An AMC is an entity that serves as an intermediary
for, and provides certain services to, creditors.\3\ These minimum
requirements apply to States that have elected to establish, pursuant
to section 1117 of FIRREA,\4\ an appraiser certifying and licensing
agency with authority to register and supervise AMCs (participating
States). Section 1473 of the Dodd-Frank Act \5\ also requires the ASC
to maintain an AMC National Registry, which will include AMCs that are
either registered with, and subject to supervision by, a State
appraiser certifying and licensing agency or are subsidiaries owned and
controlled by a Federally regulated insured depository institution and
regulated by a Federal financial institutions regulatory agency.\6\
Section 1124(e) further requires the Agencies to promulgate regulations
for the reporting of the activities of AMCs to the ASC in determining
the payment of the annual fee for the AMC National Registry.\7\
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\1\ Public Law 111-203, 124 Stat. 1376.
\2\ Public Law 101-73, 103 Stat. 183.
\3\ The term ``appraisal management company'' is defined in more
detail in section 1121(11) of Title XI of FIRREA, 12 U.S.C.
3350(11), and in Sec. 34.211(c) of this final rule.
\4\ 12 U.S.C. 3346.
\5\ Hereafter, section references are to Title XI of FIRREA,
unless otherwise noted.
\6\ 12 U.S.C. 3332(a)(6).
\7\ 12 U.S.C. 3353(e). See also FIRREA section 1109(a)(3), 12
U.S.C. 3338(a)(3) (requiring States to submit reports to the ASC
concerning supervisory activities involving AMCs). This final rule
does not implement section 1109(a)(3); this section of FIRREA is
implemented by the ASC.
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Pursuant to FIRREA section 1124, the Agencies must establish, by
rule, minimum requirements to be imposed by a participating State
appraiser certifying and licensing agency on
[[Page 32659]]
AMCs doing business in the State.\8\ Specifically, pursuant to section
1124(a), participating States must require that AMCs: (1) Register
with, and be subject to supervision by, the State appraiser certifying
and licensing agency in the State or States in which the company
operates; (2) verify that only State-certified or State-licensed
appraisers are used for Federally related transactions; \9\ (3) require
that appraisals comply with the Uniform Standards of Professional
Appraisal Practice (USPAP); and (4) require that appraisals are
conducted in accordance with the statutory valuation independence
standards pursuant to the Truth in Lending Act (TILA) (15 U.S.C. 1639e)
and its implementing regulations.\10\ An AMC that is a subsidiary owned
and controlled by an insured depository institution and regulated by a
Federal financial institutions regulatory agency is subject to all of
the minimum requirements, except the requirement to register with a
State.\11\
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\8\ 12 U.S.C. 3353(a).
\9\ Under FIRREA, a Federally related transaction is a real
estate related financial transaction that involves an insured
depository institution regulated by the OCC, Board, FDIC, or NCUA
and that requires the services of an appraiser under the interagency
appraisal rules. See 12 U.S.C. 3350(4), implemented by the OCC: 12
CFR 34.42(f) and 34.43(a); Board: 12 CFR 225.62(f) and 225.63(a);
FDIC: 12 CFR 323.2(f) and 323.3(a); and NCUA: 12 CFR 722.2(f) and
722.3(a).
\10\ 12 U.S.C. 3353(a). For regulations implementing TILA
section 129E, 15 U.S.C. 1639e, see 12 CFR 226.42 (Board) and 12 CFR
1026.42 (Bureau).
\11\ 12 U.S.C. 3353(c).
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In participating States, the minimum requirements apply to any AMC
that provides appraisal management services, as defined in the final
rule, and meets the statutory panel size threshold, which is that the
AMC oversees an appraiser panel of more than 15 State-certified or
State-licensed appraisers in a State or 25 or more appraisers in two or
more States in a calendar year or 12-month period under State law.
States may establish requirements for AMC registration and supervision
that are in addition to these minimum requirements.\12\
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\12\ 12 U.S.C. 3353(b).
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Pursuant to section 1124(f), beginning 36 months from the effective
date of this final rule, an AMC that meets the statutory size threshold
may not provide services for a Federally related transaction in a State
unless the AMC is registered with the State or is subject to oversight
by a Federal financial institutions regulatory agency.\13\ This
provision effectively allows each State up to three years to establish
registration and supervision systems that meet the requirements of the
final rule before AMCs in the State will be subject to the
aforementioned restriction in the absence of such a regime. The ASC,
with the approval of the FFIEC, may delay the restriction for an
additional year if the ASC makes a written finding that a State has
made substantial progress toward implementation of a system that meets
the criteria in Title XI of FIRREA.\14\ Even after the three-year
implementation period has passed, a State may still elect to establish
a regime, at which point AMCs operating in the State would be able to
provide appraisal management services for Federally related
transactions.
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\13\ 12 U.S.C. 3353(f)(1).
\14\ 12 U.S.C. 3353(f)(2).
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Section 1124 does not compel a State to establish an AMC
registration and supervision program, nor is a penalty imposed on a
State that does not establish a regulatory structure for AMCs within 36
months of issuance of this final rule.\15\ However, in a State that has
not adopted the AMC minimum requirements established by this rule, AMCs
are barred by section 1124 from providing appraisal management services
for Federally related transactions, unless they are owned and
controlled by a Federally regulated depository institution.\16\ Thus,
appraisal management services may still be provided for Federally
related transactions in non-participating States by individual
appraisers, by AMCs that are below the minimum statutory panel size
threshold, and as noted previously, by Federally regulated AMCs.\17\
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\15\ 12 U.S.C. 3353.
\16\ See FIRREA section 1124(f)(1), 12 U.S.C. 3353(f)(1). Under
section 1124(c), this restriction will not apply to AMCs that are
subsidiaries owned and controlled by an insured depository
institution and regulated by a Federal financial institutions
regulatory agency. 12 U.S.C. 3353(c). Such AMCs are subject to all
the requirements of section 1124, with the exception of the
requirement to register with a State. See id.
\17\ See FIRREA section 1121(11), 12 U.S.C. 3350(11).
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On April 9, 2014, the Agencies published a proposed rule to
implement the minimum requirements under FIRREA section 1124 for
registration and supervision of AMCs, with a 60-day public comment
period.\18\ With certain changes to the proposed rule, this final rule
implements the statutory requirements discussed above, as well as
section 1124's requirements for the reporting of the activities of AMCs
in determining the payment of the annual registry fee.\19\ The final
rule is being published in the Code of Federal Regulations separately
by the OCC, the Board, the FDIC, and the FHFA. The Bureau is publishing
a cross-reference to the OCC rule text in the valuation independence
provisions of Regulation Z, 12 CFR 1026.42, to highlight that the final
rule specifically reinforces the valuation independence standards. The
rules are not different substantively. The implementation of the AMC
minimum requirements does not affect the responsibility of banks,
Federal savings associations, State savings associations, bank holding
companies, and credit unions to ensure that appraisals for their
institutions comply with applicable laws and regulations and are
consistent with supervisory guidance. If these regulated financial
institutions use an AMC to engage appraisers on their behalf, the AMC
must be acting as an agent for these institutions.\20\
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\18\ 79 FR 19521 (Apr. 9, 2014).
\19\ 12 U.S.C. 3353(e). See also 12 U.S.C. 3338(a)(4) (setting
out the fee structure for the AMC National Registry).
\20\ See OCC: 12 CFR 34.45(b)(1); Board: 12 CFR 225.65(b)(1);
FDIC: 12 CFR 323.5(b)(1); and NCUA: 12 CFR 722.5(b)(1).
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Consolidation of FDIC and OTS Rules on Appraisals
Title III of the Dodd-Frank Act transferred the powers, duties, and
functions formerly performed by the Office of Thrift Supervision (OTS),
the Federal entity formerly responsible for the supervision of
Federally insured savings associations and their holding companies, to
the FDIC for State savings associations and authorized the FDIC to
consolidate OTS and FDIC rules.\21\ The final rule implements this
authority by rescinding the OTS regulatory provisions on appraisals
pertaining to State savings associations, as these entities are now
covered by the FDIC's appraisal rules.\22\
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\21\ The OTS was abolished on October 19, 2011, pursuant to the
Dodd-Frank Act.
\22\ Title III of the Dodd-Frank Act transferred supervision of
Federal savings associations to the OCC. The OCC recently integrated
the OTS and OCC rules on appraisals. See 79 FR 28393 (May 16, 2014)
(integrating certain interagency rules for national banks and
Federal savings associations).
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II. The Final Rule
The final rule: (1) Establishes the minimum requirements in section
1124 of FIRREA for State registration and supervision of AMCs in
participating States; (2) requires Federally regulated AMCs to meet the
minimum requirements of section 1124 (other than registering with the
State); and (3) requires States to report certain AMC information to
the ASC.\23\ The final rule also integrates FDIC appraisal regulations
for State nonmember banks and State savings associations.
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\23\ See 12 U.S.C. 3353(a), (c), and (e).
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For the reasons discussed in section III of this SUPPLEMENTARY
INFORMATION,
[[Page 32660]]
the final rule adopts the rule substantially as proposed, with
modifications to: (1) Provide that the standard for determining whether
an appraiser is an independent contractor will be based on how the
appraiser is treated for Federal income taxes, as determined under
Internal Revenue Service (IRS) guidance; (2) clarify that an AMC credit
union service organization (CUSO) is not considered to be a Federally
regulated AMC, and therefore would be regulated by the State or States
in which the AMC CUSO operates; (3) clarify that the rule does not bar
the use of trainee appraisers; (4) provide that the registration
limitations on individuals who have had their licenses refused, denied,
cancelled, surrendered in lieu of revocation, or revoked, should not be
construed to apply to appraisers whose licenses have been revoked for
nonsubstantive reasons, as determined by the appropriate State
appraiser certifying and licensing agency and whose licenses have been
subsequently reinstated; (5) revise the provision on reporting of
information by Federally regulated AMCs to clarify that Federally
regulated AMCs will report information required for the AMC National
Registry directly to the States; and (6) remove cross-references to
provisions of Regulation Z, 12 CFR part 1026 (Truth in Lending), in the
proposed definitions. The Agencies are generally adopting the relevant
text of the cross-referenced Regulation Z provisions, in lieu of the
cross-references. The final rule also contains technical,
nonsubstantive changes.
III. The Final Rule and Public Comments on the Proposed Rule
The following is a section-by-section review of the proposed rule
and a discussion of the public comments received by the Agencies
concerning the proposal. The Agencies received 256 comment letters
containing 89 unique comments in response to the published proposal.
These comment letters were received from State appraiser certifying and
licensing agencies, AMCs, appraiser trade and professional
associations, appraisal firms, appraisers, financial institutions,
consumer/community groups and individual commenters. For ease of
reference, unless otherwise noted, the SUPPLEMENTARY INFORMATION refers
to section numbers in the proposed and final rule texts for the OCC, 12
CFR 34.210 et seq. Rule text for the other Agencies is published
separately in this Federal Register notice at 12 CFR 208.50 and 225.190
et seq. (Board); 12 CFR 323.8 et seq. (FDIC); and 12 CFR 1222.20 et
seq. (FHFA).
A. Section 34.211. Definitions
The Agencies requested comment on the key definitions in the
proposed rule. The following is a discussion of these key definitions,
related public comments, and issues relating to those definitions.
Definitions on which the Agencies did not receive comment are not
discussed below and are adopted without change in the final rule.
1. Cross-References to Other Regulations
The Agencies are adopting changes to definitions for which cross-
references to Regulation Z, 12 CFR part 1026, were used in the proposed
rule. Specifically, the Agencies are removing most cross-references and
adopting the relevant text of the cross-referenced provisions directly
(see Sec. 34.211(g) (defining ``consumer credit''), Sec. 34.211(i)
(defining ``creditor''), and Sec. 34.211(m) (defining ``person''). In
addition, the Agencies are defining the term ``dwelling'' in Sec.
34.211(j) by adopting the text of the definition of ``dwelling'' in 12
CFR 1026.2(a)(19), which was included in the proposed definition of
``principal dwelling'' (see proposed Sec. 34.211(m)). In new Sec.
34.211(j)(2), the Agencies are retaining the explanation of ``principal
dwelling'' that was provided in the proposed rule.\24\ (See proposed
Sec. 34.211(m)). This explanation is based on Official Interpretation
12 CFR 1026.2(a)(24)-3. The Agencies are adopting these changes in the
final rule to simplify the rule and relieve regulatory burden on
States. Substituting the text of these definitions for cross-references
mitigates the potential obligations of States to update, clarify, or
amend State law or its interpretations as Regulation Z is amended over
time, or if the numbering of definitions in Regulation Z changes.\25\
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\24\ See proposed Sec. Sec. 34.211(m) and 34.211(j)(2).
\25\ These changes also should avoid any inadvertent confusion
created by referring to Regulation Z, which includes additional
exemptions that are not included in these regulations, such as for
transactions meeting the Regulation Z definition of consumer credit
transaction secured by a principal dwelling, but used to purchase a
3-4 unit owner-occupied rental property.
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2. Section 34.211(c): Appraisal Management Company; Section 34.211(d):
Appraisal Management Services
Proposed Sec. 34.211(c) defined an AMC as a person that: (1)
Provides appraisal management services to creditors or secondary
mortgage market participants; (2) provides these services in connection
with valuing the consumer's principal dwelling as security for a
consumer credit transaction (including consumer credit transactions
incorporated into securitizations); and (3) within a given year,
oversees an appraiser panel of more than 15 State-certified or State-
licensed appraisers in a State or 25 or more State-certified or State-
licensed appraisers in two or more States. The proposed definition
cross-referenced proposed Sec. 34.212 for the rules on how to
calculate the numeric threshold for the appraiser panel.
Proposed Sec. 34.211(d) defined ``appraisal management services,''
which is a key component of the definition of ``appraisal management
company,'' to mean one or more of the following: (1) Recruiting,
selecting, and retaining appraisers; (2) contracting with State-
certified or State-licensed appraisers to perform appraisal
assignments; (3) managing the process of having an appraisal performed,
including providing administrative duties such as receiving appraisal
orders and appraisal reports, submitting completed appraisal reports to
creditors and secondary mortgage market participants, collecting fees
from creditors and secondary mortgage market participants for services
provided, and paying appraisers for services performed; and (4)
reviewing and verifying the work of appraisers. This definition is
consistent with the appraisal management services outlined in the
definition of AMC in section 1121.\26\ As in section 1121, the proposed
definition of appraisal management services did not include performing
appraisals, nor does the definition of appraisal management services
adopted in this final rule.\27\
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\26\ See 12 U.S.C. 3350(11).
\27\ See id.
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a. Commercial Transactions and the Definition of AMC
Consistent with the statutory definition of AMC, the proposed
definition of AMC applied to appraisal management services provided in
connection with residential mortgage transactions secured by the
consumer's principal dwelling and securitizations involving those
mortgages. The proposed rule did not extend to appraisal management
services provided in connection with commercial real estate
transactions or securitizations involving commercial real estate
mortgages.\28\
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\28\ 12 U.S.C. 3350(11).
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In drafting the definition of AMC for the proposal, the Agencies
considered whether the statutory definition of AMC in section 1121
should be construed to
[[Page 32661]]
encompass not only appraisal management services provided for
securitizations of consumer purpose residential mortgages, but also
appraisal services in connection with securitizations of commercial
mortgages.\29\ The Agencies proposed the former. The Agencies' reading
of the statute--that it extends only to consumer purpose residential
mortgage transactions and securitizations of those mortgages--is
consistent with the text of section 1124 and with the Dodd-Frank Act as
a whole.\30\ Non-residential or commercial mortgages are not mentioned
in any AMC provisions in section 1473 of the Dodd Frank Act (or
elsewhere in Title XIV of the Dodd-Frank Act). The lack of a reference
to commercial mortgage lending in the relevant Dodd-Frank Act
provisions suggests that AMCs were not intended to be covered by the
AMC minimum requirements when they are providing appraisal management
services for underwriters or other principals in commercial mortgage
securitizations. Moreover, the Agencies understand that individual
appraisers, as opposed to AMCs, are more typically retained to provide
an appraisal of properties securing commercial mortgage loans (and
securitizations of such loans) because of the size and complexity of
those properties. This understanding is based on the supervisory
experience of the Agencies as well as outreach during the proposed rule
process to a trade association for AMCs and an individual AMC, which
confirmed that, under the current business model, AMCs do not generally
provide services in connection with commercial mortgages.
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\29\ While it is clear that the definition of AMC encompasses
only residential mortgage loans, there is some question as to
whether the definition includes securitizations of commercial
mortgages.
\30\ 12 U.S.C. 3353.
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The Agencies received a small number of comments concerning whether
an AMC's services for commercial mortgage transactions should be
covered by the final rule. Several commenters supported the proposal to
exclude commercial real estate transactions from the definition of AMC.
One commenter disagreed, stating that both commercial and consumer
transactions should be covered by the rule, but did not elaborate.
The Agencies continue to believe that commercial real estate
transactions should be excluded from the definition of AMC based on the
reasons outlined above. As such, the definition of AMC in the final
rule includes entities only when they are providing appraisal
management services for consumer mortgage transactions secured by the
consumer's principal dwelling and securitizations of those loans.
b. ``External Third Party'' Within the Definition of AMC
Section 1121 defines an AMC as any ``external third party''
authorized to take certain actions by a creditor of a consumer credit
transaction secured by the consumer's principal dwelling or by an
underwriter of or other principal in the secondary mortgage
markets.\31\ Consistent with the statutory definition, the proposal
defined the term ``appraisal management company'' to exclude a
department or division of an entity if the department or division
provides appraisal management services only to that entity. This
reflects the Agencies' interpretation that a department or a division
of an entity is not an ``external third party'' as required by the
statute. Under the proposed rule, an AMC that is an affiliate (rather
than a department or division) of a creditor or secondary market
principal would, however, be treated as an AMC, even if the AMC
provides appraisal management services only to the entity with which it
is affiliated, because the affiliate is a separate legal entity.
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\31\ 12 U.S.C. 3350(11).
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The Agencies believe that this interpretation of the term
``external third party'' is consistent with the plain meaning of
``external'' and ``third party,'' as well as with section 1124(c),
which provides that the requirements of section 1124 would apply to
AMCs that are owned and controlled by financial institutions.\32\ In
the Agencies' view, this interpretation is also consistent with section
1124 as a whole, which is directed at regulating parties that provide
appraisal management services on behalf of creditors and secondary
market principals, but does not regulate creditors or secondary market
principals directly.\33\
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\32\ 12 U.S.C. 3353(c).
\33\ 12 U.S.C. 3353.
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The Agencies received one comment on this topic, which supported
the exclusion of departments and divisions from the definition of AMC.
The Agencies are adopting in the final rule the proposed approach to
``external third party.''
c. Uniformity and the Definition of AMC
The Agencies received a number of comments suggesting that the
Agencies require all participating States to adopt the definition of
AMC in the proposed rule. Several commenters also stated that reducing
burden for AMCs would reduce costs for consumers. As a legal basis for
this position, one commenter noted that the definition of AMC is
statutory, and therefore should be binding on all the participating
States.
The Agencies agree that the definition of AMC in section 1121 sets
the uniform minimum standards for assessing whether an entity is an AMC
under this rule.\34\ Under the proposed rule, a participating State
would be required to treat an entity as an AMC if the entity provides
services described in the definition and meets the statutory panel size
threshold. As such, pursuant to section 1121 and the proposed rule, a
participating State could not revise the definition of AMC to eliminate
or limit the range of services that would classify an entity as an AMC
with respect to the minimum requirements in the rule. Similarly, a
State could not void the statutory panel size threshold that triggers
the minimum requirements by, for example, adopting an AMC law that
provides that an entity is an AMC only if it has 50 or more appraisers
on its nationwide panel.\35\ Thus, all States electing to establish an
AMC regulatory program under the rule would have a uniform minimum
scope as to coverage of their program.
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\34\ 12 U.S.C. 3350(11). This rule establishes ``minimum''
requirements for a State to apply in registering AMCs. Thus, the
Agencies interpret the rule of construction in FIRREA section
1124(b) to recognize that States may adopt requirements that exceed
those in the rule, for example, defining AMC to cover more entities
than would be covered under the minimum requirements of this rule.
15 U.S.C. 3353(b).
\35\ 12 U.S.C. 3350(11).
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While the Agencies understand the commenters' desire for
uniformity, FIRREA section 1124(b) recognizes expressly the authority
of States to adopt requirements in addition to those in the final rule:
``Nothing in this section [1124] shall be construed to prevent States
from establishing requirements in addition to any rules promulgated
under subsection(a)[by the Agencies].'' \36\ Therefore, the Agencies
decline to require all participating States to adopt a uniform
definition of AMC.
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\36\ 12 U.S.C. 3353(b).
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d. ``Portals'' Within the Definition of AMC
The Agencies received one comment from an entity that provides
appraisal related services through electronic mechanisms, described as
a ``portal'' business model. The commenter requested that the Agencies
address the question of whether a portal is an AMC.
The Agencies do not support a categorical rule in this regard. The
business model an entity uses to provide services should not be
[[Page 32662]]
determinative of whether the entity is an AMC; rather, if a portal is
providing appraisal management services, and meets the other elements
of the definition, then it should be considered an AMC under the final
rule. Thus, the final rule does not limit or affect the discretion of
States to treat a portal as an AMC if a State finds that a portal
provides appraisal management services.
e. Distinction Between AMCs and Appraisal Firms
In the proposal, the Agencies addressed whether appraisal firms
should be considered AMCs pursuant to sections 1124 and 1121(11) \37\
and requested comment on whether the distinction between employees and
independent contractors served as a basis for excluding appraisal firms
from the definition of an AMC. (See Question 3 in the proposal.) The
technical distinction between independent contractors and employees,
for purposes of determining whether an entity meets the statutory panel
size thresholds, is addressed in the section-by-section analysis of
Sec. 34.212 (Appraiser Panel), which discusses how to calculate the
number of appraisers on a panel. The following is a discussion of the
comments on the broader issue of whether the proposal appropriately
excluded appraisal firms from the scope of the rule.
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\37\ 12 U.S.C. 3353 and 3350(11).
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A number of commenters supported the proposal to construe section
1124 as applying only to AMCs or hybrid entities (discussed in detail
below) and not to appraisal firms. These commenters stated that the
business models of AMCs and appraisal firms are different. Under the
different business models, according to these commenters, employees of
appraisal firms perform appraisals, while AMCs contract for appraisal
services, but do not perform appraisals. Another set of commenters
argued that appraisal firms should be covered by the rule. The basis
for this argument was the commenters' assertion that there is no
substantive distinction between AMCs, which hire others to perform
appraisals, and appraisal firms, which generally hire appraisers as
employees.
As discussed in the preamble to the proposed rule, the Agencies
interpret section 1124 to distinguish between AMCs and appraisal firms
for three key reasons.\38\ First, the distinction between appraisal
firms and AMCs is reflected in section 1472 of the Dodd-Frank Act,
which added provisions concerning valuation independence to TILA.\39\
These provisions contemplate expressly that certain entities would not
be covered by the AMC minimum requirements in FIRREA section 1124 and
describe this type of entity, in pertinent part, as one that ``utilizes
the services of State licensed or certified appraisers and receives a
fee for performing appraisals in accordance with the Uniform Standards
of Professional Appraisal Practice.'' \40\ The Agencies understand that
the type of entity described here as excluded from the AMC minimum
requirements is an appraisal firm, which receives fees for directly
performing appraisals. Second, FIRREA section 1124 uses the term
``appraisal management company,'' and not appraisal firm.\41\ Third,
section 1121(11) describes the activities of AMCs as including
``contracting with State-certified or State-licensed appraisers to
perform appraisal assignments,'' but not directly performing
appraisals.\42\ Section 1121(11) also defines an AMC as an entity that
``oversees a network or panel of more than 15 certified or licensed
appraisers in a State or 25 or more nationally (meaning two or more
States) within a given year . . .'' \43\ By contrast, the Agencies
understand that appraisal firms perform appraisals as a primary
function directly through employees and do not oversee a ``network or
panel'' of non-employee appraisers.
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\38\ 12 U.S.C. 3353.
\39\ See TILA section 129F, 15 U.S.C. 1639e.
\40\ 15 U.S.C. 1639e(i)(2) (emphasis added); see also 12 U.S.C.
3353. A ``fee appraiser'' is defined in TILA section 129E, 15 U.S.C.
1639(e)(i), as a person who: (1) Is not an employee of a loan
originator or AMC engaging the appraiser; (2) performs an appraisal
in compliance with USPAP; and (3) is a company [an appraisal firm]
not subject to the requirements of section 1124 (minimum
requirements for AMCs, 12 U.S.C. 3353) and that receives a fee for
performing appraisals.
\41\ Id.
\42\ 12 U.S.C. 3350(11).
\43\ 12 U.S.C. 3350(11).
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As stated in the proposal, the Agencies believe that the
fundamental reasons to distinguish between AMCs and appraisal firms are
that the business models of AMCs and appraisal firms are different and
that Congress expressed an intention to exclude entities operating on
an appraisal firm model from coverage by the AMC minimum requirements.
This conclusion is consistent with the fact that AMCs provide appraisal
management services to third parties, including retaining appraisers to
perform appraisals, but AMCs do not perform appraisals. By contrast,
appraisal firms perform appraisals using one or more of the firm's
employees or partners. In addition, appraisal firms typically hire a
limited number of appraisers, based on identified need, and hire
inexperienced trainees and train them to become qualified appraisers.
AMCs, on the other hand, generally have a large number of pre-approved
appraisers in their network or panel who are available, as independent
contractors, for potential assignments and do not conduct training for
inexperienced appraisers.
f. Hybrid Entities
In the proposal, the Agencies discussed the possibility that there
are, or may be in the future, ``hybrid'' entities, meaning entities
that both hire appraisers as employees to perform appraisals and engage
independent contractors to perform appraisals. In this situation, the
entity could be considered both an AMC and an appraisal firm. As such,
under the proposed rule, the hybrid entity would be treated as an AMC
for purposes of State registration if it meets the statutory panel size
threshold (of overseeing more than 15 State-certified or State-licensed
appraisers in a State or 25 or more State-certified or State-licensed
appraisers in two or more States within a given year). Under the
proposal, the numerical calculation of panel size for hybrid entities
would only include appraisers engaged as independent contractors.
Some commenters supported the proposed treatment of firms that have
both employee appraisers and independent contractor appraisers. One
commenter suggested that the Agencies should not recognize a hybrid
firm as a valid business model, but did not elaborate. The Agencies
adopt in the final rule the proposed definition of AMC and the proposed
treatment of hybrid firms. The Agencies continue to believe that
sections 1124 and 1121(11) are best interpreted to apply only to AMCs,
as defined in the proposed and final rules, and not to appraisal firms
(with the exception of hybrid firms). In addition to the statutory
distinction between appraisal firms and AMCs, the Agencies believe this
interpretation is consistent with, and supported by, the key
distinction between AMCs and appraisal firms--that the former contracts
with appraisers to perform appraisals, while the latter performs
appraisals directly through employees. Even if some services provided
by AMCs and appraisal firms overlap, which some commenters assert, this
key difference between the two entities (that AMCs contract with
appraisers to perform appraisals and appraisal firms perform appraisals
directly through their own employees) remains. The final rule also
reflects the definition of ``appraisal management company'' in
[[Page 32663]]
section 1121(11), which provides that an AMC is an entity that
``oversees a network or panel'' of appraisers.\44\ Appraisal firms do
not oversee networks or panels of non-employee appraisers.
---------------------------------------------------------------------------
\44\ 12 U.S.C. 3350(11).
---------------------------------------------------------------------------
The Agencies also continue to believe that recognition of hybrid
firms as AMCs is appropriate when the entity maintains a panel of
appraisers that includes independent contractors meeting the threshold
minimum numbers pursuant to Sec. 34.212. The Agencies believe that
this interpretation of the definition of AMC is consistent with the
statutory language and purpose, appropriately reflects the business
models of AMCs, and accommodates the possibility that appraisal firms
may evolve over time. For these reasons, the Agencies adopt in the
final rule the proposed definition of AMC and the proposed treatment of
hybrid firms.
3. Section 34.211(e) Appraiser Panel
The Agencies are adopting the proposed definition of ``appraiser
panel'' with minor clarifications. Specifically, proposed Sec.
34.211(e) defined an appraiser network or panel as a network of State-
licensed or State-certified appraisers who are independent contractors
to an AMC. In the final rule, ``appraiser panel'' is defined as a
network, list or roster of licensed or certified appraisers approved by
the AMC to perform appraisals as independent contractors for the AMC.
Appraisers on an AMC's ``appraiser panel'' under this part include both
appraisers accepted by the AMC for consideration for future appraisal
assignments and appraisers engaged by the AMC to perform one or more
appraisals. The final rule also clarifies in the definition of
``appraiser panel'' that an appraiser is an independent contractor for
purposes of this rule if the appraiser is treated as an independent
contractor by the AMC for purposes of Federal income taxation.
a. Distinction Between Employees and Independent Contractors in
Determining Panel Membership
The definition of ``appraisal management company'' in section
1121(11) provides that an entity will be treated as an AMC subject to
State registration if it has an ``appraiser network or panel'' of more
than 15 State-certified or State-licensed appraisers in a State or 25
or more appraisers nationally (meaning two or more States) within a
given year.\45\ Section 1121(11) does not specify whether a ``network
or panel'' consists of employees of an AMC or independent contractors
retained by the AMC (or both). However, by including only independent
contractors with the AMC, the proposed and adopted definition of
``appraiser panel'' reflects the approach taken by the majority of
States that have adopted AMC registration laws or have proposed AMC
laws \46\ and reflects the Agencies' understanding that AMCs typically
engage appraisers as independent contractors under the current AMC
business model.\47\ Section 34.211(e) also reflects the definition of
AMC in section 1121(11), which outlines typical tasks carried out by
AMCs, including as ``contract[ing] with licensed and certified
appraisers.'' \48\ As discussed above in the section-by-section
analysis of Sec. 34.211(c), the definition of AMC and its description
of appraisal management services does not include directly performing
appraisals through the AMC's own employees--rather, AMCs contract with
external third parties to perform appraisals.\49\
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\45\ 12 U.S.C. 3350(11).
\46\ A majority of States with AMC laws define ``appraiser
panel'' as being comprised of independent contractors. See, e.g.,
N.C. Gen. Stat. section 93E-2-2 (defining an appraiser panel as a
network or panel of appraisers who are independent contractors to
the AMC); Vernon's Tex. Code Ann. Occupations Code section
1104.003(b)(3) (same); Louisiana La. Rev. Stat. Ann. section
37:3415.2(a) (same); see also Ohio (draft code) (same). A minority
of States use a broader definition for ``appraiser panel'' that
encompasses a combination of independent contractors and employees.
See, e.g., Cal. Bus. & Prof. Code section 11302 (defining AMC to
include both independent contractors and employees); Ark. Code Ann.
section 17-14-402(2) (same); Ky. Rev. Stat. section
324A.150(2)(same). The majority approach is consistent with the
model AMC code offered by a trade association for appraisers and the
minority approach is consistent with a model code offered by a trade
association for AMCs.
\47\ As discussed in the proposal, this understanding is based
on outreach conducted by the Agencies with associations that
represent AMCs and appraisers, as well as outreach with State
appraiser certifying and licensing agencies.
\48\ 12 U.S.C. 3350(11).
\49\ The Agencies will monitor AMCs to assess whether they are
hiring appraisers as part-time employees to avoid State registration
requirements. Outreach with State officials before the issuance of
the proposed rule did not indicate this is currently occurring or at
significant risk of occurring.
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The method for calculating whether an entity has an ``appraiser
network or panel'' of more than 15 State-certified or State-licensed
appraisers in a State or 25 or more appraisers nationally (meaning two
or more States) within a calendar year or 12-month period under State
law is discussed further under the section-by-section analysis of Sec.
34.212, below.
The Agencies requested comment on the proposed definition of
``appraiser panel'' and on the alternative of defining this term to
include employees as well as independent contractors. (See Question 2
in the proposal.) Some commenters argued that employees as well as
independent contractor appraisers should be counted as part of an
appraiser network or panel. These commenters did not disagree with the
Agencies' understanding that AMCs generally use independent contractors
rather than employee appraisers. Nor did the commenters address the key
distinction between AMCs and appraisal firms, which is that AMCs
primarily engage third parties to perform appraisals, whereas appraisal
firms perform appraisals directly through employees.
As discussed above in the section-by-section analysis of Sec.
34.211(c), the commenters argued that appraisal firms should be
regulated as AMCs as a matter of policy. As such, these commenters
suggested that the distinction between employee and independent
contractor appraisers be removed from the rule. In support of this
position, the commenters stated that appraisal firms and AMCs provide
substantially the same services, and therefore should both be covered
by the AMC registration and supervision programs.
Other commenters agreed with the employee-independent contractor
distinction, stating that defining ``appraiser panel'' to be comprised
only of independent contractor appraisers reflects the difference
between the AMC and appraisal firm business models. Specifically, these
commenters stated that appraisal firms' employees perform appraisals
directly, while AMCs provide appraisal management services and engage
third-party appraisers to perform appraisals.
The Agencies adopt in the final rule the proposed definition of
``appraiser panel,'' which includes only appraisers who are independent
contractors to an AMC. The Agencies note the predominance of comments
in favor of retaining the employee-independent contractor distinction.
The final rule also reflects that the commenters who opposed the
proposed employee-independent contractor distinction effectively
conceded that the distinction is accurate, arguing instead that AMCs
and appraisal firms should both be regulated as AMCs under section 1124
and implementing State laws, regardless of the way these entities
structure their operations.\50\ This larger policy question is
addressed above in the discussion of the distinction between employees
and independent contractors as a basis for exclusion of an appraisal
firm from the definition of an AMC. See the section-by-section analysis
of Sec. 34.211(c)
[[Page 32664]]
(definition of AMC), above. Moreover, the treatment of hybrid firms
will help address the potential that a firm may try to avoid the
requirements of the rule by using a combination of appraisers who are
employees and appraisers who are independent contractors.
---------------------------------------------------------------------------
\50\ 12 U.S.C. 3353.
---------------------------------------------------------------------------
b. Definition of Independent Contractor
The Agencies requested comment on whether the term ``independent
contractor'' should be defined, and if so why and how, including
whether it should be defined based on Federal law by using the
standards or guidance issued by the IRS or standards adopted in other
Federal regulations, such as those issued under the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (SAFE Act),\51\ or left
to State law. (See Question 2 in the proposal.) A number of commenters
requested that the final rule include a definition of independent
contractor, or that the rule incorporate an external definition, for
example, IRS guidance on the employee-independent contractor
distinction or the definition of independent contractor in the SAFE
Act. In addition, these commenters stated that it would be desirable to
have a standard for independent contractor that applies in all
participating States. The commenters stated a preference for using IRS
guidance for this purpose. One commenter disagreed, suggesting that a
single definition of the term independent contractor is not needed.
---------------------------------------------------------------------------
\51\ 12 CFR 1008.23 (``Independent contractor means an
individual who performs his or her duties other than at the
direction of and subject to the supervision and instruction of an
individual . . .'') (emphasis added). The SAFE Act was enacted as
part of the Housing and Economic Recovery Act of 2008, Pub. L. 110-
289, Division A, Title V, sections 1501-1517, 122 Stat. 2654, 2810-
2824 (July 30, 2008), codified at 12 U.S.C. 5101-5116.
---------------------------------------------------------------------------
The Agencies believe that additional guidance on the meaning of
``independent contractor'' under the final rule facilitates compliance
and, therefore, are amending the proposed definition of appraiser panel
accordingly. As noted, the definition of appraiser panel in Sec.
34.211(e) provides that that an appraiser is deemed an ``independent
contractor'' for purposes of this rule if the appraiser is treated as
such by the AMC for purposes of Federal income taxation.\52\
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\52\ For guidance on how to determine whether an appraiser is an
employee or independent contractor, see IRS Publication 1779,
``Independent Contractor or Employee,'' available at http://www.irs.gov/pub/irs-pdf/p1779.pdf and IRS Publication 15-A,
``Employer's Supplemental Tax Guide,'' at p. 7 et seq. (discussing
factors for distinguishing employees from independent contractors),
available at http://www.irs.gov/pub/irs-pdf/p15a.pdf.
---------------------------------------------------------------------------
4. Section 34.211(h): Covered Transaction
Proposed Sec. 34.211(h) defined a covered transaction as any
consumer credit transaction secured by the consumer's principal
dwelling. The proposed definition did not limit the definition of
``covered transaction'' to Federally related transactions (generally,
credit transactions involving a Federally regulated depository
institution, see 12 U.S.C. 3350(4)), even though Title XI of FIRREA and
its implementing regulations have applied historically only to
appraisals for Federally related transactions.
As stated in the proposed rule, defining ``covered transaction'' to
include all consumer credit transactions secured by the consumer's
principal dwelling reflects the statutory text of section 1121(11),
which defines the term ``appraisal management company,'' as in
pertinent part, ``any external third party authorized either by a
creditor of a consumer credit transaction secured by the consumer's
principal dwelling or by an underwriter of or other principal in the
secondary mortgage markets.'' \53\
---------------------------------------------------------------------------
\53\ 12 U.S.C. 3350(11).
---------------------------------------------------------------------------
Applying coverage of the AMC rule beyond Federally related
transactions is consistent with the structure and text of other parts
of section 1124, most of which address appraisals generally rather than
appraisals only for Federally related transactions. For example,
section 1124(a)(2) specifies that only licensed or certified appraisers
are to be used for ``federally related transactions,'' but sections
1124(a)(3) and (a)(4) apply to ``appraisals'' generally.\54\ In
particular, the text of section 1124(a)(4) indicates that one of the
chief purposes of the minimum requirements for AMCs is to ensure
compliance with the valuation independence standards established
pursuant to section 129E of TILA.\55\ Those standards apply to AMCs
whenever they engage in a consumer credit transaction secured by the
consumer's principal dwelling, regardless of whether the transaction is
a Federally related transaction.\56\
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\54\ See 12 U.S.C. 3353(a)(2) (3) and (4).
\55\ 12 U.S.C. 3353(a)(4).
\56\ See 15 U.S.C. 1639e(a) (defining scope); 12 CFR
1026.42(b)(1)-(2) (implementing regulations defining scope).
---------------------------------------------------------------------------
For these reasons, the proposed rule provided that the minimum
requirements in participating States would apply to all entities that
meet the definition of AMC in providing appraisal management services
related to consumer credit transactions secured by the consumer's
principal dwelling for both Federally related transactions and non-
Federally related transactions.
The Agencies received one comment that supported the proposed
definition of ``covered transaction.'' The Agencies are adopting it in
the final rule as proposed. As such, a covered transaction is defined
to mean any consumer credit transaction secured by the consumer's
principal dwelling. For the reasons discussed above in describing the
proposed definition, the Agencies have determined the final rule should
not limit the definition of ``covered transaction'' to consumer credit
transactions secured by the consumer's principal dwelling that are
Federally related transactions.
5. Section 34.211(k): Federally Regulated AMCs
Section Sec. 34.211(k) defines a ``Federally regulated AMC'' as an
AMC that is owned and controlled by an insured depository institution,
as defined in 12 U.S.C. 1813, or an insured credit union, as defined in
12 U.S.C. 1752, and regulated by the OCC, the Board, the NCUA, or the
FDIC. This definition differs from the proposed definition only in that
the reference to the NCUA is removed, for reasons discussed below.
Under section 1124(c), an AMC that is a subsidiary owned and
controlled by an insured depository institution or an insured credit
union and regulated by a Federal financial institutions regulatory
agency \57\ is not required to register with a State.\58\ Proposed
Sec. 34.211(j) defined an entity of this type as a ``Federally
regulated AMC,'' meaning an AMC that is owned and controlled by an
insured depository institution, as defined in 12 U.S.C. 1813, or an
insured credit union, as defined in 12 U.S.C. 1752, and regulated by
the OCC, the Board, the NCUA, or the FDIC. Under section 1124(c), a
Federally regulated AMC must follow the minimum requirements that are
applicable to a State-registered AMC (other than the requirement to
register with a State) and is subject to supervision for compliance
with these requirements by the appropriate Federal financial
institutions regulatory agency. In addition, under section 1124(e), as
[[Page 32665]]
implemented by the proposed rule, AMCs, including Federally regulated
AMCs, must report to the participating State or States in which they
operate the information required to be submitted by the State to the
ASC for administration of the AMC National Registry. These requirements
are discussed further in the section-by-section analysis of Sec.
34.215, below.
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\57\ The term ``Federal financial institutions regulatory
agencies'' means the Board, the FDIC, the OCC, the former OTS, and
the NCUA. 12 U.S.C. 3350(6). Title III of the Dodd-Frank Act
provides that the OCC is now the Federal financial institutions
regulatory agency for Federal savings associations. Title III of the
Dodd-Frank Act also provides that the FDIC is the Federal financial
institutions regulatory agency for State savings associations.
Finally, the Dodd-Frank Act provides that the Board is responsible
for regulation of savings and loan holding companies.
\58\ 12 U.S.C. 3353(c).
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In the proposal, the Agencies discussed whether an AMC that is a
subsidiary owned and controlled by a credit union (credit union service
organization or ``CUSO'') would be considered a Federally regulated
AMC, and thus exempt from State registration and supervision. The
Agencies indicated that an AMC, even if owned and controlled by a
credit union, would not be a Federally regulated AMC because the NCUA,
unlike the other banking agencies involved in this rulemaking, does not
directly oversee or regulate CUSOs. Instead, the authority that the
NCUA exercises over CUSOs is through its regulations that permit
Federal credit unions to invest in, or lend to, CUSOs.\59\ For these
reasons, under the proposed rule, if an AMC were owned and controlled
by a credit union (whether owned by a State or Federally chartered
credit union) it would not be considered to be regulated by a Federal
financial institutions regulatory agency. As such, the AMC CUSO would
be required to be registered in accordance with applicable State
requirements in participating States.\60\
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\59\ See 12 CFR part 712 (outlining requirements relating to
credit union investments in CUSOs).
\60\ As noted in the preamble to the proposed rule, the NCUA has
not, historically, asserted that CUSOs or their employees are exempt
from applicable State registration and licensing regimes. See 75 FR
44656, 44659 (applying similar reasoning to the licensing of
mortgage loan originators who were employees of CUSOs under the SAFE
Act.
---------------------------------------------------------------------------
The Agencies requested comment on whether references to the NCUA
and insured credit unions should be removed from the definition of
``Federally regulated AMC'' and other parts of the final rule to
clarify that an AMC CUSO would be subject to State registration and
supervision. (See Question 4 in the proposal.) Some commenters
expressed concern that the references to the NCUA and credit unions in
the proposed regulatory text were confusing and suggested that removing
these references in the final rule would clarify that AMC CUSOs are
subject to State registration and supervision.
To provide clarification in the final rule, the Agencies removed
references to NCUA and credit unions from pertinent portions of the
regulatory text defining ``Federally regulated AMC.'' An AMC owned and
controlled by a credit union (whether owned by a State or Federally
chartered credit union) is not considered to be regulated by a Federal
financial institutions regulatory agency under the final rule. As such,
AMC CUSOs are required to register in accordance with applicable State
requirements.
6. Section 34.211(n): Secondary Mortgage Market Participant
In the proposed rule, the Agencies defined ``secondary mortgage
market participant'' to implement the statutory definition of AMC,
which refers to an entity that performs services authorized by ``an
underwriter of or other principal in the secondary mortgage markets.''
\61\ Proposed Sec. 34.211(n) defined ``secondary mortgage market
participant'' to mean a guarantor or insurer of mortgage-backed
securities, or an underwriter or issuer of mortgage-backed securities.
The definition included individual investors in a mortgage-backed
security only if they also serve in the capacity of a guarantor,
insurer, underwriter, or issuer for the mortgage-backed security.
---------------------------------------------------------------------------
\61\ 12 U.S.C. 3350(11).
---------------------------------------------------------------------------
Most commenters supported the proposed definition of ``secondary
mortgage market participant.'' Some commenters indicated that the
definition is clear and needs no further additions or clarifications at
this time, but could at some future date to reflect evolving
conditions. One commenter believed that the definition is sufficiently
understandable for States to be able to write statutes and rules to
enforce the intent of the rule. Another commenter suggested that the
definition of ``secondary market participant'' is too narrow, and that
any bank or creditor involved in lending Federally insured funds in a
transaction secured by real estate (commercial or residential) should
be considered a secondary market participant.
Commenters did not provide any specific suggestions for revising
the proposed definition of secondary mortgage market participant. As
with other aspects of the proposed rule, the Agencies understand that
changes in the marketplace may, at some point, require the Agencies to
amend the final rule, or may require States to amend or re-interpret
State laws. The Agencies continue to believe, however, that the
definition of secondary mortgage market participant is accurate at
present. Regarding the comment that banks or creditors lending
Federally insured funds should be included, the Agencies note that the
statutory definition of AMC distinguishes between ``creditors'' and
``secondary mortgage market participants,'' \62\ and therefore believe
that including originating banks or creditors in the definition of
``secondary mortgage market participants'' would be inconsistent with
this distinction in the statutory definition. The Agencies in the final
rule adopt the proposed definition of secondary mortgage market
participant.
---------------------------------------------------------------------------
\62\ 12 U.S.C. 3350(11).
---------------------------------------------------------------------------
B. Section 34.212: Appraiser Panel--Annual Size Calculation
1. Determining Appraiser Panel
Section 34.212 finalizes proposed Sec. 34.212 without change,
other than revising the title from ``Appraiser Panel'' to ``Appraiser
Panel--Annual Size Calculation,'' for clarity. Section 34.212 sets out
criteria for determining whether, within a calendar year or 12-month
period specified by State law, an AMC oversees an appraiser panel of
more than 15 State-certified or State-licensed appraisers in a State or
25 or more State-certified or State-licensed appraisers in two or more
States. Consistent with the proposal, pursuant to Sec. 34.212(a), an
appraiser is deemed part of the AMC's appraiser panel as of the
earliest date the AMC accepts the appraiser for consideration for
future appraisal assignments in covered transactions or engages the
appraiser to perform one or more appraisal assignments on behalf of a
creditor or secondary mortgage market participant in a covered
transaction, including an affiliate of such a creditor or participant.
Also consistent with the proposal, pursuant to Sec. 34.212(b), an
appraiser who is considered to be part of the AMC's appraiser panel is
deemed to remain on the panel until: (1) The date on which the AMC
sends written notice to the appraiser removing the appraiser from the
appraiser panel; (2) the date the AMC receives written notice from the
appraiser asking to be removed from the appraiser panel; or (3) the
date the AMC receives notice of the death or incapacity of the
appraiser. If an appraiser is removed from an AMC's appraiser panel,
but the AMC subsequently accepts the appraiser for consideration for
future assignments or engages the appraiser at any time during the
twelve months after the appraiser's removal, the removal would be
deemed not to have occurred, and the appraiser would be deemed to have
been part of the AMC's appraiser panel without interruption. The
Agencies included
[[Page 32666]]
these procedural provisions to give States clarity and prevent
circumvention of the registration requirement.
The Agencies received a wide variety of comments relating to the
calculation of appraiser panel membership under Question 2 of the
proposal. Some commenters suggested that the approach in the proposal,
which would count appraisers either engaged to perform appraisals or
pre-approved to do so, would result in the unintended consequence of
limiting the number of appraisers in AMC networks or panels. These
commenters argued that pre-approved appraisers who have not yet been
engaged by the AMC for an assignment should not be counted. They argued
that the proposed method of counting appraisers would provide a strong
incentive for AMCs to limit significantly the size of networks or
panels, given that the AMC National Registry fee will be determined
based on the number of appraisers on an AMC's network or panel of
appraisers. The commenters stated that, to reduce costs, AMCs would
likely reduce the size of appraiser panels if the proposed method of
counting appraisers were adopted as final.
As background, the commenters explained that AMCs maintain large
panels of pre-approved appraisers in order to offer timely appraisal
services in a wide variety of areas, including smaller communities and
rural areas where appraisers are engaged less often than in more
populated communities. The commenters noted that, if the AMCs reduce
panels to actively engaged appraisers, then real estate transactions in
small communities and rural areas will take more time because AMCs
would not typically have pre-approved appraisers readily available for
this type of assignment.\63\ For these reasons, the commenters
requested that the Agencies modify the proposed method of counting
appraisers in an AMC's network or panel to include only appraisers who
are actually engaged to perform an appraisal during a 12-month period.
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\63\ One commenter, a coalition of three AMCs, stated the
process of approving an appraiser for a panel typically requires
from one week at a minimum to a month.
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The Agencies understand the commenters' concerns relating to the
panel membership and the potential for AMCs to reduce their appraiser
networks or panels to reduce ASC fees. The Agencies are also cognizant
of, and concerned about, the potential adverse effects this may have on
small communities and rural areas. However, for several reasons, the
Agencies decline to amend the rule such that only appraisers actually
given assignments in a particular year will be counted as being on the
panel. First, the Agencies interpret sections 1124 and 1121(11) to mean
that the counting of appraisers in determining whether an entity is
subject to the AMC minimum requirements does not control or affect the
counting of appraisers for purposes of payment of the AMC National
Registry fee.\64\ Therefore, this final rule does not address or
require the collection or calculation of these fees. Section 34.212 of
the rule implements FIRREA section 1121(11) and governs how to count
the number of appraisers on a panel only for purposes of whether an
entity is an AMC subject to the AMC minimum requirements of this final
rule, either as an AMC registered with a State that adopts these
requirements or as a Federally regulated AMC.\65\ The rule requires
AMCs to provide information to the State or States in which they
operate, to be used in determining the payment of the annual AMC
National Registry fee, but does not address or control how to calculate
the number of appraisers on a network or panel for purposes of
determining the fee. The AMC National Registry fee provisions
pertaining to the calculation, assessment, and collection of the fee
are addressed in FIRREA section 1109(a), which is enforced and
administered by the ASC, not by the Agencies pursuant to section
1124.\66\ As such, it is the ASC, and not the Agencies in this
rulemaking, that will determine how to calculate and pay the AMC
National Registry fee.
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\64\ 12 U.S.C. 3350(11) (defining an AMC subject to the minimum
requirements as, in pertinent part, an entity with a ``network or
panel of more than 15 certified or licensed appraisers in a State or
25 or more nationally (meaning two or more States) within a given
year.'' 12 U.S.C. 3350(11). The provision of the statute relevant to
determining the registry fee is in section 1109(a)(4)(B), which
provides that the fee is based on the number of appraisers ``working
for or contracting with [an AMC] in [a] state during the previous
year.'' FIRREA section 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B).
\65\ 12 U.S.C. 3350(11).
\66\ 12 U.S.C. 3338(a), 3353.
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Second, the statute that the Agencies are charged with implementing
expressly defines an AMC with reference to the number of appraisers
that the AMC ``oversees'' on a ``network or panel'' in a given year,
not only on the number of appraisers to which it actually gives
assignments.\67\ While commenters speculate that this approach to
defining the number of appraisers that an AMC oversees on a network or
panel may lead to efforts to evade the definition, the alternative
approach suggested by commenters of relying only on the number of
appraisers actually used during a 12-month period will also encourage
evasion attempts. This alternative would allow AMCs to accumulate
relationships with large numbers of independent contractors, advertise
this breadth of coverage, and evade the rule by managing the actual use
of appraisers through the year.
---------------------------------------------------------------------------
\67\ FIRREA section 1121(11), 12 U.S.C. 3350(11) (defining AMC).
---------------------------------------------------------------------------
The Agencies will monitor the effect of the rule and the definition
of AMC for evasion and revisit the rule to the extent appropriate and
permitted by statute in light of future developments.
2. Section 34.212(d): Annual Period for Counting Appraisers on AMC
Panel
Proposed Sec. 34.212(d) provided two options to States for
calculating the number of appraisers on an entity's panel for
determining whether the entity meets the minimum thresholds for
designation as an AMC. The first was the 12-month calendar year and the
second was any other 12-month period set by a State. One commenter
suggested that, to promote uniformity, all States should be required to
use the calendar year for determining whether an entity has the
requisite number of appraisers on its panel to qualify as an AMC.
Under the proposed rule, States would have the flexibility to align
the 12-month period for determining AMC status with their AMC
registration calendars, which may, or may not, be based on the calendar
year. In this regard, the Agencies are aware that many States already
do not use a calendar year for their existing appraiser registration
process. The Agencies believe that allowing states to set the 12-month
period provides appropriate flexibility and will help States comply
with the minimum requirements and reduce regulatory burden for State
governments. Thus, the Agencies adopt Sec. 34.212(d) in the final rule
without change.
C. Section 34.213: Appraisal Management Company Registration
1. Section 34.213(a): Minimum Requirements for Participating States
Under proposed Sec. 34.213(a), adopted without change in this
final rule, participating States must have a licensing program in place
within the State appraiser certifying and licensing agency that has the
authority to: (1) Review and approve or deny an AMC's application for
initial registration; (2) review and renew or refuse to renew an AMC's
registration periodically; (3) examine the books and records of an
[[Page 32667]]
AMC operating in the State and require the AMC to submit reports,
information, and documents to the State; (4) verify that the appraisers
on the AMC's appraiser panel hold valid State certifications or
licenses, as applicable; (5) conduct investigations of AMCs to assess
potential violations of applicable appraisal-related laws, regulations,
or orders; (6) discipline, suspend, terminate, and refuse to renew the
registration of an AMC that violates applicable appraisal-related laws,
regulations, or orders; and (7) report to the ASC an AMC's violation of
applicable appraisal-related laws, regulations, or orders, as well as
disciplinary and enforcement actions and other relevant information
about an AMC's operations.
These authorities and mechanisms reflected the Agencies'
interpretation of the provisions of section 1124(a), including the
minimum requirement in section 1124(a)(1) that AMCs be ``subject to
supervision'' by the State appraiser certifying and licensing
agency.\68\ The Agencies interpret section 1124(a) as being consistent
with the criteria outlined in FIRREA sections 1103, 1109, and 1118(a),
which describe the elements of State regulation of AMCs that will be
monitored by the ASC.\69\ For example, the ASC is responsible for
monitoring whether States have supervision systems in place that would
allow a State to process complaints against an AMC and conduct
investigations in connection with those complaints.\70\ The ASC is also
responsible for monitoring whether a State takes appropriate
enforcement actions against an AMC that is found to have violated
applicable laws and regulations.\71\ Consistent with the interpretation
stated in the proposal, the Agencies continue to believe that these
requirements are consistent with the enforcement and supervision
authorities underlying an effective regulatory program and will ensure
that State appraiser certifying and licensing agencies have the
required structures for the registration and supervision of AMCs.
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\68\ 12 U.S.C. 3353(a). As stated in the proposal, the Agencies
view section 1124 as allowing the Agencies to establish more
specific requirements for supervision and registration of AMCs that
implement the general requirements enumerated in section 1124(a).
Id. In addition, by providing that the regulation shall ``include''
the requirements enumerated in section 1124, the statute implies
that the Agencies have the discretion to establish additional
supervisory standards for State oversight of AMCs consistent with
the general requirements specifically enumerated in section 1124(a).
Id.
\69\ See 12 U.S.C. 3332(a)(1)(B) (requiring the ASC to monitor
requirements established by the States for supervision of AMCs); 12
U.S.C. 3338(a) (requiring each participating State to transmit
reports to the ASC on supervisory activities involving AMCs and
disciplinary actions taken); and 12 U.S.C. 3347(a) (requiring the
ASC to monitor States to assess whether a State has an effective
regulatory program).
\70\ See FIRREA section 1103(a)(1)(B), 12 U.S.C. 3332(a)(1)(B).
\71\ See FIRREA sections 1109(a)(3) and 1118(a)(4), 12 U.S.C.
3338(a)(3) and 3347(a)(4).
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2. Section 34.213(b): Minimum Requirements for State-Registered AMCs
The Agencies are adopting proposed Sec. 34.213(b) without change.
Section 34.213(b) implements FIRREA sections 1121(11) and 1124 and
provides that participating States must require State-registered AMCs
to follow certain minimum requirements when AMCs provide appraisal
management services for a creditor or ``underwriter of or other
principal in the secondary mortgage markets'' that are related to a
covered transaction.\72\ Pursuant to the minimum requirements in Sec.
34.213(b), an AMC (other than a Federally regulated AMC) is required to
register with, and be subject to supervision by, a State appraiser
certifying and licensing agency in each State in which the AMC
operates. In addition, States must require AMCs to verify that only
State-certified or State-licensed appraisers are used when a creditor
or secondary mortgage market participant engages in a transaction that
requires the services of a State-certified or State-licensed appraiser
under the Federally related transaction regulations. A State also must
require registered AMCs to have processes and controls reasonably
designed to ensure that the AMC, in engaging an appraiser, selects an
appraiser who has the requisite education, expertise, and experience to
complete competently the assignment for the particular market and
property type. This minimum requirement implements the requirement of
section 1124(a)(2) \73\ and emphasizes a core principle of the
Agencies' FIRREA appraisal regulation and the Interagency Appraisal and
Evaluation Guidelines, which is that an appraiser must not only be
State credentialed and competent generally, but also have specific
competency to perform a particular appraisal assignment.\74\
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\72\ 12 U.S.C. 3350(11), 3353.
\73\ 12 U.S.C. 3353(a)(2).
\74\ See 12 CFR 34.46(b) (OCC); see also Interagency Appraisal
and Evaluation Guidelines, 75 FR 77450, 77458 (December 10, 2010);
Appraisal Standards Board, Uniform Standards of Professional
Appraisal Practice, Appraiser Competency Rule (2014-2015), available
at The Appraisal Foundation, https://netforum.avectra.com/eWeb/DynamicPage.aspx?Site=TAF&WebCode=USPAP (requiring that an appraiser
have specific competency for the appraisal assignment).
---------------------------------------------------------------------------
In addition, States must require an AMC to establish and comply
with processes and controls reasonably designed to ensure that the AMC
conducts its appraisal management services in accordance with: (1) The
AMC's obligations as a covered person with respect to mandatory
reporting, conflicts of interest, and other acts or practices that
would violate valuation independence pursuant to section 129E(a)
through (i) of TILA; and (2) the AMC's obligations as a creditor's
agent with respect to appraiser compensation pursuant to section
129E(i) of TILA, 15 U.S.C. 1639e(i).\75\
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\75\ See 12 CFR 226.42 (Board); 12 CFR 1026.42 (Bureau).
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As noted in the proposed rule, the AMC minimum standards do not
affect the responsibility of banks, Federal savings associations, State
savings associations, bank holding companies, and credit unions for
compliance with applicable regulations and guidance concerning
appraisals. Under the interagency appraisal rules, for example, if an
appraisal is prepared by a fee appraiser (as opposed to in-house, by
the institution), the appraiser must be engaged directly by the
regulated institution or its agent, and have no direct or indirect
interest, financial or otherwise, in the property or the
transaction.\76\ As stated in the Interagency Appraisal and Evaluation
Guidelines, an institution that engages a third party, such as an AMC,
to administer any part of the institution's appraisal program remains
responsible for compliance with applicable laws concerning appraisers
and appraisals.\77\
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\76\ 12 CFR 34.45 and 164.5 (OCC); 12 CFR 225.65 (Board); 12 CFR
323.5 (FDIC); 12 CFR 722.5(NCUA).
\77\ See Interagency Appraisal and Evaluation Guidelines, 75 FR
77450, 77463 (discussing third-party arrangements).
---------------------------------------------------------------------------
The Agencies requested comment on the proposed minimum requirements
for State registration and supervision of AMCs. (See Question 6 in the
proposal.) The Agencies also asked related questions concerning
appraisal review standards and potential challenges States may
encounter under the proposed minimum requirements for State
registration and supervision of AMCs. (See Questions 7 through 11 in
the proposal.) The following is a summary of these comments, followed
by the response from the Agencies.\78\
[[Page 32668]]
For the reasons explained below, the Agencies adopt proposed Sec.
34.213 on AMC registration without change in the final rule.
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\78\ The Agencies received many comments on Question 6
concerning the proposed minimum requirements for State registration
and supervision of AMCs. Commenters were generally supportive of the
proposed requirements. However, the commenters made several
observations and expressed concerns with the proposed requirements.
These comments overlap with comments made concerning other
questions in the proposal. As such, Question 6 is not addressed
separately.
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a. Appraisal Review
The Agencies requested comment on the proposal to defer
consideration of appraisal review standards to a separate rulemaking.
(See Question 7 in the proposal). Some commenters agreed with the
Agencies that appraisal review standards should be addressed in a
separate rulemaking. Other commenters suggested that there are many
pressing questions concerning appraisal review standards and that this
rulemaking should therefore incorporate such standards.
In drafting the minimum requirements for State registration and
supervision of AMCs, and the definition of appraisal management
services discussed previously, the Agencies considered whether to
require AMCs to follow minimum standards when performing appraisal
reviews. This question was presented by section 1121(11), which
includes appraisal review as one of the types of appraisal management
services performed by AMCs.\79\ In considering this question, the
Agencies noted that FIRREA section 1110 requires a separate rulemaking
regarding the requirement that, for Federally related transactions,
appraisals shall be subject to ``appropriate'' review for compliance
with USPAP.\80\ As stated in the proposal, the Agencies believe that a
rulemaking to implement section 1110 provides the appropriate
opportunity to address the requirement for appraisal reviews.\81\ For
this reason, the proposed minimum standards for AMCs did not include
appraisal review standards.
---------------------------------------------------------------------------
\79\ 12 U.S.C. 3350(11).
\80\ FIRREA section 1110(3), 12 U.S.C. 3339(3).
\81\ 12 U.S.C. 3339(3).
---------------------------------------------------------------------------
Commenters identified issues that may be appropriate for
consideration in a rulemaking pursuant to FIRREA section 1110(3), but
did not address why those standards are more appropriately addressed in
the context of this rulemaking rather than in a separate rulemaking to
implement section 1110(3).\82\ The Agencies continue to believe that
addressing appraisal review issues more comprehensively in a separate
rulemaking is appropriate, rather than doing so in a limited way as
part of the AMC rule. The appraisal review standard of section 1110(3)
applies to all regulated financial institutions subject to the
appraisal rules of the Federal financial institution regulatory
agencies, not just appraisals for which one of those firms uses an AMC
to engage an appraiser. In addition, most commenters supported a
separate rulemaking on appraisal review standards. For these reasons,
consistent with the proposal, the final rule does not contain appraisal
review standards.
---------------------------------------------------------------------------
\82\ 12 U.S.C. 3339(3).
---------------------------------------------------------------------------
b. Barriers to Implementation of AMC Minimum Requirements
The Agencies also asked about whether any barriers existed for
States in implementing the proposed AMC minimum requirements. (See
Question 8 in the proposal). In response, the Agencies received several
comments indicating concern that States might not have adequate funding
or resources to implement or enforce the proposed rule. Other
commenters expressed the view that the requirement to establish
authorities and mechanisms to examine the books and records of an AMC
could be subject to different interpretations by each State, and that
the Agencies' expectations should be clarified. A third set of
commenters indicated additional guidance is needed on the expectations
for States engaging in examinations of AMCs. One commenter believed
that States should be given the option to register AMCs for longer than
a period of one year. See proposed Sec. 34.212 (requiring an annual
count of appraisers on an entity's panel to determine whether the
entity is subject to State registration requirements pursuant to the
proposed rule). The commenter indicated that many States allow
appraiser registration for longer periods and that doing so for AMCs
might facilitate implementation of the rule by States.
The Agencies are aware of, and sensitive to, the adequacy of
participating States' resources to supervise AMCs in the manner
contemplated by FIRREA section 1124. It is the Agencies' understanding,
however, that many States that have already established AMC laws and
registration programs have collected fees from AMCs, in part to offset
the costs of the registration and supervision programs, using authority
under State law. Nothing in this rule would prevent these States, or
States that choose to become participating States, from continuing to
charge fees to AMCs in the future.\83\ The Agencies also note that the
registration and supervision of AMCs is voluntary, and that a State may
elect not to establish such a program for any reason, including if its
resources do not support such a program.
---------------------------------------------------------------------------
\83\ This approach is consistent with the States' approach to
registering appraisers. The Agencies understand that State appraiser
certifying and licensing agencies have collected fees from
appraisers for administering national appraiser registration for
many years.
---------------------------------------------------------------------------
With respect to the request that the Agencies set standards for
State supervision of AMCs, the Dodd-Frank Act section 1473 amended
FIRREA to confirm clearly the States' ability to exercise registration
and supervisory capacities over AMCs, which the State can exercise
using its own discretion, based on the individual State's enforcement
priorities.\84\ As such, the Agencies leave supervisory standards to
the discretion of the States and to the ASC, which is charged under
Title XI of FIRREA with evaluating the efficacy of State registration
and supervision of AMCs.
---------------------------------------------------------------------------
\84\ 12 U.S.C. 3346.
---------------------------------------------------------------------------
Regarding the request that States be able to register AMCs for
longer than a year, the Agencies defer to individual States, but note
that the requirement for an annual count of appraisers on an entity's
panel is statutory. Specifically, the definition of AMC in FIRREA
section 1121(11) bases whether an entity is an AMC on the number of
appraisers on an entity's panel ``within a given year.'' \85\ Regarding
whether a two-year AMC National Registry fee collection program is
permissible or feasible, the Agencies defer to the ASC, which
administers the relevant portion of FIRREA.\86\ Specifically, FIRREA
section 1109(a)(4) requires States to submit AMC fees for the AMC
National Registry to the ASC annually.\87\
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\85\ 12 U.S.C. 3350(11).
\86\ FIRREA section 1109(a)(4), 12 U.S.C. 3338(a)(4) (requiring
States to submit AMC fees for the National Registry to the ASC
annually).
\87\ 12 U.S.C. 3338(a)(4).
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While the registration fee cycle is dictated by section 1109(a)(4),
any additional licensing fees or any other associated fees charged by
the State can be charged based on the State's determination of an
appropriate cycle.\88\ The Agencies do not see a need to make any
changes from the proposed version of the rule to clarify the annual
registration cycle requirement in the final rule.
---------------------------------------------------------------------------
\88\ 12 U.S.C. 3338(a)(4).
---------------------------------------------------------------------------
c. Trainee Appraisers
The Agencies received one comment on the requirement that States
must verify that the appraisers on an AMC's panel hold valid States
licenses and certifications (see proposed Sec. 34.213(a)(4)). This
commenter expressed concern that the requirement
[[Page 32669]]
could be interpreted by some States to prohibit appraisers from using
trainees to assist with assignments.
The Agencies are adopting proposed Sec. 34.213(a)(4) with a minor
non-substantive change. New Sec. 34.213(a)(4) requires States to
verify that the appraisers on an AMC's appraiser panel--as defined in
Sec. 34.211(e)--hold valid State certifications or licenses, as
applicable. The Agencies are removing references to a ``list,''
``network,'' or ``roster'' because these terms are incorporated into
the definition of ``appraiser panel'' in Sec. 34.211(e). Regarding the
concerns about whether trainee appraisers may be used in light of this
requirement, Sec. 34.213(a)(4) is not intended to imply any changes in
the current requirements for their use. The requirement in Sec.
34.213(a)(4) complements the requirement in proposed Sec. 34.213(b)(2)
(adopted as final without change) that AMCs must use only State-
licensed or State-certified appraisers for Federally related
transactions. Both are intended to implement FIRREA section 1124(a)(2),
under which the Agencies must require States to require AMCs to use
only State-licensed or certified appraisers for Federally related
transactions.\89\
---------------------------------------------------------------------------
\89\ 12 U.S.C. 3353(a)(2).
---------------------------------------------------------------------------
The trainee appraiser designation established by the Appraiser
Qualifications Board (AQB) of the Appraisal Foundation requires
trainees to work under the supervision of a qualified supervisory
appraiser, as authorized by section 1122(e).\90\ The Agencies continue
to support the use of trainee appraisers as long as they work under the
supervision of a State-certified and or State-licensed appraiser and
have met the qualifications established by the appropriate State and
the AQB. As such, the requirement in section 1124(a)(2) and the
proposed and final rules should not be interpreted to bar trainee
appraisers from working with State-certified or State-licensed
appraisers who perform appraisals for AMCs, which is authorized by
section 1122(e).\91\ The final rule amends proposed Sec. 34.213(b)(2),
by substituting the term ``engage'' for the term ``use'' to clarify
that an appraiser may work with a trainee appraiser on an appraisal,
but only the appraiser may be ``engaged'' by the AMC to perform
appraisals. In a Federally related transaction, an AMC may engage only
a State-certified or State-licensed appraiser.
---------------------------------------------------------------------------
\90\ 12 U.S.C. 3351(e).
\91\ 12 U.S.C. 3351(e), 3353(a)(2).
---------------------------------------------------------------------------
d. Valuation Independence
The Agencies received comments on proposed Sec. 34.213(b)(5),
which requires participating States to require AMCs to establish and
comply with processes and controls reasonably designed to ensure that
the AMC conducts its appraisal management services in accordance with
the requirements of the valuation independence requirements of TILA
section 129E.\92\ These commenters requested that the final rule
clarify the extent to which States are expected to investigate and
enforce TILA section 129E and its implementing regulations, which
includes the requirements to pay appraisers customary and reasonable
fees. These commenters also expressed concern that States might
interpret these rules differently, potentially in ways that may
conflict with Federal interpretations.
---------------------------------------------------------------------------
\92\ 15 U.S.C. 1639e.
---------------------------------------------------------------------------
In response to the comments, the Agencies note that, pursuant to
section 1124(a)(4), States must require AMCs to require that appraisals
are conducted in accordance with the valuation independence
requirements of section 129E(a) through (i) of TILA.\93\ The Agencies
proposed to implement this requirement by mandating that participating
States require AMCs to:
---------------------------------------------------------------------------
\93\ 12 U.S.C. 3353(a)(4), 15 U.S.C. 1639e.
---------------------------------------------------------------------------
Establish and comply with processes and controls
reasonably designed to ensure that the AMC, in engaging an appraiser,
selects an appraiser who is independent of the transaction and who has
the requisite education, expertise, and experience necessary to
competently complete the appraisal assignment for the particular market
and property type; and
Establish and comply with processes and controls
reasonably designed to ensure that the AMC conducts its appraisal
management services in accordance with the requirements of section
129E(a)-(i) of the Truth in Lending Act, 15 U.S.C. 1639e(a)-(i), and
regulations thereunder.
See proposed Sec. 34.213(b)(3) and (4).
Questions about what mechanisms a State agency may use to assess a
party's compliance in connection with any authority the State has to
commence a civil action to enforce section 129E of TILA are outside the
scope of this rulemaking.\94\ This final rule sets minimum standards
for States to adopt in establishing a State program for registering and
supervising AMCs. Once adopted by a State, these minimum standards
become part of the State's legal framework for licensing and
registering AMCs. Questions concerning what authority a State may
confer on its own agency to supervise for and enforce compliance with
the State's licensing and registration program are also outside the
scope of this rulemaking.
---------------------------------------------------------------------------
\94\ 15 U.S.C. 1639e.
---------------------------------------------------------------------------
3. Other Issues
a. The 36-Month Implementation Period
The Agencies asked for comment on whether aspects of the proposed
rule would be challenging for States to implement within 36 months.
(See Question 9 in the proposal.) The Agencies also asked States to
identify alternative approaches that would make implementation easier.
Seven commenters stated that 36 months does not give States enough time
for implementation and that the 36-month implementation period should
begin after the ASC establishes the AMC National Registry and has
issued its clarifying regulations. One commenter asserted that States
would have difficulty beginning the implementation process until the
ASC issued its regulations. Other commenters expressed concerns that
the ASC would be unable to set up a functioning AMC National Registry
and issue its clarifying regulations within 36 months after this final
rule is issued.
The Agencies note that Congress specifically provided for a 36- to
48-month implementation period before restrictions are imposed on AMCs
in States that have not yet participated. This 36-month implementation
period is set pursuant to section 1124(f), which also provides for a
potential 12-month extension if the ASC finds that a State has made
substantial progress towards implementing an AMC registration and
supervision program.\95\ Thus, only the ASC, and not the Agencies, may
extend the implementation period beyond 36 months. The Agencies
anticipate that concerns about the 36-month period and the need for
registry regulations will be addressed by the ASC. In response to the
concern expressed by the commenters, however, the Agencies are adopting
changes to the proposed definitions that relied on cross-references to
Regulation Z, 12 CFR part 1026 rule, by substituting the text of these
definitions for the cross references. As noted in the section-by-
section analysis of Sec. 34.211, above, the Agencies believe that
these changes mitigate the potential obligations of States to update,
clarify, or amend State law or its interpretations as Regulation Z is
amended over time, or if the
[[Page 32670]]
numbering of definitions in Regulation Z changes.
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\95\ FIRREA sections 1124(f)(1) and (2), 12 U.S.C. 3353(f)(1)
and (2).
---------------------------------------------------------------------------
b. Potential Differences Between State Laws and the Proposed AMC Rule
The Agencies asked for comment on whether there are questions
raised by any differences between State laws and the proposed rule and
whether those differences should be addressed in the final rule. (See
Question 11 in the proposal.) As noted, one commenter suggested that,
to promote uniformity, all States should be required to use the
calendar year for determining whether an entity has the requisite
number of appraisers on its panel to qualify as an AMC. These comments
were addressed in the section-by-section analysis of Sec. 34.212(d),
above.
c. Voluntary Nature of State Adoption of AMC Registration and
Supervision Programs
As described earlier in this preamble, the Agencies have
interpreted section 1124 to mean that there is no requirement for
States to adopt programs for registration and supervision of AMCs.\96\
Rather, if a State chooses not to adopt such a program, AMCs located in
that State may not provide appraisal management services for Federally
related transactions, unless the AMCs are Federally regulated. To
qualify to provide appraisal management services for Federally related
transactions, a State program must include the minimum requirements for
registration and supervision of AMCs in section 1124 and in the final
rule.\97\
---------------------------------------------------------------------------
\96\ 12 U.S.C. 3353.
\97\ 12 U.S.C. 3353.
---------------------------------------------------------------------------
The Agencies received a number of comments concerning the Agencies'
interpretation of the statute and the conclusion that adoption by
States of AMC registration and supervision programs is voluntary and
optional. These commenters argued that, in non-participating States,
non-Federally regulated AMCs will be at a competitive disadvantage,
because these AMCs will be barred by statute from providing appraisal
management services for Federally related transactions. In addition,
the commenters argued that interpreting State adoption of the minimum
requirements to be voluntary would burden lenders. These commenters
asserted that, in non-participating States, lenders would have to set
up in-house appraisal management staff, which would raise the costs of
lending. In addition, the commenters argued that, in non-participating
States, consumers would be affected adversely by increased costs for
appraisals and delays arising from the absence of AMCs in the
marketplace. These commenters also suggested that either the Agencies
or the ASC should serve as a ``back-up'' regulator to register and
supervise AMCs in non-participating States. These commenters suggested
that this alternative would address the same policy concerns they
expressed in arguing for mandatory State participation.
In response to these comments, the Agencies note first that section
1124(a), by its plain terms, does not require any State to adopt an AMC
registration and supervision program.\98\ Nor is there a stated penalty
for a State that declines to do so. Rather, under section 1124(f), an
AMC (that is not Federally regulated) in a non-participating State is
barred from providing appraisal management services for Federally
related transactions.\99\ The Agencies note that 38 States have already
adopted AMC programs.\100\ The commenters also provided no
substantiating basis to support the commenters' warning that lending
will be inhibited or more costly in non-participating States. If after
the 36-month period following issuance of the final rule (or any
extended period permitted by the ASC), a State has not yet adopted an
AMC registration and supervision program, many options exist for
creditors to obtain appraisals for Federally related transactions.
Creditors that do not wish to hire in-house appraisers can engage
third-party appraisers directly.\101\ Smaller AMCs (those that have
fewer than 15 appraisers in the State on their panel or fewer than 25
appraisers in two or more States) as well as Federally regulated AMCs
can still perform services in Federally related transactions. AMCs that
exceed the statutory size threshold may also continue to service
transactions that are not Federally related and, if the State does
later participate, can also then provide services in Federally related
transactions.
---------------------------------------------------------------------------
\98\ 12 U.S.C. 3353(a).
\99\ 12 U.S.C. 3353(f).
\100\ One commenter, an AMC, highlighted a report by a Hawaii
State auditor regarding a proposed bill in the Hawaii legislature
that concerns the registration of AMCs. The commenter argued that
this report provided evidence that Hawaii would not adopt an AMC
law. The auditor's report, however, does not indicate that it would
be inappropriate for a State to participate in the AMC regulatory
system established under section 1124. Rather, the report opined
that the particular proposed bill would not be the appropriate
method of participation for various reasons, including that the
regulation of AMCs should not be managed by the State real estate
commission. See Auditor of the State of Hawaii Report 10-07 (Sept.
2010) at 4, Sunrise Analysis: Real Estate Appraisal Management
Companies, (Sept. 2010) at 4, available at http://files.hawaii.gov/auditor/Reports/2010/10-07.pdf.
\101\ The valuation independence provisions of TILA section 129E
and its implementing regulations do not require use of AMCs. 15
U.S.C. 1639e, implemented at 12 CFR 226.42 (Board) and 12 CFR
1026.42 (Bureau).
---------------------------------------------------------------------------
Some commenters suggested that the Agencies or the ASC step in to
register and supervise AMCs in non-participating States. Neither
section 1124 nor FIRREA authorizes either the Agencies or the ASC to
serve as a ``back up'' regulator for registration and supervision of
AMCs.\102\ The Agencies are only permitted to directly supervise
Federally regulated AMCs, as discussed in the section-by-section
analysis of Sec. 34.215, below.
---------------------------------------------------------------------------
\102\ 12 U.S.C. 3353.
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D. Section 34.214: Registration Limitations
Section 34.214 finalizes proposed Sec. 34.215, which placed
certain limitations on whether an AMC (whether or not Federally
regulated) may be registered in a State or included in the AMC National
Registry. Proposed Sec. 34.215 was based on section 1124(d), which
provides that an AMC shall not be registered by a State or included on
the AMC National Registry if the company, in whole or in part, directly
or indirectly, is owned by any person who has had an appraiser license
or certificate refused, denied, cancelled, surrendered in lieu of
revocation, or revoked in any State.\103\ Section 1124(d) provides
further that each person who owns more than 10 percent of an AMC must
be of good moral character, as determined by the State appraiser
certifying and licensing agency, and must submit to a background
investigation carried out by the State appraiser certifying and
licensing agency.\104\
---------------------------------------------------------------------------
\103\ 12 U.S.C. 3353(d).
\104\ 12 U.S.C. 3353(d).
---------------------------------------------------------------------------
To implement this provision, proposed Sec. 34.215(a)--finalized in
substantially similar form at Sec. 34.214(a)--provided that an AMC may
not be registered by a State or included on the AMC National Registry
if such company, in whole or in part, directly or indirectly, is owned
by any person who has had an appraiser license or certificate refused,
denied, cancelled, surrendered in lieu of revocation, or revoked in any
State. As the Agencies noted in the proposal, section 1124(d) states
clearly that the limitations regarding appraiser licensure and
certification determine both whether an AMC may be ``registered by a
State'' and
[[Page 32671]]
whether an AMC may be ``included on the national registry'' of
AMCs.\105\
---------------------------------------------------------------------------
\105\ 12 U.S.C. 3353(d).
---------------------------------------------------------------------------
In addition, proposed Sec. 34.215(b)--finalized at Sec.
34.214(b)--provided that, for AMCs seeking to be registered in a State,
each person who owns more than 10 percent of an AMC must be of good
moral character, as determined by the State appraiser certifying and
licensing agency, and must submit to a background investigation carried
out by the State appraiser certifying and licensing agency. Under the
proposal, this limitation would apply to Federally regulated AMCs only
if they seek to register voluntarily with a State. Under the proposal,
these threshold requirements concerning licensure would be ongoing
obligations for State appraiser certifying and licensing agencies. As
such, a State would be expected to review whether an AMC meets the
proposed ownership limitations, as described in the statute and in
proposed Sec. 34.215 (finalized at Sec. 34.214), at the time of
registration of an AMC, and at the time of renewal of the AMC license
each year, or more frequently as determined necessary by that State.
1. Section 34.214 (a): Technical Versus Substantive Licensing
Violations
Some commenters suggested that the Agencies consider circumstances
in which an appraiser's license lapsed or was revoked for technical
reasons unrelated to the quality of appraisals performed by the
appraiser. They asserted that being barred from owning an AMC eligible
for registration in a State or included in the AMC National Registry in
these cases is potentially unfair. One example of this is when an
appraiser neglects to renew his or her appraiser's license on time.
Depending on the State law, an appraiser would typically be able to be
reinstated, pending payment of certain penalties. In this situation,
the lapse in the appraiser's license is unrelated to fraud or a failure
to perform an appraisal in compliance with USPAP.
The Agencies agree that non-substantive grounds for the revocation
of an appraiser's license should not be construed to be within the
scope of the registration limitations in section 1124(d).\106\ In
connection with this, the Agencies agree that an appraiser who is
subsequently reinstated by the State appraiser certifying and licensing
agency should not be within the scope of the registration limitations.
For example, if an appraiser's license lapses for non-payment of fees,
and the appraiser is later reinstated by the State appraiser certifying
and licensing agency after meeting his or her obligation, the appraiser
should not be barred from owning an AMC. If, however, an appraiser's
license or certificate is revoked, for example, for violations of the
TILA independence standards or for failure to comply with USPAP, an AMC
owned wholly or in part by that appraiser should not be eligible to
register in a State or appear on the AMC National Registry. For these
reasons, the final rule clarifies that an appraiser is subject to the
ownership ban if the revocation of the appraiser's license or
certification was for a substantive cause, as determined by the State
certifying and licensing agency.
---------------------------------------------------------------------------
\106\ 12 U.S.C. 3353(d).
---------------------------------------------------------------------------
2. Other Issues
Some commenters expressed concern that States may not be able to
obtain the information to determine whether an appraiser license has
been revoked in another State. One commenter requested guidance on how
to approach the moral character registration requirement within a
corporate structure. Specifically, the commenter inquired about whether
a State must review issues related to moral character to owners beyond
the AMC, for example to a holding company. Another commenter suggested
that the Agencies define ``good moral character'' rather than leaving
it to participating States to adopt their own definition.
With respect to the commenters' questions concerning the details
and logistics of a State's investigation of an applicant for presence
of the registration limitation factors, the Agencies believe that it is
desirable to afford flexibility to the States, many of which currently
perform background investigations in connection with various licensing
regimes, to establish appropriate procedures and the scope of the
background investigations to be performed by that particular State. The
statute establishes the ASC as the agency that oversees the adequacy of
State AMC registration and investigation procedures. Similarly, with
respect to the comment suggesting the final rule define ``good moral
character'' in a manner that all participating States would be required
to adopt, the Agencies note that section 1124 provides for the good
moral character limitation to be applied ``as determined by the
State.'' Thus, consistent with the statute, the final rule defers to
the participating States to make determinations as to the scope of the
good moral character requirement.\107\ In overseeing implementation by
participating States, the ASC potentially could provide input as well.
---------------------------------------------------------------------------
\107\ State appraiser boards also have experience applying the
``good moral character'' standard, which is a common element of
appraiser licensure standards already. See, e.g., Virginia 18 VAC
130-20-30(1); Pennsylvania Code Ch. 36.12(a); Michigan Code Ch.
339.2610; Missouri Code Ch. 339.511(2); N.J. S.A. Title 45 Ch. 14F-
10(b).
---------------------------------------------------------------------------
Finally, the Agencies are also clarifying in Sec. 34.214(a) that
the section regarding registration limitations applies to AMCs required
to register with a State, not to Federally regulated AMCs (unless they
voluntarily wish to register with a State). Accordingly, the title of
this section has been revised from ``Registration limitations'' to
``Ownership limitations for AMCs registering in a State.'' As discussed
in the section-by-section analysis of new Sec. 34.215(b), below, for
clarity the Agencies added a separate provision regarding limitations
on Federally regulated AMCs being included on the AMC National
Registry, also pursuant to section 1124(d).\108\
---------------------------------------------------------------------------
\108\ 12 U.S.C. 3353(d).
---------------------------------------------------------------------------
E. Section 34.215: Requirements for Federally Regulated AMCs
Section 1124(c) provides that AMCs that are owned and controlled
subsidiaries of an insured depository institution or an insured credit
union and regulated by a Federal financial institutions regulatory
agency, are not required to register with a State.\109\ These Federally
regulated AMCs are, however, subject to the same minimum requirements
as AMCs that are not regulated by a Federal financial institutions
regulatory agency.
---------------------------------------------------------------------------
\109\ 12 U.S.C. 3353(c). However, nothing in the proposed rule
would prohibit a Federally regulated AMC from registering with a
State if the State permitted it to do so.
---------------------------------------------------------------------------
1. Section 34.215(a): Requirements in Providing Services
Section 34.215(a) finalizes without change the proposed Sec.
34.214(a) concerning requirements for Federally regulated AMCs.
Pursuant to proposed Sec. 34.214(a), Federally regulated AMCs were
subject to the same substantive standards that were proposed for non-
Federally regulated AMCs. Specifically, pursuant to Sec. 34.214(a),
Federally regulated AMCs were required to have systems in place to
ensure that only State-certified or State-licensed appraisers perform
appraisals for Federally related transactions; that appraisers with the
requisite education, expertise, and experience necessary for the
assignment are used; that appraisals comply with USPAP; and that the
[[Page 32672]]
valuation independence requirements of TILA section 129E are met.\110\
---------------------------------------------------------------------------
\110\ See section 129E of TILA, 15 U.S.C. 1639e (implemented at
12 CFR 1026.42).
---------------------------------------------------------------------------
2. Section 34.215(b): Ownership Limitations for Federally Regulated
AMCs
Section 34.215(b) reflects a non-substantive revision to the
proposal. This provision implements limitations on inclusion in the AMC
National Registry for Federally regulated AMCs pursuant to section
1124(d) and reorganizes them into a separate section for Federally
regulated AMCs.\111\ The proposed rule folded the limitations on
Federally regulated AMCs into proposed Sec. 34.215 (Registration
limitations), which also addressed limitations on AMCs that are
required to register with a State.
---------------------------------------------------------------------------
\111\ 12 U.S.C. 3353(d).
---------------------------------------------------------------------------
For clarity, the final rule separates the ownership limitations on
AMCs required to register with States (proposed Sec. 32.215; finalized
in Sec. 34.214) from the ownership limitations on Federally regulated
AMCs that can be included on the AMC National Registry (Sec.
34.215(b)). Specifically, Sec. 34.215(b) states that a Federally
regulated AMC shall not be included on the AMC National Registry if
such AMC, in whole or in part, directly or indirectly, is owned by any
person who has had an appraiser license or certificate refused, denied,
cancelled, surrendered in lieu of revocation, or revoked in any State
for a substantive cause, as determined by the State. Section 34.215(b)
also provides that an AMC is not barred by Sec. 34.215(b) from being
included on the AMC National Registry if the license or certificate of
the appraiser with an ownership interest in the AMC has been reinstated
by the State or States in which the appraiser was licensed or
certified.
3. Section 34.215(c): Reporting Information for the AMC National
Registry
As part of being included on the AMC National Registry, the
proposed rule required Federally regulated AMCs to provide to each
participating State in which the AMC operates the information required
by the ASC for administration of the AMC National Registry.
Specifically, under proposed Sec. 34.214(b), Federally regulated AMCs
would have been required to provide information relating to the
determination of the AMC National Registry fee and the information
needed to determine whether the ownership limitations under proposed
Sec. 34.215 (finalized as Sec. 34.215(b), discussed above) apply.
Finally, the proposed rule directed Federally regulated AMCs to contact
the ASC concerning alternative means for submitting the information
outlined in Sec. 34.214(b), in the event a State did not convey the
information.
The Agencies received comments concerning the requirement that
States convey information on Federally regulated AMCs to the ASC, which
many commenters addressed when responding to a specific question in the
proposal concerning potential barriers to a State providing the
necessary information to the ASC, as discussed below.
The Agencies asked for comment on whether there may be barriers to
collecting information on Federally regulated AMCs for the ASC. (See
Question 10 in the proposal.) A number of commenters expressed the view
that the supervision and handling of Federally regulated AMCs should be
done by the ASC, not by the States. Other commenters expressed concern
that States do not have a way to identify a Federally regulated AMC.
Another set of commenters suggested that States would have difficulty
with collecting information concerning Federally regulated AMCs because
they do not have a process for the collection of such information. A
few other commenters argued that States do not have authority over
Federally regulated AMCs, which would make it impossible to police the
collection requirement. Some commenters suggested that requiring States
to collect information on Federally regulated AMCs amounted to an
unfunded mandate, particularly if State law prohibited an agency from
collecting a fee from an entity it does not license or regulate. These
commenters argued that States should be compensated for collecting
information from Federally regulated AMCs.
The Agencies note that the proposed and final rules do not
implement the statutory requirement for States to collect the AMC
National Registry fee, nor do they determine the process for
collection. The collection of the fee is provided for pursuant to
FIRREA section 1109 and will be implemented by the ASC, not the
Agencies as part of this joint rulemaking.\112\ In addition, the
Agencies note that the requirement for States to collect fees from
Federally regulated AMCs is statutory.\113\ Under FIRREA section
1109(a)(4)(B), participating States are required to collect an annual
ASC fee from each AMC that is registered with the States or operated as
a subsidiary of a Federally regulated financial institution.\114\
---------------------------------------------------------------------------
\112\ 12 U.S.C. 3338.
\113\ See section 1109(a)(4)(B), 12 U.S.C. 3338(a)(4)(B).
\114\ 12 U.S.C. 3338(a)(4)(B).
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In FIRREA section 1124(e), the Agencies are charged with jointly
promulgating regulations for the reporting of the activities of AMCs to
the ASC in determining the payment of the AMC National Registry
fee.\115\ The Agencies interpret FIRREA sections 1109(a)(4)(B) and
1124(e) together to require States to collect information related to
the determination of the fee for Federally regulated AMCs operating in
their States.\116\ Therefore, in Sec. 34.215(c), the Agencies are
adopting the proposal to require Federally regulated AMCs to submit
information required for the AMC National Registry to the States in
which they operate without substantive change.
---------------------------------------------------------------------------
\115\ See FIRREA section 1124(e), 12 U.S.C. 3353(e).
\116\ See 12 U.S.C. 3338(a)(4)(B), 3353(e).
---------------------------------------------------------------------------
Specifically, new Sec. 34.215(c) requires Federally regulated AMCs
to report to the State or States in which they operate the information
required to be submitted by the State to the ASC, pursuant to policies
that will be developed and issued by the ASC regarding the
determination of the AMC National Registry fee, including but not
necessarily limited to information related to the ownership limitations
in Sec. 34.215(b). These ownership limitations relate to determining
the AMC National Registry fee because the limitations determine whether
an AMC is eligible to be included in the Registry in the first
instance.
The Agencies understand commenters' concerns about States
collecting information from Federally regulated AMCs and submitting it
to the ASC. As discussed, the Agencies interpret the statute to require
that participating States have a mechanism for collecting information
from identified Federally regulated AMCs operating in their States and
submitting it to the ASC. However, the Agencies emphasize that this
final rule does not require States to identify Federally regulated AMCs
operating in their States, nor are they responsible for supervising or
enforcing a Federally regulated AMC's compliance with information
submission requirements related to the AMC National Registry. Rather,
the Federal agencies overseeing Federally regulated AMCs are
responsible for supervising and enforcing the compliance of Federally
regulated AMCs with these requirements, including whether the
[[Page 32673]]
AMC identifies itself to the State and submits required information.
States are also not required to assess whether any licensing issues in
that State of owners of a Federally regulated AMC disqualify the AMC
from being on the AMC National Registry, pursuant to the ownership
limitations in Sec. 34.215(b). The final rule defers to the ASC to
determine whether the cause of an appraiser license issue arose was
``substantive.'' The Agencies are sensitive to concerns raised about
the cost to States of collecting and remitting information regarding
Federally regulated AMCs. The final rule does not bar a State from
collecting a fee from Federally regulated AMCs to offset the cost of
collecting the AMC National Registry fee and the information related to
the fee. In addition, pursuant to section 1109(b)(5), the ASC has the
authority to provide grants to State appraiser certifying and licensing
agencies to support the efforts of such agencies to comply with Title
XI of FIRREA, including in connection with implementation of the AMC
National Registry.\117\ Finally, the Agencies consulted further with
the ASC regarding the proposal to give Federally regulated AMCs the
alternative to report information directly to the ASC, for example,
when operating in a non-participating State that is not collecting
information. Due to operational challenges raised by the ASC, the
Agencies are removing this alternative from the final rule. However,
the Agencies recognize that practical challenges may arise as the
minimum requirements are adopted in States and reporting requirements
take effect and will be monitoring these issues.
---------------------------------------------------------------------------
\117\ 12 U.S.C. 3338(b)(5).
---------------------------------------------------------------------------
F. Section 34.216: Information To Be Presented to the ASC by
Participating States
Section Sec. 34.216 is adopted without change from proposed rule.
Pursuant to Sec. 34.216, States that establish AMC registration and
supervision programs are required to submit to the ASC the information
regarding AMCs required by ASC regulations and guidance. This provision
implements the requirement in section 1124(e) for the Agencies to
establish these reporting requirements.
The Agencies did not receive comments specifically relating to
Sec. 34.216; however, as discussed above in response to questions
concerning potential barriers to State registration and supervision of
AMCs, some commenters expressed concern regarding the costs of
collecting information related to fees and the registration
limitations, as well as the logistics of doing so with respect to
Federally regulated AMCs.\118\ As discussed above in the section-by-
section analysis of Sec. 34.213, the Agencies are aware that there are
States that currently charge AMCs a fee to offset administrative costs
and could continue to do so. The Agencies also believe that cost
concerns may be addressed by the ASC, through its authority to provide
grants to States to assist States in complying with Title XI of FIRREA.
The Agencies expect that the ASC will work with both the States and the
Agencies to address logistical issues as the final rule is implemented.
---------------------------------------------------------------------------
\118\ The commenters, however, did not offer data on what volume
or burden the collection of information and transmission process
would be expected to pose.
---------------------------------------------------------------------------
G. Integration of FDIC and OTS Rules on Appraisals
The FDIC proposed to integrate its appraisal regulations for both
nonmember banks and State savings associations. Specifically, the FDIC
proposed to rescind 12 CFR part 390, subpart X (part 390, subpart X),
of the former OTS regulation entitled ``Appraisals.'' The FDIC did not
receive any comments specifically relating to the integration of the
former OTS rules on appraisals. The final rule implements this
authority by rescinding the former OTS regulatory provisions on
appraisals pertaining to State savings associations, as these entities
are now covered by the FDIC's appraisal rules.
IV. Statutory Implementation Period
Pursuant to section 1124(f)(1), the limitation that applies to AMCs
operating without registering with a participating State will apply as
of 36 months from the effective date of this final rule.\119\ As a
result, States electing to participate have 36 months from August 10,
2015 to establish an AMC registration and supervision program that
meets the minimum requirements in this final rule and register AMCs
seeking to provide appraisal management services related to Federally
related transactions in the State before this limitation begins to
apply. Subject to the approval of the FFIEC, the ASC may extend this
period by an additional 12 months if it makes a written finding that a
State has made substantial progress towards implementing a registration
and supervision program for AMCs that meets the standards in Title XI
of FIRREA. The compliance date for the final rule for Federally
regulated AMCs is 12 months after the effective date of this final rule
with respect to practice requirements in Sec. 34.215(a). This 12-month
compliance date will allow Federally regulated AMCs time to develop the
processes and controls required by this final rule. The compliance date
for AMCs that are regulated by States will be determined by each State.
---------------------------------------------------------------------------
\119\ 12 U.S.C. 3353(f).
---------------------------------------------------------------------------
V. Regulatory Analysis
Paperwork Reduction Act
Certain provisions of the final rule contain ``information
collection'' requirements within the meaning of the Paperwork Reduction
Act (PRA) of 1995 (44 U.S.C. 3501 et seq.). Under the PRA, the Agencies
may not conduct or sponsor, and, notwithstanding any other provision of
law, a person is not required to respond to, an information collection
unless the information collection displays a valid Office of Management
and Budget (OMB) control number. The information collection
requirements contained in this final rule were submitted to OMB for
review and approval at the proposed rule stage by the FDIC, FHFA, and
OCC pursuant to section 3506 of the PRA and section 1320.11 of the
OMB's implementing regulations (5 CFR part 1320). OMB instructed the
agencies to examine public comment in response to the proposed rule and
describe in the supporting statement of their next collections any
public comments received regarding the collection as well as why (or
why it did not) incorporate the commenter's recommendation. The
Agencies received no public comments regarding the collection. The
Board reviewed the proposed rule under the authority delegated to the
Board by OMB.
The collection of information requirements in the final rule are
found in Sec. Sec. 34.212-34.216. This information is required to
implement section 1473 of the Dodd-Frank Act.
Title of Information Collection: Minimum Requirements for Appraisal
Management Companies.
OMB Control Nos.: The Agencies will be seeking new control numbers
for these collections.
Frequency of Response: Event generated.
Affected Public: States; businesses or other for-profit and not-
for-profit organizations.
Abstract:
State Recordkeeping Requirements
States seeking to register AMCs must have an AMC registration and
supervision program. Section 34.213(a) requires each participating
State to establish and maintain within its
[[Page 32674]]
appraiser certifying and licensing agency a registration and
supervision program with the legal authority and mechanisms to: (i)
Review and approve or deny an application for initial registration;
(ii) periodically review and renew, or deny renewal of, an AMC's
registration; (iii) examine an AMC's books and records and require the
submission of reports, information, and documents; (iv) verify an AMC's
panel members' certifications or licenses; (v) investigate and assess
potential law, regulation, or order violations; (vi) discipline,
suspend, terminate, or deny registration renewals of, AMCs that violate
laws, regulations, or orders; and (vii) report violations of appraisal-
related laws, regulations, or orders, and disciplinary and enforcement
actions to the ASC.
Section 34.213(b) requires each participating State to impose
requirements on AMCs not owned and controlled by an insured depository
institution and regulated by a Federal financial institutions
regulatory agency to: (i) Register with and be subject to supervision
by a State appraiser certifying and licensing agency in each State in
which the AMC operates; (ii) engage only State-certified or State-
licensed appraisers for Federally regulated transactions in conformity
with any Federally regulated transaction regulations; (iii) establish
and comply with processes and controls reasonably designed to ensure
that the AMC, in engaging an appraiser, selects an appraiser who is
independent of the transaction and who has the requisite education,
expertise, and experience necessary to competently complete the
appraisal assignment for the particular market and property type; (iv)
direct the appraiser to perform the assignment in accordance with
USPAP; and (v) establish and comply with processes and controls
reasonably designed to ensure that the AMC conducts its appraisal
management services in accordance with section 129E(a)-(i) of TILA.
State Reporting Burden
Section 34.216 requires that each State electing to register AMCs
for purposes of permitting AMCs to provide appraisal management
services relating to covered transactions in the State must submit to
the ASC the information required to be submitted under this Subpart and
any additional information required by the ASC concerning AMCs.
AMC Reporting Requirements
Section 34.215(c) requires that a Federally regulated AMC must
report to the State or States in which it operates the information
required to be submitted by the State pursuant to the ASC's policies,
including: (i) Information regarding the determination of the AMC
National Registry fee; and (ii) the information listed in Sec. 34.214.
Section 34.214 provides that an AMC may not be registered by a
State or included on the AMC National Registry if such company is
owned, directly or indirectly, by any person who has had an appraiser
license or certificate refused, denied, cancelled, surrendered in lieu
of revocation, or revoked in any State. Each person that owns more than
10 percent of an AMC shall submit to a background investigation carried
out by the State appraiser certifying and licensing agency. While Sec.
34.214 does not authorize States to conduct background investigations
of Federally regulated AMCs, it would allow a State to do so if the
Federally regulated AMC chooses to register voluntarily with the State.
AMC Recordkeeping Requirements
Section 34.212(b) provides that an appraiser in an AMC's network or
panel is deemed to remain on the network or panel until: (i) the AMC
sends a written notice to the appraiser removing the appraiser with an
explanation; or (ii) receives a written notice from the appraiser
asking to be removed or a notice of the death or incapacity of the
appraiser. The AMC would retain these notices in its files.
Burden Estimates:
Total Number of Respondents: 500 AMCs, 55 States.
Bureau: Since the Bureau is merely adopting a cross-reference in
Regulation Z to the OCC regulatory text, the Bureau is not imposing any
new or additional information collection requirements on regulated
entities. Therefore, the Bureau is not seeking OMB approval for the
information collection requirements already accounted for by the other
agencies' information collection requests submitted to OMB in
association with this rule.
FDIC Burden Total: 1,545 hours.
FHFA Burden Total: 617 hours.
OCC Burden Total: 1,545 hours.
Board Burden Total: 1,545 hours.
Total Burden: 5,252 hours.
Regulatory Flexibility Act
OCC: The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,
generally requires that, in connection with a rulemaking, an agency
prepare and make available for public comment a regulatory flexibility
analysis that describes the impact of the rule on small entities.
However, the regulatory flexibility analysis otherwise required under
the RFA is not required if an agency certifies that the rule will not
have a significant economic impact on a substantial number of small
entities (defined in regulations promulgated by the Small Business
Administration (SBA) to include commercial banks and savings
institutions, and trust companies, with assets of $550 million or less
and $38.5 million or less, respectively) and publishes its
certification and a brief explanatory statement in the Federal Register
together with the rule.
The OCC currently supervises 1,492 insured depository institutions
(1,051 commercial banks and 441 Federal savings associations) of which
approximately 1,090 are small entities based on the SBA's definition of
small entities for RFA purposes. The OCC classifies the economic impact
of total costs on a small entity as significant if the total costs in a
single year are greater than 5 percent of total salaries and benefits,
or greater than 2.5 percent of total non-interest expense.
As discussed in the SUPPLEMENTARY INFORMATION above, section 1473
of the Dodd-Frank Act requires the Agencies to jointly prescribe
regulations to implement the minimum requirements for State
registration and supervision of AMCs. The final rule meets this
obligation by requiring States that elect to register and supervise
AMCs to impose certain requirements on AMCs. The final rule also
requires participating States to have certain basic supervisory
authorities, such as the ability to investigate complaints against
AMCs, and take disciplinary action with respect to AMCs that violate
applicable laws.
The OCC believes the final rule will not have a significant
economic impact on a substantial number of small entities for several
reasons. First, the final rule imposes requirements primarily on
States, not on national banks or Federal savings associations. Second,
to the extent that the final rule imposes burden on national banks or
Federal savings associations that own and control an AMC, there are
only two such AMCs, and these are owned by large national banks. For
these reasons, the OCC believes that the final rule will not have an
impact on a substantial number of OCC-supervised small entities.
Therefore, the OCC certifies that the final rule would not have a
significant economic impact on a substantial number of small entities.
Board: The RFA, 5 U.S.C. 601 et seq., requires an agency to provide
and make available for public comment a regulatory flexibility analysis
that describes the impact of a proposed rule
[[Page 32675]]
on small entities. However, a regulatory flexibility analysis is not
required, if the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities
(defined in regulations of the SBA to include banking organizations
(commercial banks, savings institutions, and trust companies)) with
total assets of less than or equal to $550 million and publishes its
certification and a short explanatory statement in the Federal Register
together with the rule.\120\ Based on its analysis, and for the reasons
stated below, the Board believes that the final rule will not have a
significant economic impact on a substantial number of small entities.
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\120\ U.S. Small Business Administration, Table of Small
Business Size Standards Matched to North American Industry
Classification System Codes, available at https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
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The AMC Rule applies to States that elect to establish licensing
and certifying authorities to regulate AMCs. In the Board's regulatory
flexibility analysis for this Rule, the Board determined that
approximately 32 entities would be subject to direct regulation and
supervision by Federal financial institutions regulatory agencies.
These entities would be subject to direct regulation and supervision
under the Rule because the entities are Federally regulated AMCs. The
number of these 32 entities that actually would be subject to
regulation under the AMC Rule is currently unknown because some of the
entities may have a network or panel of contract appraisers that is too
small to satisfy a threshold requirement of the AMC Rule and therefore
would be exempt from regulation and supervision under the AMC Rule.
Data currently available to the Board indicate that approximately
five State member banks operate a Federally regulated AMC. Data
available to the Board are not sufficient to estimate how many of the
approximately five entities subject to Board regulation and supervision
would be classified as ``small entities.''
Generally, the RFA requires an agency to perform a regulatory
flexibility analysis of small entity impacts only when the agency's
rule directly regulates the small entities. The impact of this final
rule on small entities is indirect. This final rule does not impose
directly any significant new recordkeeping, reporting, or compliance
requirements on small entities, but instead requires participating
States to impose certain requirements on AMCs. The final rule also
requires participating States to have certain basic supervisory
capabilities, such as the ability to investigate complaints against
AMCs, and take disciplinary action with respect to AMCs that violate
applicable laws and regulations.
Moreover, while certain minimum requirements are imposed on
participating States by the language of section 1473 of the Dodd-Frank
Act, each State may establish requirements in addition to those
required by section 1473. Furthermore, an entity with a network or
panel of appraisers that does not meet the numerical test specified in
section 1473 may voluntarily register with a participating state and
the ASC, thus incurring some nominal expenses in establishing and
maintaining the required registration information and meeting the
minimum operational requirements. Because of these uncertainties,
calculation of the impact of the final rule on the average Board-
supervised institution or entity is uncertain, although the number of
Board-supervised entities directly subject to supervision under the
Rule is expected to be less than five.
Based on its analysis, and for the reasons stated above, the Board
certifies that the final rule will not have a significant economic
impact on a substantial number of small entities.
FDIC: The RFA generally requires that, in connection with a
rulemaking, an agency prepare and make available for public comment an
initial regulatory flexibility analysis (IRFA) that describes the
impact of the final rule on small entities.\121\ A regulatory
flexibility analysis is not required, however, if the agency certifies
that the final rule will not have a significant economic impact on a
substantial number of small entities (defined in regulations
promulgated by the SBA to include banking organizations with total
assets of less than or equal to $550 million) and publishes its
certification and a short, explanatory statement in the Federal
Register together with the final rule.
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\121\ See 5 U.S.C. 601 et seq.
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As of September 30, 2014, there were approximately 3,451 small
FDIC-supervised institutions, which include 3,167 State nonmember banks
and 284 State-chartered savings institutions. The FDIC analyzed the
organizational structure information in the Board of Governors of the
Federal Reserve System's National Information Center database. This
analysis found that few FDIC-supervised institutions owned or
controlled an entity that provides the types of appraisal management
services specified in section 1473. Of these institutions, none
oversees a network or panel of appraisers that meets the statutory
panel size threshold specified in section 1473 for an entity to be an
AMC. Therefore, the final rule would not have any impact on any FDIC-
supervised institutions. If any FDIC-supervised institution that owns
or controls an entity with a network or panel of appraisers that does
not meet the statutory panel size threshold specified in section 1473
voluntarily decides to register that entity with the States, then the
institution may incur some nominal expenses in establishing and
maintaining a process for providing the required registration
information and meeting the minimum operational requirements.
In addition, the final rule implements the minimum requirements for
States to register and supervise AMCs as required by section 1473 of
the Dodd-Frank Act. The final rule meets this obligation by requiring
States that elect to register and supervise AMCs to impose certain
requirements on AMCs. The final rule also requires participating States
to have certain basic supervisory authorities, such as the ability to
investigate complaints against AMCs and take disciplinary action with
respect to AMCs that violate applicable laws.
It is the opinion of the FDIC that the final rule will not have a
significant economic impact on a substantial number of small entities
that it regulates in light of the fact that no FDIC-supervised
institutions own or control an entity with a network or panel of
appraisers that meets the statutory panel size threshold specified in
section 1473 for an entity to be an AMC. In addition, the final rule
imposes requirements primarily on States and not on FDIC-supervised
institutions. Accordingly, the FDIC certifies that the final rule would
not have a significant economic impact on a substantial number of small
entities. Thus, a regulatory flexibility analysis is not required.
Bureau: The RFA generally requires an agency to conduct an IRFA and
a final regulatory flexibility analysis (FRFA) of any rule subject to
notice-and-comment rulemaking requirements, unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities.\122\
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\122\ For purposes of assessing the impacts of the proposed rule
on small entities, ``small entities'' is defined in the RFA to
include small businesses, small not-for-profit organizations, and
small government jurisdictions. 5 U.S.C. 601(6). A ``small
business'' is determined by application of SBA regulations and
reference to the North American Industry Classification System
(NAICS) classifications and size standards. 5 U.S.C. 601(3). A
``small organization'' is any ``not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
5 U.S.C. 601(4). A ``small governmental jurisdiction'' is the
government of a city, county, town, township, village, school
district, or special district with a population of less than 50,000.
5 U.S.C. 601(5). Given this definition, participating States are not
small governmental jurisdictions and the burden on them is not
relevant to this analysis.
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[[Page 32676]]
An FRFA is not required because this rule will not have a
significant economic impact on a substantial number of small entities.
This final rule implements the minimum requirements to be applied
by participating States in the registration and supervision of AMCs, as
well as requirements directly applicable to Federally regulated AMCs.
The Bureau notes that the final rule does not impose requirements on
AMCs (other than Federally regulated AMCs), but instead seeks to
encourage States to adopt minimum requirements in their regulation of
AMCs. Burden may be generated from the States' exercise of discretion
to implement the final rule, based on the States having the option to
decline to participate. The Bureau does not view this as burden
resulting from the rule itself, however. Nonetheless, to inform the
rulemaking and to inform the public, the Bureau exercised its
discretion to analyze economic impacts that will be imposed on AMCs by
States that implement final rule.\123\ For this purpose, the Bureau
assumed States that have not yet passed an AMC licensing and
registration law (17 States, as of November 2014) would all elect to
pass such a law and establish an AMC licensing and supervision program
that satisfies the standards of the final rule. This assumption is
taken to establish an outer bound. Because the final rule does not
require States to adopt the minimum requirements in the final rule,
however, it is possible that not all 17 States (as defined in the final
rule) would do so.\124\
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\123\ The Bureau does not assume costs associated with the final
rule's requirements to ensure compliance with USPAP and other
regulations, because AMCs would be subject to these standards even
without their being referenced in the final rule.
\124\ A State could accept the consequences on AMCs' business in
the State from not implementing the final rule. FIRREA section
1124(f) provides that three years after the final rule takes effect,
AMCs cannot provide services in Federally related transactions
unless and until a State has implemented the final rule. However,
the Bureau understands that only a minority of mortgage transactions
are ``Federally related transactions'' within the meaning of FIRREA.
See, e.g., 12 CFR 225.62(f) (transaction must ``[r]equire the
services of an appraiser'' to be federally related). But see id. at
Sec. 225.63(a)(1),(9),(10) (exemptions from FIRREA appraisal
requirements for transactions of $250,000 or less, transactions
insured by or sold to a U.S. government agency, and transactions
that conform to GSE appraisal standards). However, the Bureau
believes all States will choose to participate. Several industry
comments expressed concerns with the possible consequences if States
did not participate. These comments did not establish that it was
likely that States would not do so, however. Thus, the Bureau
continues to rely on the assumption that the remaining States will
choose to participate either within three years or soon thereafter.
However, even if this is not the case, the transactions affected
until a State did participate would be portfolio loans over $250,000
that are not insured by either the Federal Housing Administration
(FHA), the U.S. Department of Veterans Affairs (VA), or the United
States Department of Agriculture Rural Housing Service (USDA RHS).
These loans represent a small percentage of the market, and
therefore inability by certain market participants (certain types of
AMCs) to provide appraisal management services in these types of
transactions in a non-participating State will not result in a
significant economic impact on a substantial number of small
entities.
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Various commenters expressed their concerns with State and Federal
fees that may be instituted in connection with AMC registration and
supervision. This rule does not determine fee amounts for States to
charge, require collection of registration fees by the ASC, or
authorize the collection of such ASC fees. It instead provides minimum
requirements for States to use to regulate AMCs within the State. How a
State chooses to implement these requirements, including which if any
new State fees to charge, is within the discretion of the States. With
respect to the ASC registration fee, the Dodd-Frank Act grants
authority to set that fee exclusively to the ASC.\125\ Therefore, the
Bureau does not consider any fees imposed on AMCs by the ASC (whether
directly or through the States for forwarding to the ASC) as an impact
of the final rule.
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\125\ See 12 U.S.C. 3338. This provision in FIRREA is not part
of the joint rulemaking authority in section 1124 that is the basis
for the Agencies' issuance of this final rule.
---------------------------------------------------------------------------
A national association commented explicitly on the fees that AMCs
would pay and the fees' effect on consumers:
``150+- AMCs, $2,500 average fee per State (includes application
fee, surety bond fees, background checks, secretary of State
application fees, administration fees, and etc.)
150 AMCs x $2,500 x 50 States = $18,750,000.00
150 AMCs x 2500 appraisers x $50 ASC fee = $18,750,000.00.''
The Bureau's analysis differs from the commenter's in several ways.
First, for the purposes of RFA, the Bureau is concerned only with
smaller AMCs, and an AMC with 2,500 appraisers that operates in all 50
States is unlikely to be small under the SBA definition that would
include only AMCs with yearly revenues below $7,500,000. Second, the
Bureau does not count as a burden imposed by the final rule those
registration fees in States that already established AMC registration
regimes before adoption of the final rule; thus the multiplier in the
first calculation should be 17 rather than 50. Third, the Bureau
assumes for its base calculations that only the minimum State rate is
caused by the rule (Vermont's $250 fee), thus the multiplier is $250
instead of $2,500. Finally, as mentioned above, the Bureau does not
include the ASC fee or, in other words the third line overall (which in
any event assumes a fee amount that the ASC has not yet established).
Note that the Bureau's use of the minimum State rate for its base
calculation of impacts does not imply that the Bureau suggests that the
remaining 17 States adopt this rate.
Commenters also discussed the impact of the rule on States and the
burden that may result with the implementation of the final rule. While
the Bureau acknowledges these comments, for the purposes of making a
determination under the RFA, the impact of the final rule on the States
is not incorporated into the FRFA because States are not classified as
small entities.
As discussed in the proposed rulemaking, State registration fees in
States that have not yet passed an AMC licensing and registration law
would constitute the primary economic impact of the final rule. As also
noted in the proposed rule, such fees in States that have established
such laws vary widely. Such State registration and renewal fees are not
necessarily for the sole purpose of recovering costs of administering
the minimum requirements under the final rule. States can impose
charges for a variety of reasons, including to raise revenue
(independent of the cost of the registration regime) or to fund the
administration of a regime that exceeds the minimum requirements under
the final rule. The Bureau believes that the fee charged by Vermont--
$125 for registration and $250 for annual renewal--would be sufficient
to recover the cost of implementing the final rule in a newly-
participating State.\126\ The Bureau therefore considered this fee in
estimating the economic impact of the final rule in the 17 States that
do not yet have AMC registration requirements. As discussed further
below, however, the Bureau also considered more
[[Page 32677]]
conservative estimates of the impact of the final rule using
significantly higher fee amounts. The Bureau believes that the 38
States that already have AMC registration requirements would have to do
minimal, if any, updating of the requirements due to this rule, as
discussed in the preamble. Thus, the Bureau believes that the rule's
indirect burden on the AMCs operating in these 38 States is negligible.
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\126\ The application fee in Vermont is $125. See https://www.sec.state.vt.us/media/188701/amc_application.pdf. The annualized
renewal fee is $250 ($500 for a two-year period). See https://www.sec.state.vt.us/media/486847/Appraisal-Management-Company-Renewal-Form-077-2014.pdf. In addition, while some States may elect
to impose additional requirements relating to examination and
inspection of their AMCs, the Bureau does not believe that the
minimum requirements that States must provide would lead to
significant costs for AMCs.
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As noted in the section-by-section analysis, it is possible that an
appraisal firm, which hires employees to perform appraisals, could also
oversee more than 15 appraisers engaged as independent contractors in a
State, or 25 or more appraisers in two or more States, in a given year.
Comments did not establish that such firms--described in the section-
by-section analysis as `hybrid firms'--currently exist to any
meaningful extent. The Bureau believes that to the extent such firms do
exist, they are either already included in what the Bureau has counted
as an AMC, or the firm is unlikely to be considered ``small'' within
the meaning of the RFA.
An additional requirement in the final rule is that the State AMC
licensing programs have authority and mechanisms to examine books and
records of the AMCs, to otherwise obtain information from the AMCs, and
to discipline AMCs. The Bureau believes that existing State
registration fees generally already account for the cost to the States
of having such authority and mechanisms, and that the requirement in
the final rule therefore would not lead to higher registration fees in
any significant amount.\127\ Accordingly, in the 17 States that would
adopt new registration and renewal systems, the Bureau believes the
renewal fee currently charged in Vermont would cover the State's cost
associated with implementing this requirement.
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\127\ See, e.g., Vermont Statutes Title 26 section 3324
(requiring AMCs to ``retain all records related to an appraisal,
review, or consulting assignment for no less than five years . . .
[and w]ith reasonable notice, a licensee or registrant shall produce
any records governed by this section for inspection and copying by
the board or its authorized agent.'').
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The Bureau notes that the final rule is not prescriptive as to how
or when the States must exercise the authority or mechanisms. Exercise
of such authority and mechanisms is determined at the discretion of the
States, subject to monitoring by the ASC for effectiveness in the
judgment or discretion of the ASC. Accordingly, to the extent that
State exercise of such authority and mechanisms leads to burden on
small entities, such burden would be attributable to such State
implementation and/or ASC oversight expectations rather than to the
final rule itself. Therefore, State statutes that implement this
requirement relating to establishing examination authority and
mechanisms are not expected to cause fee increases or new burden above
the $250 overall baseline that is assumed for purposes of this
analysis.\128\
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\128\ In addition, the Bureau does not believe that in States
that add this requirement there will be any significant new burden
on the AMCs. The Bureau believes that the AMCs already keep their
books and records in order as a standard course of business
practice, and thus the occasional State examiner visits should not
impose any significant burden. In addition, the final rule requires
only that the State have the authority and mechanism to request
records and information. The final rule does not require that the
State exercise this authority and any burdensome exercise of this
authority would therefore not be caused by the final rule. Finally,
to the extent State supervision programs do increase burden, the
Bureau believes this burden would be within the sensitivity
tolerances described in the footnote at the end of this section.
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Similarly, the Bureau believes that other minimum requirements for
AMCs under the final rule (verifying the use of licensed or certified
status of appraisers, requiring that appraisers comply with USPAP,
complying with any contractual review provisions, and establishing and
complying with processes to ensure appraisers are qualified and
independent and that the AMC acts in compliance with applicable
valuation independence regulations), as well as the standard for
removing appraisers from the appraiser panel, would not result in new
burden on AMCs because these standards merely reinforce existing
compliance requirements as well as industry practice.\129\ The Bureau
further notes that States have discretion to interpret the requirements
to establish processes and controls to ensure compliance, subject to
monitoring by the ASC for effectiveness in the judgment or discretion
of the ASC. Accordingly, to the extent that State interpretations of
such requirements leads to burden on small entities, such burden would
be attributable to such State implementation and/or ASC oversight
expectations rather than to the final rule itself.
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\129\ These requirements also would not result in new burden on
Federally regulated AMCs, for the same reason. Federally regulated
AMCs do not have to comply with State registration and renewal
requirements, which can entail fees. Conservatively, however, the
Bureau applied the State fee burden to all of the small AMCs in its
calculation method described herein. As a result, the estimated
burden of State fees associated with the final rule may be over-
estimated.
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Just as these conduct standards would not impose a significant
burden on AMCs required to register at the State level, the Bureau does
not believe they would impose significant burdens on Federally
regulated AMCs either. See Interagency Appraisal and Evaluation
Guidelines, 75 FR 77450 (Dec. 10, 2010) (Interagency Guidelines). The
Interagency Guidelines, part VI, already require Federal financial
institutions, when obtaining required appraisals, to select appraisers
who are certified or licensed, qualified, in compliance with USPAP, and
independent. 75 FR at 77458. Federally regulated AMCs frequently
perform appraisals for their affiliates. Therefore, it can be assumed
that in delegating these functions to AMCs, these Federal financial
institutions also delegated these requirements from part VI of the
Interagency Guidelines to these AMCs.
To estimate the impact of the final rule on small AMCs, the Bureau
conducted a survey. The Bureau called nine AMCs, selected randomly from
a list of approximately 500 AMCs provided by industry trade
associations. The AMCs were asked for certain basic data including the
number of States in which they operate, their revenue (including the
revenue from any non-appraisal business), and the number of appraisals
that they performed in 2012.\130\ The Bureau estimated the revenue to
be the number of appraisals performed in 2012 multiplied by $350--the
average appraisal cost assumed in the Agencies' analysis under section
1022 of the Dodd-Frank Act in the 2013 Interagency Appraisals Rule.
This revenue estimate is likely to be underestimated, given that
several AMCs out of nine reported additional revenue that was not due
to the residential appraisal business. Out of the nine AMCs, six had
revenues of less than $7,500,000 in 2012, and thus would be within the
scope of the RFA analysis based upon SBA guidelines.\131\ The Bureau
computed the cost of registration and renewal fees in States that do
not already have them, allocated these costs to individual AMCs based
upon the number of States in which the AMC operated,\132\ and computed
the ratio of these allocated costs to the AMCs' revenues.
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\130\ One of the AMCs did not report its revenue.
\131\ NAICS code 531320--Offices of Real Estate Appraisers--
includes ``appraisal services,'' which we believe would include
services provided by AMCs in the processing and review of
appraisals. An alternative classification would be NAICS code
561110--Office Administrative Services. In any event, this code also
has an SBA threshold of $7,500,000.
\132\ The Bureau assumed that an AMC that operated in x States
needs to register in additional (17/55)*x States. This assumption
results in a (17/55)*x*$250 State registration and renewal fee
burden on an AMC operating in x States.
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[[Page 32678]]
The Bureau acknowledges that requiring AMCs to send letters to the
appraisers that the AMC decides to remove from its panel might add
burden in States that do not already have registration requirements
(which typically include notice provisions). The Bureau does not
possess any evidence on the number of appraisers to whom an AMC would
have to send these letters. According to the Bureau of Labor and
Statistics' August 2014 preliminary numbers, 1.9 percent of the labor
force in the real estate and rental and leasing industry was either
laid off or discharged in the most recent month. Thus, the Bureau
estimates that an AMC will dismiss approximately a quarter of
appraisers from its panel in any given year. The Bureau assumes that
each AMC will have several standardized letters explaining the reason
for dismissal: for example, changing economic conditions or the
appraiser's violation of USPAP or work performance issues. Each AMC
might incur a minimal one-time cost to draft these letters, with some
industry associations potentially providing templates. After this
minimal one-time cost is incurred, the ongoing cost would include a
minimal adjustment of the letter based on the appraiser's particular
circumstances and the actual printing and mailing cost. These letters
also could be sent in batches, periodically, such as on an annual
basis. Thus, for the purposes of this analysis, the Bureau implicitly
accounts for these costs in the sensitivity analyses below (which use a
State fee of $5,150 and include a $300 administrative expense).
The Bureau then fit the received ratios using three different
distributions: normal, generalized extreme value, and logistic. The
three different distributions were used because no a priori assumptions
regarding how these ratios are distributed can be made. The three
distributions mentioned above are commonly used by empirical
researchers to fit observed values. Considering the costs imposed by
the States as a result of the final rule, the Bureau believes that less
than 1 percent of the small entities would experience a cost of over 1
percent of their revenue, using either the normal, or the logistic, or
the generalized extreme value distributions.\133\ The Bureau also notes
that because the sample did not include any AMCs that were either too
small (for example, with 15 or fewer appraisers in one State) or that
were Federally regulated AMCs, these estimates are likely overstated.
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\133\ The Bureau notes that the percentage of small institutions
for which the estimated burden of the final rule would amount to
over 3 percent of the revenue would remain under 1 percent even if
the Bureau had used the following alternative assumptions: (1)
$5,150 as the assumed burden of the proposed rule for states that
adopt new registration regimes--the highest among the existing state
registration fees (in Minnesota, per http://mn.gov/elicense/licenses/licensedetail.jsp?URI=tcm:29-9313&CT_URI=tcm:27-117-32),
and assumed this same amount as the annual renewal fee (even though
the Minnesota renewal fee is only $2,650, per http://mn.gov/elicense/licenses/licensedetail.jsp?URI=tcm:29-9313&CT_URI=tcm:27-117-32); and (2) an additional annual labor cost of $300 for any
possible associated burden of (a) filling out registration and
renewal forms in those states (assuming an AMC operates in
approximately 20 states on average, such that 6.26 of those states
adopt new AMC licensing programs) and any additional burden related
to notices from small AMCs removing appraisers from their panels in
those states. The percentages of institutions for which this cost
would amount to over 1 percent of the revenue changed, respectively,
to 26 percent, 18 percent, and 15 percent of the small institutions
affected, according to the normal, generalized extreme value, and
logistic distributions.
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Certification
Accordingly, the Bureau Director, by signing below, certifies that
this final rule would not have a significant economic impact on a
substantial number of small entities.
FHFA: The RFA (5 U.S.C. 601 et seq.) requires an agency to analyze
a proposed regulation's impact on small entities if the final rule is
expected to have a significant economic impact on a substantial number
of small entities.\134\ A regulatory flexibility analysis is not
required if the agency certifies that the final rule will not have a
significant economic impact on a substantial number of small entities
and publishes its certification and a short statement in the Federal
Register together with the final rule.
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\134\ 5 U.S.C. 605(b).
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The rule implements section 1124 of FIRREA and establishes minimum
requirements to be imposed by a participating State appraiser
certifying and licensing agency on AMCs doing business in the State.
FHFA has considered the impact of this regulation and determined that
it is not likely to have a significant economic impact on a substantial
number of small entities because States and FHFA's regulated entities--
Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--are not small
entities for purposes of the RFA. See 5 U.S.C. 601(6).
NCUA: The RFA \135\ requires NCUA to provide a regulatory
flexibility analysis to certify that a rulemaking will not have a
significant economic impact on a substantial number of small entities
(defined for purposes of the RFA to include credit unions with assets
less than $50 million) and publish its certification and a short
explanatory statement in the Federal Register with the final rule.\136\
As explained above, the requirements of this rule would only apply
directly to AMC subsidiaries owned and controlled by an insured
depository institution, or an insured credit union, and regulated by a
Federal financial institutions regulatory agency. NCUA, unlike the
other banking agencies to this rulemaking, does not directly oversee or
regulate any subsidiaries owned and controlled by credit unions,
including AMC subsidiaries. Rather, NCUA's regulations permit Federal
credit unions to invest in or lend only to CUSOs that conform to
specific requirements outlined in part 712 of the NCUA's regulations.
Because NCUA does not directly regulate or oversee CUSOs owned by State
or Federally chartered credit unions, NCUA is not adopting regulatory
text or any requirements through this rulemaking that would directly
affect small entities. Accordingly, the NCUA Board certifies the rule
will not have a significant economic impact on a substantial number of
small entities.
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\135\ 5 U.S.C. 601 et seq.
\136\ 78 FR 4032 (Jan. 18, 2013).
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Unfunded Mandates Reform Act of 1995 Determination
OCC: The OCC has analyzed the final rule under the factors in the
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this
analysis, the OCC considered whether the final rule includes Federal
mandates that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year (adjusted annually for inflation). For
the following reasons, the OCC finds that the final rule does not
trigger the $100 million UMRA threshold. First, the mandates in the
final rule apply only to those States that choose to establish an AMC
registration system. Second, the costs specifically related to
requirements set forth in law are excluded from expenditures under the
UMRA. Although the OCC estimates that expenditures by State governments
could be $82 million in one year, the UMRA cost estimate for the final
rule is zero, given that the final rule's mandates are set forth in
section 1473. For this reason, and for the other reasons cited above,
the OCC has determined that this final rule will not result in
expenditures by State, local, and tribal governments, or the private
sector, of $100 million or more in any one year. Accordingly, this
[[Page 32679]]
final rule is not subject to section 202 of the UMRA.
List of Subjects
12 CFR Part 34
Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit,
Mortgages, National banks, Reporting and recordkeeping requirements,
Savings associations, Truth in lending.
12 CFR Part 208
Accounting, Agriculture, Banks, Banking, Confidential business
information, Consumer protection, Crime, Currency, Insurance,
Investments, Mortgages, Reporting and recordkeeping requirements,
Securities.
12 CFR Part 225
Administrative practice and procedure, Banks, Banking, Federal
Reserve System, Holding companies, Reporting and recordkeeping
requirements, Securities.
12 CFR Part 323
Banks, Banking, Mortgages, Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 1026
Advertising, Appraisal, Appraiser, Banks, Banking, Consumer
protection, Credit, Credit unions, Mortgages, National banks, Reporting
and recordkeeping requirements, Savings associations, Truth in lending.
12 CFR Part 1222
Appraisals, Government sponsored enterprises, Mortgages.
Department of the Treasury
Office of the Comptroller of the Currency
Authority and Issuance
For the reasons set forth in the preamble, the OCC is amending 12
CFR part 34 as follows:
PART 34--REAL ESTATE LENDING AND APPRAISALS
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1. The authority citation for part 34 is revised to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1462a, 1463,
1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and
5412(b)(2)(B) and 15 U.S.C. 1639h.
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2. Subpart H to part 34 is added to read as follows:
Subpart H--Appraisal Management Company Minimum Requirements
Sec.
34.210 Authority, purpose, and scope.
34.211 Definitions.
34.212 Appraiser panel--annual size calculation.
34.213 Appraisal management company registration.
34.214 Ownership limitations for State-registered appraisal
management companies.
34.215 Requirements for Federally regulated appraisal management
companies.
34.216 Information to be presented to the Appraisal Subcommittee by
participating States.
Sec. 34.210 Authority, purpose, and scope.
(a) Authority. This subpart is issued by the Office of the
Comptroller of the Currency under 12 U.S.C. 93a and Title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA),
as amended by the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376 (2010)), 12
U.S.C. 3331 et seq.
(b) Purpose. The purpose of this subpart is to implement sections
1109, 1117, 1121, and 1124 of FIRREA Title XI, 12 U.S.C. 3338, 3346,
3350, and 3353.
(c) Scope. This subpart applies to States and to appraisal
management companies (AMCs) providing appraisal management services in
connection with consumer credit transactions secured by a consumer's
principal dwelling or securitizations of those transactions.
(d) Rule of construction. Nothing in this subpart should be
construed to prevent a State from establishing requirements in addition
to those in this subpart. In addition, nothing in this subpart should
be construed to alter guidance in, and applicability of, the
Interagency Appraisal and Evaluation Guidelines \3\ or other relevant
agency guidance that cautions banks, bank holding companies, Federal
savings associations, state savings associations, and credit unions, as
applicable, that each such entity is accountable for overseeing the
activities of third-party service providers and ensuring that any
services provided by a third party comply with applicable laws,
regulations, and supervisory guidance applicable directly to the
financial institution.
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\3\ See http://www.occ.gov/news-issuances/bulletins/2010/bulletin-2010-42.html.
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Sec. 34.211 Definitions.
For purposes of this subpart:
(a) Affiliate has the meaning provided in 12 U.S.C. 1841.
(b) AMC National Registry means the registry of State-registered
AMCs and Federally regulated AMCs maintained by the Appraisal
Subcommittee.
(c)(1) Appraisal management company (AMC) means a person that:
(i) Provides appraisal management services to creditors or to
secondary mortgage market participants, including affiliates;
(ii) Provides such services in connection with valuing a consumer's
principal dwelling as security for a consumer credit transaction or
incorporating such transactions into securitizations; and
(iii) Within a given 12-month period, as defined in Sec.
34.212(d), oversees an appraiser panel of more than 15 State-certified
or State-licensed appraisers in a State or 25 or more State-certified
or State-licensed appraisers in two or more States, as described in
Sec. 34.212;
(2) An AMC does not include a department or division of an entity
that provides appraisal management services only to that entity.
(d) Appraisal management services means one or more of the
following:
(1) Recruiting, selecting, and retaining appraisers;
(2) Contracting with State-certified or State-licensed appraisers
to perform appraisal assignments;
(3) Managing the process of having an appraisal performed,
including providing administrative services such as receiving appraisal
orders and appraisal reports, submitting completed appraisal reports to
creditors and secondary market participants, collecting fees from
creditors and secondary market participants for services provided, and
paying appraisers for services performed; and
(4) Reviewing and verifying the work of appraisers.
(e) Appraiser panel means a network, list or roster of licensed or
certified appraisers approved by an AMC to perform appraisals as
independent contractors for the AMC. Appraisers on an AMC's ``appraiser
panel'' under this part include both appraisers accepted by the AMC for
consideration for future appraisal assignments in covered transactions
or for secondary mortgage market participants in connection with
covered transactions and appraisers engaged by the AMC to perform one
or more appraisals in covered transactions or for secondary mortgage
market participants in connection with covered transactions. An
appraiser is an independent contractor for purposes of this subpart if
the appraiser is treated as an independent contractor by the AMC for
purposes of Federal income taxation.
(f) Appraisal Subcommittee means the Appraisal Subcommittee of the
Federal Financial Institutions Examination Council.
[[Page 32680]]
(g) Consumer credit means credit offered or extended to a consumer
primarily for personal, family, or household purposes.
(h) Covered transaction means any consumer credit transaction
secured by the consumer's principal dwelling.
(i) Creditor means:
(1) A person who regularly extends consumer credit that is subject
to a finance charge or is payable by written agreement in more than
four installments (not including a down payment), and to whom the
obligation is initially payable, either on the face of the note or
contract, or by agreement when there is no note or contract.
(2) A person regularly extends consumer credit if the person
extended credit (other than credit subject to the requirements of 12
CFR 1026.32) more than 5 times for transactions secured by a dwelling
in the preceding calendar year. If a person did not meet these
numerical standards in the preceding calendar year, the numerical
standards shall be applied to the current calendar year. A person
regularly extends consumer credit if, in any 12-month period, the
person originates more than one credit extension that is subject to the
requirements of 12 CFR 1026.32 or one or more such credit extensions
through a mortgage broker.
(j) Dwelling means:
(1) A residential structure that contains one to four units,
whether or not that structure is attached to real property. The term
includes an individual condominium unit, cooperative unit, mobile home,
and trailer, if it is used as a residence.
(2) A consumer can have only one ``principal'' dwelling at a time.
Thus, a vacation or other second home would not be a principal
dwelling. However, if a consumer buys or builds a new dwelling that
will become the consumer's principal dwelling within a year or upon the
completion of construction, the new dwelling is considered the
principal dwelling for purposes of this section.
(k) Federally regulated AMC means an AMC that is owned and
controlled by an insured depository institution, as defined in 12
U.S.C. 1813 and regulated by the Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, or the
Federal Deposit Insurance Corporation.
(l) Federally related transaction regulations means regulations
established by the Office of the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, or the National Credit Union Administration,
pursuant to sections 1112, 1113, and 1114 of FIRREA Title XI, 12 U.S.C.
3341-3343.
(m) Person means a natural person or an organization, including a
corporation, partnership, proprietorship, association, cooperative,
estate, trust, or government unit.
(n) Secondary mortgage market participant means a guarantor or
insurer of mortgage-backed securities, or an underwriter or issuer of
mortgage-backed securities. Secondary mortgage market participant only
includes an individual investor in a mortgage-backed security if that
investor also serves in the capacity of a guarantor, insurer,
underwriter, or issuer for the mortgage-backed security.
(o) States mean the 50 States and the District of Columbia and the
territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin
Islands.
(p) Uniform Standards of Professional Appraisal Practice (USPAP)
means the appraisal standards promulgated by the Appraisal Standards
Board of the Appraisal Foundation.
Sec. 34.212 Appraiser panel--annual size calculation.
For purposes of determining whether, within a 12-month period, an
AMC oversees an appraiser panel of more than 15 State-certified or
State-licensed appraisers in a State or 25 or more State-certified or
State-licensed appraisers in two or more States pursuant to Sec.
34.211(c)(1)(iii)--
(a) An appraiser is deemed part of the AMC's appraiser panel as of
the earliest date on which the AMC:
(1) Accepts the appraiser for the AMC's consideration for future
appraisal assignments in covered transactions or for secondary mortgage
market participants in connection with covered transactions; or
(2) Engages the appraiser to perform one or more appraisals on
behalf of a creditor for a covered transaction or secondary mortgage
market participant in connection with covered transactions.
(b) An appraiser who is deemed part of the AMC's appraiser panel
pursuant to paragraph (a) of this section is deemed to remain on the
panel until the date on which the AMC:
(1) Sends written notice to the appraiser removing the appraiser
from the appraiser panel, with an explanation of its action; or
(2) Receives written notice from the appraiser asking to be removed
from the appraiser panel or notice of the death or incapacity of the
appraiser.
(c) If an appraiser is removed from an AMC's appraiser panel
pursuant to paragraph (b) of this section, but the AMC subsequently
accepts the appraiser for consideration for future assignments or
engages the appraiser at any time during the twelve months after the
AMC's removal, the removal will be deemed not to have occurred, and the
appraiser will be deemed to have been part of the AMC's appraiser panel
without interruption.
(d) The period for purposes of counting appraisers on an AMC's
appraiser panel may be the calendar year or a 12-month period
established by law or rule of each State with which the AMC is required
to register.
Sec. 34.213 Appraisal management company registration.
Each State electing to register AMCs pursuant to paragraph (b)(1)
of this section must:
(a) Establish and maintain within the State appraiser certifying
and licensing agency a licensing program that is subject to the
limitations set forth in Sec. 34.214 and with the legal authority and
mechanisms to:
(1) Review and approve or deny an AMC's application for initial
registration;
(2) Review and renew or review and deny an AMC's registration
periodically;
(3) Examine the books and records of an AMC operating in the State
and require the AMC to submit reports, information, and documents;
(4) Verify that the appraisers on the AMC's appraiser panel hold
valid State certifications or licenses, as applicable;
(5) Conduct investigations of AMCs to assess potential violations
of applicable appraisal-related laws, regulations, or orders;
(6) Discipline, suspend, terminate, or deny renewal of the
registration of an AMC that violates applicable appraisal-related laws,
regulations, or orders; and
(7) Report an AMC's violation of applicable appraisal-related laws,
regulations, or orders, as well as disciplinary and enforcement actions
and other relevant information about an AMC's operations, to the
Appraisal Subcommittee.
(b) Impose requirements on AMCs that are not owned and controlled
by an insured depository institution and not regulated by a Federal
financial institutions regulatory agency to:
(1) Register with and be subject to supervision by the State
appraiser certifying and licensing agency;
(2) Engage only State-certified or State-licensed appraisers for
Federally related transactions in conformity with any Federally related
transaction regulations;
(3) Establish and comply with processes and controls reasonably
[[Page 32681]]
designed to ensure that the AMC, in engaging an appraiser, selects an
appraiser who is independent of the transaction and who has the
requisite education, expertise, and experience necessary to competently
complete the appraisal assignment for the particular market and
property type;
(4) Direct the appraiser to perform the assignment in accordance
with USPAP; and
(5) Establish and comply with processes and controls reasonably
designed to ensure that the AMC conducts its appraisal management
services in accordance with the requirements of section 129E(a) through
(i) of the Truth in Lending Act, 15 U.S.C. 1639e(a) through (i), and
regulations thereunder.
Sec. 34.214 Ownership limitations for State-registered appraisal
management companies.
(a) Appraiser certification or licensing of owners. (1) An AMC
subject to State registration pursuant to Sec. 34.213 shall not be
registered by a State or included on the AMC National Registry if such
AMC, in whole or in part, directly or indirectly, is owned by any
person who has had an appraiser license or certificate refused, denied,
cancelled, surrendered in lieu of revocation, or revoked in any State
for a substantive cause, as determined by the appropriate State
appraiser certifying and licensing agency.
(2) An AMC subject to State registration pursuant to Sec. 34.213
is not barred by paragraph (a)(1) of this section from being registered
by a State or included on the AMC National Registry if the license or
certificate of the appraiser with an ownership interest was not revoked
for a substantive cause and has been reinstated by the State or States
in which the appraiser was licensed or certified.
(b) Good moral character of owners. An AMC shall not be registered
by a State if any person that owns more than 10 percent of the AMC--
(1) Is determined by the State appraiser certifying and licensing
agency not to have good moral character; or
(2) Fails to submit to a background investigation carried out by
the State appraiser certifying and licensing agency.
Sec. 34.215 Requirements for Federally regulated appraisal management
companies.
(a) Requirements in providing services. To provide appraisal
management services for a creditor or secondary mortgage market
participant relating to a covered transaction, a Federally regulated
AMC must comply with the requirements in Sec. 34.213(b)(2) through
(5).
(b) Ownership limitations. (1) A Federally regulated AMC shall not
be included on the AMC National Registry if such AMC, in whole or in
part, directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State for a
substantive cause, as determined by the Appraisal Subcommittee.
(2) A Federally regulated AMC is not barred by this paragraph (b)
from being included on the AMC National Registry if the license or
certificate of the appraiser with an ownership interest was not revoked
for a substantive cause and has been reinstated by the State or States
in which the appraiser was licensed or certified.
(c) Reporting information for the AMC National Registry. A
Federally regulated AMC must report to the State or States in which it
operates the information required to be submitted by the State to the
Appraisal Subcommittee, pursuant to the Appraisal Subcommittee's
policies regarding the determination of the AMC National Registry fee,
including but not necessarily limited to the collection of information
related to the limitations set forth in this section, as applicable.
Sec. 34.216 Information to be presented to the Appraisal Subcommittee
by participating States.
Each State electing to register AMCs for purposes of permitting
AMCs to provide appraisal management services relating to covered
transactions in the State must submit to the Appraisal Subcommittee the
information required to be submitted by Appraisal Subcommittee
regulations or guidance concerning AMCs that operate in the State.
Board of Governors of the Federal Reserve System
For the reasons set forth in the preamble, the Board amends 12 CFR
parts 208 and 225, as follows:
PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL
RESERVE SYSTEM (REGULATION H)
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3. The authority citation for part 208 is revised to read as follows:
Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a,
371d, 461, 481-486, 601, 611, 1814, 1816, 1818, 1820(d)(9), 1833(j),
1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1831x, 1835a, 1882,
2901-2907, 3105, 3310, 3331-3351, 3353, and 3905-3909; 15 U.S.C.
78b, 78l(b), 78l(i), 780-4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w,
6801 and 6805; 31 U.S.C. 5318; 42 U.S.C. 4012a, 4104b, 4106, and
4128.
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4. Revise the heading of subpart E to read as follows:
Subpart E--Real Estate Lending, Appraisal Standards, and Minimum
Requirements for Appraisal Management Companies
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5. Section 208.50 is revised to read as follows:
Sec. 208.50 Authority, purpose, and scope.
(a) Authority. Subpart E of Regulation H (12 CFR part 208, subpart
E) is issued by the Board of Governors of the Federal Reserve System
pursuant to section 304 of the Federal Deposit Insurance Corporation
Improvement Act of 1991, (12 U.S.C 1828(o)), Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act, (12 U.S.C 3331-
3351), and section 1473 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, (12 U.S.C. 3353).
(b) Purpose and scope. This subpart prescribes standards for real
estate lending to be used by state member banks in adopting internal
real estate lending policies. The standards applicable to appraisals
rendered in connection with Federally related transactions entered into
by member banks and the minimum requirements for appraisal management
companies are set forth in 12 CFR part 225, subparts G and M
respectively (Regulation Y).
PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
(REGULATION Y)
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6. The authority citation for part 225 is revised to read as follows:
Authority: 12 U.S.C. 1844(b), 3106 and 3108, 1817(j)(13),
1818(b), 1831i, 1972, 3310, 3331-3351 and 3353; 12 U.S.C. 3901, et
seq.; and 12 U.S.C. 1841, et seq.
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7. Subpart M is added to part 225 to read as follows:
Subpart M--Minimum Requirements for Appraisal Management Companies
Sec.
225.190 Authority, purpose, and scope.
225.191 Definitions.
225.192 Appraiser panel--annual size calculation.
225.193 Appraisal management company registration.
225.194 Ownership limitations for State-registered appraisal
management companies.
225.195 Requirements for Federally regulated appraisal management
companies.
[[Page 32682]]
225.196 Information to be presented to the Appraisal Subcommittee by
participating States.
Sec. 225.190 Authority, purpose, and scope.
(a) Authority. This subpart is issued by the Board of Governors of
the Federal Reserve System (the Board) pursuant to title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA) (Pub. L. 101-73, 103 Stat. 183 (1989)), 12 U.S.C. 3310, 3331-
3351, section 1473 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, 12 U.S.C. 3353, and section 5(b) of the Bank Holding
Company Act, 12 U.S.C. 1844(b).
(b) Purpose and scope. (1) The purpose of this subpart is to
implement sections 1109, 1117, 1121, and 1124 of FIRREA Title XI, 12
U.S.C. 3338, 3346, 3350, and 3353. Title XI provides protection for
Federal financial and public policy interests in real estate related
transactions by requiring real estate appraisals used in connection
with Federally related transactions to be performed in writing, in
accordance with uniform standards, by appraisers whose competency has
been demonstrated and whose professional conduct will be subject to
effective supervision. This subpart implements the requirements of
title XI as amended by the Dodd-Frank Wall Street Reform and Consumer
Protection Act and applies to all Federally related transactions and to
States and to appraisal management companies (AMCs) performing
appraisal management services in connection with consumer credit
transactions secured by a consumer's principal dwelling or
securitizations of those transactions.
(2) This subpart:
(i) Identifies which real estate related financial transactions
require the services of an appraiser.
(ii) Prescribes which categories of Federally related transactions
shall be appraised by a State-certified appraiser and which by a State-
licensed appraiser;
(iii) Prescribes minimum standards for the performance of real
estate appraisals in connection with Federal related transactions under
the jurisdiction of the Board;
(iv) Prescribes minimum requirements to be applied by participating
States in the registration and supervision of AMCs; and
(v) Prescribes minimum requirements to be applied by participating
States to report certain information concerning AMCs registered with
the States to a national registry of AMCs.
(c) Rule of construction. Nothing in this subpart should be
construed to prevent a State from establishing requirements in addition
to those in this subpart. In addition, nothing in this subpart should
be construed to alter guidance in, and applicability of, the
Interagency Appraisal and Evaluation Guidelines \1\ or other relevant
agency guidance that cautions banks and bank holding companies, that
each organization is accountable for overseeing the activities of
third-party service providers and ensuring that any services provided
by a third party comply with applicable laws, regulations, and
supervisory guidance applicable directly to the creditor.
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\1\ See, Agencies issue final appraisal and evalutation
guidelines, http://www.federalreserve.gov/newsevents/press/bcreg/20101202a.htm.
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Sec. 225.191 Definitions.
For purposes of this subpart:
(a) Affiliate has the meaning provided in 12 U.S.C. 1841.
(b) AMC National Registry means the registry of State-registered
AMCs and Federally regulated AMCs maintained by the Appraisal
Subcommittee.
(c) Appraisal Foundation means the Appraisal Foundation established
on November 30, 1987, as a not-for-profit corporation under the laws of
Illinois.
(d)(1) Appraisal management company (AMC) means a person that:
(i) Provides appraisal management services to creditors or to
secondary mortgage market participants, including affiliates;
(ii) Provides such services in connection with valuing a consumer's
principal dwelling as security for a consumer credit transaction or
incorporating such transactions into securitizations; and
(iii) Within a 12-month period, as defined in Sec. 225.192(d),
oversees an appraiser panel of more than 15 State-certified or State-
licensed appraisers in a State or 25 or more State-certified or State-
licensed appraisers in two or more States, as described in Sec.
225.192;
(2) An AMC does not include a department or division of an entity
that provides appraisal management services only to that entity.
(e) Appraisal management services means one or more of the
following:
(1) Recruiting, selecting, and retaining appraisers;
(2) Contracting with State-certified or State-licensed appraisers
to perform appraisal assignments;
(3) Managing the process of having an appraisal performed,
including providing administrative services such as receiving appraisal
orders and appraisal reports, submitting completed appraisal reports to
creditors and secondary market participants, collecting fees from
creditors and secondary market participants for services provided, and
paying appraisers for services performed; and
(4) Reviewing and verifying the work of appraisers.
(f) Appraiser panel means a network, list or roster of licensed or
certified appraisers approved by an AMC to perform appraisals as
independent contractors for the AMC. Appraisers on an AMC's ``appraiser
panel'' under this part include both appraisers accepted by the AMC for
consideration for future appraisal assignments in covered transactions
or for secondary mortgage market participants in connection with
covered transactions and appraisers engaged by the AMC to perform one
or more appraisals in covered transactions or for secondary mortgage
market participants in connection with covered transactions. An
appraiser is an independent contractor for purposes of this part if the
appraiser is treated as an independent contractor by the AMC for
purposes of Federal income taxation.
(g) Consumer credit means credit offered or extended to a consumer
primarily for personal, family, or household purposes.
(h) Covered transaction means any consumer credit transaction
secured by the consumer's principal dwelling.
(i) Creditor means:
(1) A person who regularly extends consumer credit that is subject
to a finance charge or is payable by written agreement in more than
four installments (not including a down payment), and to whom the
obligation is initially payable, either on the face of the note or
contract, or by agreement when there is no note or contract.
(2) A person regularly extends consumer credit if the person
extended credit (other than credit subject to the requirements of 12
CFR 1026.32) more than 5 times for transactions secured by a dwelling
in the preceding calendar year. If a person did not meet these
numerical standards in the preceding calendar year, the numerical
standards shall be applied to the current calendar year. A person
regularly extends consumer credit if, in any 12-month period, the
person originates more than one credit extension that is subject to the
requirements of 12 CFR 1026.32 or one or more such credit extensions
through a mortgage broker.
(j) Dwelling means:
(1) A residential structure that contains one to four units,
whether or not that structure is attached to real property. The term
includes an individual condominium unit,
[[Page 32683]]
cooperative unit, mobile home, and trailer, if it is used as a
residence.
(2) A consumer can have only one ``principal'' dwelling at a time.
Thus, a vacation or other second home would not be a principal
dwelling. However, if a consumer buys or builds a new dwelling that
will become the consumer's principal dwelling within a year or upon the
completion of construction, the new dwelling is considered the
principal dwelling for purposes of this section.
(k) Federally regulated AMC means an AMC that is owned and
controlled by an insured depository institution, as defined in 12
U.S.C. 1813 and regulated by the Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, or the
Federal Deposit Insurance Corporation.
(l) Federally related transaction regulations means regulations
established by the Office of the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, or the National Credit Union Administration,
pursuant to sections 1112, 1113, and 1114 of FIRREA Title XI, 12 U.S.C.
3341-3343.
(m) Person means a natural person or an organization, including a
corporation, partnership, proprietorship, association, cooperative,
estate, trust, or government unit.
(n) Secondary mortgage market participant means a guarantor or
insurer of mortgage-backed securities, or an underwriter or issuer of
mortgage-backed securities. Secondary mortgage market participant only
includes an individual investor in a mortgage-backed security if that
investor also serves in the capacity of a guarantor, insurer,
underwriter, or issuer for the mortgage-backed security.
(o) States mean the 50 States and the District of Columbia and the
territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin
Islands.
(p) Uniform Standards of Professional Appraisal Practice (USPAP)
means the appraisal standards promulgated by the Appraisal Standards
Board of the Appraisal Foundation.
Sec. 225.192 Appraiser panel--annual size calculation.
For purposes of determining whether, within a 12-month period, an
AMC oversees an appraiser panel of more than 15 State-certified or
State-licensed appraisers in a State or 25 or more State-certified or
State-licensed appraisers in two or more States pursuant to Sec.
225.191(d)(1)(iii)-
(a) An appraiser is deemed part of the AMC's appraiser panel as of
the earliest date on which the AMC:
(1) Accepts the appraiser for the AMC's consideration for future
appraisal assignments in covered transactions or for secondary mortgage
market participants in connection with covered transactions; or
(2) Engages the appraiser to perform one or more appraisals on
behalf of a creditor for a covered transaction or secondary mortgage
market participant in connection with a covered transaction.
(b) An appraiser who is deemed part of the AMC's appraiser panel
pursuant to paragraph (a) of this section is deemed to remain on the
panel until the date on which the AMC:
(1) Sends written notice to the appraiser removing the appraiser
from the appraiser panel, with an explanation of its action; or
(2) Receives written notice from the appraiser asking to be removed
from the appraiser panel or notice of the death or incapacity of the
appraiser.
(c) If an appraiser is removed from an AMC's appraiser panel
pursuant to paragraph (b) of this section, but the AMC subsequently
accepts the appraiser for consideration for future assignments or
engages the appraiser at any time during the twelve months after the
AMC's removal, the removal will be deemed not to have occurred, and the
appraiser will be deemed to have been part of the AMC's appraiser panel
without interruption.
(d) The period for purposes of counting appraisers on an AMC's
appraiser panel may be the calendar year or a 12-month period
established by law or rule of each State with which the AMC is required
to register.
Sec. 225.193 Appraisal management company registration.
Each State electing to register AMCs pursuant to paragraph (b)(1)
of this section must:
(a) Establish and maintain within the State appraiser certifying
and licensing agency a licensing program that is subject to the
limitations set forth in Sec. 225.194 and with the legal authority and
mechanisms to:
(1) Review and approve or deny an AMC's application for initial
registration;
(2) Review and renew or review and deny an AMC's registration
periodically;
(3) Examine the books and records of an AMC operating in the State
and require the AMC to submit reports, information, and documents;
(4) Verify that the appraisers on the AMC's appraiser panel hold
valid State certifications or licenses, as applicable;
(5) Conduct investigations of AMCs to assess potential violations
of applicable appraisal-related laws, regulations, or orders;
(6) Discipline, suspend, terminate, or deny renewal of the
registration of an AMC that violates applicable appraisal-related laws,
regulations, or orders; and
(7) Report an AMC's violation of applicable appraisal-related laws,
regulations, or orders, as well as disciplinary and enforcement actions
and other relevant information about an AMC's operations, to the
Appraisal Subcommittee.
(b) Impose requirements on AMCs that are not owned and controlled
by an insured depository institution and not regulated by a Federal
financial institutions regulatory agency to:
(1) Register with and be subject to supervision by the State
appraiser certifying and licensing agency;
(2) Engage only State-certified or State-licensed appraisers for
Federally related transactions in conformity with any Federally related
transaction regulations;
(3) Establish and comply with processes and controls reasonably
designed to ensure that the AMC, in engaging an appraiser, selects an
appraiser who is independent of the transaction and who has the
requisite education, expertise, and experience necessary to competently
complete the appraisal assignment for the particular market and
property type;
(4) Direct the appraiser to perform the assignment in accordance
with USPAP; and
(5) Establish and comply with processes and controls reasonably
designed to ensure that the AMC conducts its appraisal management
services in accordance with the requirements of section 129E(a)-(i) of
the Truth in Lending Act, 15 U.S.C. 1639e(a)-(i), and regulations
thereunder.
Sec. 225.194 Ownership limitations for State-registered appraisal
management companies.
(a) Appraiser certification or licensing of owners. (1) An AMC
subject to State registration pursuant to Sec. 225.193 shall not be
registered by a State or included on the AMC National Registry if such
AMC, in whole or in part, directly or indirectly, is owned by any
person who has had an appraiser license or certificate refused, denied,
cancelled, surrendered in lieu of revocation, or revoked in any State
for a substantive cause, as determined by the appropriate State
appraiser certifying and licensing agency.
[[Page 32684]]
(2) An AMC subject to State registration pursuant to Sec. 225.193
is not barred by paragraph (a)(1) of this section from being registered
by a State or included on the AMC National Registry if the license or
certificate of the appraiser with an ownership interest was not revoked
for a substantive cause and has been reinstated by the State or States
in which the appraiser was licensed or certified.
(b) Good moral character of owners. An AMC shall not be registered
by a State if any person that owns more than 10 percent of the AMC--
(1) Is determined by the State appraiser certifying and licensing
agency not to have good moral character; or
(2) Fails to submit to a background investigation carried out by
the State appraiser certifying and licensing agency.
Sec. 225.195 Requirements for Federally regulated appraisal
management companies.
(a) Requirements in providing services. To provide appraisal
management services for a creditor or secondary mortgage market
participant relating to a covered transaction, a Federally regulated
AMC must comply with the requirements in Sec. 225.193(b)(2) through
(5).
(b) Ownership limitations. (1) A Federally regulated AMC shall not
be included on the AMC National Registry if such AMC, in whole or in
part, directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State for a
substantive cause, as determined by the ASC.
(2) A Federally regulated AMC is not barred by this paragraph (b)
from being included on the AMC National Registry if the license or
certificate of the appraiser with an ownership interest was not revoked
for a substantive cause and has been reinstated by the State or States
in which the appraiser was licensed or certified.
(c) Reporting information for the AMC National Registry. A
Federally regulated AMC must report to the State or States in which it
operates the information required to be submitted by the State to the
Appraisal Subcommittee pursuant to the Appraisal Subcommittee's
policies regarding the determination of the AMC National Registry fee,
including but not necessarily limited to the collection of information
related to the limitations set forth in this section.
Sec. 225.196 Information to be presented to the Appraisal
Subcommittee by participating States.
Each State electing to register AMCs for purposes of permitting
AMCs to provide appraisal management services relating to covered
transactions in the State must submit to the Appraisal Subcommittee the
information required to be submitted by Appraisal Subcommittee
regulations or guidance concerning AMCs that operate in the State.
Federal Deposit Insurance Corporation
Authority and Issuance
For the reasons set forth in the preamble, the FDIC amends 12 CFR
parts 323 and 390 as follows:
PART 323--APPRAISALS
0
8. Revise the authority citation for part 323 to read as follows:
Authority: 12 U.S.C. 1818, 1819 [``Seventh'' and ``Tenth''] and
3331 et seq.
0
9. Add a heading for new subpart A to read as follows:
Subpart A--Appraisals Generally
Sec. Sec. 323.1 through 323.7--[Designated as subpart A]
0
10. Designate Sec. Sec. 323.1 through 323.7 as new subpart A.
Sec. Sec. 323.1, 323.3, 323.4, and 323.5--[Amended]
0
11. Amend Sec. Sec. 323.1, 323.3, 323.4, and 323.5 by removing
``part'' and adding ``subpart'' in its place in each instance in which
it appears.
0
12. Add subpart B to part 323 to read as follows:
Subpart B--Appraisal Management Company Minimum Requirements
Sec.
323.8 Authority, purpose, and scope.
323.9 Definitions.
323.10 Appraiser panel--annual size calculation.
323.11 Appraisal management company registration.
323.12 Ownership limitations for State-registered appraisal
management companies.
323.13 Requirements for Federally regulated appraisal management
companies.
323.14 Information to be presented to the Appraisal Subcommittee by
participating States.
Sec. 323.8 Authority, purpose, and scope.
(a) Authority. This subpart is issued pursuant to12 U.S.C. 1818,
1819 [``Seventh'' and ``Tenth''] and Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act (FIRREA), as amended
by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act) (Pub. L. 111-203, 124 Stat. 1376 (2010)), 12 U.S.C.
3331 et seq.
(b) Purpose. The purpose of this subpart is to implement sections
1109, 1117, 1121, and 1124 of FIRREA Title XI, 12 U.S.C. 3338, 3346,
3350, and 3353.
(c) Scope. This subpart applies to States and to appraisal
management companies (AMCs) providing appraisal management services in
connection with consumer credit transactions secured by a consumer's
principal dwelling or securitizations of those transactions.
(d) Rule of construction. Nothing in this subpart should be
construed to prevent a State from establishing requirements in addition
to those in this subpart. In addition, nothing in this subpart should
be construed to alter guidance in, and applicability of, the
Interagency Appraisal and Evaluation Guidelines \1\ or other relevant
agency guidance that cautions banks, bank holding companies, Federal
savings associations, state savings association, and credit unions, as
applicable, that each such entity is accountable for overseeing the
activities of third-party service providers and ensuring that any
services provided by a third party comply with applicable laws,
regulations, and supervisory guidance applicable directly to the
financial institution.
---------------------------------------------------------------------------
\1\ https://www.fdic.gov/regulations/laws/rules/5000-4800.html.
---------------------------------------------------------------------------
Sec. 323.9 Definitions.
For purposes of this subpart:
(a) Affiliate has the meaning provided in 12 U.S.C. 1841.
(b) AMC National Registry means the registry of State-registered
AMCs and Federally regulated AMCs maintained by the Appraisal
Subcommittee.
(c)(1) Appraisal management company (AMC) means a person that:
(i) Provides appraisal management services to creditors or to
secondary mortgage market participants, including affiliates;
(ii) Provides such services in connection with valuing a consumer's
principal dwelling as security for a consumer credit transaction or
incorporating such transactions into securitizations; and
(iii) Within a given 12-month period, as defined in Sec.
323.10(d), oversees an appraiser panel of more than 15 State-certified
or State-licensed appraisers in a State or 25 or more State-certified
or State-licensed appraisers in two or more States, as described in
Sec. 323.12;
[[Page 32685]]
(2) An AMC does not include a department or division of an entity
that provides appraisal management services only to that entity.
(d) Appraisal management services means one or more of the
following:
(1) Recruiting, selecting, and retaining appraisers;
(2) Contracting with State-certified or State-licensed appraisers
to perform appraisal assignments;
(3) Managing the process of having an appraisal performed,
including providing administrative services such as receiving appraisal
orders and appraisal reports, submitting completed appraisal reports to
creditors and secondary market participants, collecting fees from
creditors and secondary market participants for services provided, and
paying appraisers for services performed; and
(4) Reviewing and verifying the work of appraisers.
(e) Appraiser panel means a network, list or roster of licensed or
certified appraisers approved by an AMC to perform appraisals as
independent contractors for the AMC. Appraisers on an AMC's ``appraiser
panel'' under this part include both appraisers accepted by the AMC for
consideration for future appraisal assignments in covered transactions
or for secondary mortgage market participants in connection with
covered transactions and appraisers engaged by the AMC to perform one
or more appraisals in covered transactions or for secondary mortgage
market participants in connection with covered transactions. An
appraiser is an independent contractor for purposes of this subpart if
the appraiser is treated as an independent contractor by the AMC for
purposes of Federal income taxation.
(f) Appraisal Subcommittee means the Appraisal Subcommittee of the
Federal Financial Institutions Examination Council.
(g) Consumer credit means credit offered or extended to a consumer
primarily for personal, family, or household purposes.
(h) Covered transaction means any consumer credit transaction
secured by the consumer's principal dwelling.
(i) Creditor means:
(1) A person who regularly extends consumer credit that is subject
to a finance charge or is payable by written agreement in more than
four installments (not including a down payment), and to whom the
obligation is initially payable, either on the face of the note or
contract, or by agreement when there is no note or contract.
(2) A person regularly extends consumer credit if the person
extended credit (other than credit subject to the requirements of 12
CFR 1026.32) more than 5 times for transactions secured by a dwelling
in the preceding calendar year. If a person did not meet these
numerical standards in the preceding calendar year, the numerical
standards shall be applied to the current calendar year. A person
regularly extends consumer credit if, in any 12-month period, the
person originates more than one credit extension that is subject to the
requirements of 12 CFR 1026.32 or one or more such credit extensions
through a mortgage broker.
(j) Dwelling means:
(1) A residential structure that contains one to four units,
whether or not that structure is attached to real property. The term
includes an individual condominium unit, cooperative unit, mobile home,
and trailer, if it is used as a residence.
(2) A consumer can have only one ``principal'' dwelling at a time.
Thus, a vacation or other second home would not be a principal
dwelling. However, if a consumer buys or builds a new dwelling that
will become the consumer's principal dwelling within a year or upon the
completion of construction, the new dwelling is considered the
principal dwelling for purposes of this section.
(k) Federally regulated AMC means an AMC that is owned and
controlled by an insured depository institution, as defined in 12
U.S.C. 1813 and regulated by the Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, or the
Federal Deposit Insurance Corporation.
(l) Federally related transaction regulations means regulations
established by the Office of the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, or the National Credit Union Administration,
pursuant to sections 1112, 1113, and 1114 of FIRREA Title XI, 12 U.S.C.
3341-3343.
(m) Person means a natural person or an organization, including a
corporation, partnership, proprietorship, association, cooperative,
estate, trust, or government unit.
(n) Secondary mortgage market participant means a guarantor or
insurer of mortgage-backed securities, or an underwriter or issuer of
mortgage-backed securities. Secondary mortgage market participant only
includes an individual investor in a mortgage-backed security if that
investor also serves in the capacity of a guarantor, insurer,
underwriter, or issuer for the mortgage-backed security.
(o) States mean the 50 States and the District of Columbia and the
territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin
Islands.
(p) Uniform Standards of Professional Appraisal Practice (USPAP)
means the appraisal standards promulgated by the Appraisal Standards
Board of the Appraisal Foundation.
Sec. 323.10 Appraiser panel--annual size calculation.
For purposes of determining whether, within a 12-month period, an
AMC oversees an appraiser panel of more than 15 State-certified or
State-licensed appraisers in a State or 25 or more State-certified or
State-licensed appraisers in two or more States pursuant to Sec.
323.9(c)(1)(iii)--
(a) An appraiser is deemed part of the AMC's appraiser panel as of
the earliest date on which the AMC:
(1) Accepts the appraiser for the AMC's consideration for future
appraisal assignments in covered transactions or for secondary mortgage
market participants in connection with covered transactions; or
(2) Engages the appraiser to perform one or more appraisals on
behalf of a creditor for a covered transaction or secondary mortgage
market participant in connection with a covered transaction.
(b) An appraiser who is deemed part of the AMC's appraiser panel
pursuant to paragraph (a) of this section is deemed to remain on the
panel until the date on which the AMC:
(1) Sends written notice to the appraiser removing the appraiser
from the appraiser panel, with an explanation of its action; or
(2) Receives written notice from the appraiser asking to be removed
from the appraiser panel or notice of the death or incapacity of the
appraiser.
(c) If an appraiser is removed from an AMC's appraiser panel
pursuant to paragraph (b) of this section, but the AMC subsequently
accepts the appraiser for consideration for future assignments or
engages the appraiser at any time during the twelve months after the
AMC's removal, the removal will be deemed not to have occurred, and the
appraiser will be deemed to have been part of the AMC's appraiser panel
without interruption.
(d) The period for purposes of counting appraisers on an AMC's
appraiser panel may be the calendar year or a 12-month period
established by law or rule of each State with which the AMC is required
to register.
Sec. 323.11 Appraisal management company registration.
Each State electing to register AMCs pursuant to paragraph (b)(1)
of this section must:
[[Page 32686]]
(a) Establish and maintain within the State appraiser certifying
and licensing agency a licensing program that is subject to the
limitations set forth in Sec. 323.12 and with the legal authority and
mechanisms to:
(1) Review and approve or deny an AMC's application for initial
registration;
(2) Review and renew or review and deny an AMC's registration
periodically;
(3) Examine the books and records of an AMC operating in the State
and require the AMC to submit reports, information, and documents;
(4) Verify that the appraisers on the AMC's appraiser panel hold
valid State certifications or licenses, as applicable;
(5) Conduct investigations of AMCs to assess potential violations
of applicable appraisal-related laws, regulations, or orders;
(6) Discipline, suspend, terminate, or deny renewal of the
registration of an AMC that violates applicable appraisal-related laws,
regulations, or orders; and
(7) Report an AMC's violation of applicable appraisal-related laws,
regulations, or orders, as well as disciplinary and enforcement actions
and other relevant information about an AMC's operations, to the
Appraisal Subcommittee.
(b) Impose requirements on AMCs that are not owned and controlled
by an insured depository institution and not regulated by a Federal
financial institution regulatory agency to:
(1) Register with and be subject to supervision by the State
appraiser certifying and licensing agency;
(2) Engage only State-certified or State-licensed appraisers for
Federally regulated transactions in conformity with any Federally
related transaction regulations;
(3) Establish and comply with processes and controls reasonably
designed to ensure that the AMC, in engaging an appraiser, selects an
appraiser who is independent of the transaction and who has the
requisite education, expertise, and experience necessary to competently
complete the appraisal assignment for the particular market and
property type;
(4) Direct the appraiser to perform the assignment in accordance
with USPAP; and
(5) Establish and comply with processes and controls reasonably
designed to ensure that the AMC conducts its appraisal management
services in accordance with the requirements of section 129E(a)-(i) of
the Truth in Lending Act, 15 U.S.C. 1639e(a)-(i), and regulations
thereunder.
Sec. 323.12 Ownership limitations for State-registered appraisal
management companies.
(a) Appraiser certification or licensing of owners. (1) An AMC
subject to State registration pursuant to this section shall not be
registered by a State or included on the AMC National Registry if such
AMC, in whole or in part, directly or indirectly, is owned by any
person who has had an appraiser license or certificate refused, denied,
cancelled, surrendered in lieu of revocation, or revoked in any State
for a substantive cause, as determined by the appropriate State
appraiser certifying and licensing agency.
(2) An AMC subject to State registration pursuant to this section
is not barred by Sec. 323.11(a)(1) from being registered by a State or
included on the AMC National Registry if the license or certificate of
the appraiser with an ownership interest was not revoked for a
substantive cause and has been reinstated by the State or States in
which the appraiser was licensed or certified.
(b) Good moral character of owners. An AMC shall not be registered
by a State if any person that owns more than 10 percent of the AMC--
(1) Is determined by the State appraiser certifying and licensing
agency not to have good moral character; or
(2) Fails to submit to a background investigation carried out by
the State appraiser certifying and licensing agency.
Sec. 323.13 Requirements for Federally regulated appraisal management
companies.
(a) Requirements in providing services. To provide appraisal
management services for a creditor or secondary mortgage market
participant relating to a covered transaction, a Federally regulated
AMC must comply with the requirements in Sec. 323.11(b)(2) through
(5).
(b) Ownership limitations. (1) A Federally regulated AMC shall not
be included on the AMC National Registry if such AMC, in whole or in
part, directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State for a
substantive cause, as determined by the ASC.
(2) A Federally regulated AMC is not barred by Sec. 323.12(b) from
being included on the AMC National Registry if the license or
certificate of the appraiser with an ownership interest was not revoked
for a substantive cause and has been reinstated by the State or States
in which the appraiser was licensed or certified.
(c) Reporting information for the AMC National Registry. A
Federally regulated AMC must report to the State or States in which it
operates the information required to be submitted by the State pursuant
to the Appraisal Subcommittee's policies regarding the determination of
the AMC National Registry fee, including but not necessarily limited to
the collection of information related to the limitations set forth in
Sec. 323.12, as applicable.
Sec. 323.14 Information to be presented to the Appraisal Subcommittee
by participating States.
Each State electing to register AMCs for purposes of permitting
AMCs to provide appraisal management services relating to covered
transactions in the State must submit to the Appraisal Subcommittee the
information required to be submitted by Appraisal Subcommittee
regulations or guidance concerning AMCs that operate in the State.
PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT
SUPERVISION
0
13. The authority citation for part 390 is revised to read as follows:
Authority: 12 U.S.C. 1819.
Subpart A also issued under 12 U.S.C. 1820.
Subpart B also issued under 12 U.S.C. 1818.
Subpart C also issued under 5 U.S.C. 504; 554-557; 12 U.S.C.
1464; 1467; 1468; 1817; 1818; 1820; 1829; 3349, 4717; 15 U.S.C. 78l;
78o-5; 78u-2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; 42 U.S.C. 4012a.
Subpart D also issued under 12 U.S.C. 1817; 1818; 1820; 15
U.S.C. 78l.
Subpart E also issued under 12 U.S.C. 1813; 1831m; 15 U.S.C. 78.
Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et
seq.
Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et
seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601-3619.
Subpart I also issued under 12 U.S.C. 1831x.
Subpart J also issued under 12 U.S.C. 1831p-1.
Subpart K also issued under 12 U.S.C. 1817; 1818; 15 U.S.C. 78c;
78l.
Subpart L also issued under 12 U.S.C. 1831p-1.
Subpart M also issued under 12 U.S.C. 1818.
Subpart N also issued under 12 U.S.C. 1821.
Subpart O also issued under 12 U.S.C. 1828.
Subpart P also issued under 12 U.S.C. 1470; 1831e; 1831n; 1831p-
1; 3339.
Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
[[Page 32687]]
Subpart R also issued under 12 U.S.C. 1463; 1464; 1831m; 1831n;
1831p-1.
Subpart S also issued under 12 U.S.C. 1462; 1462a; 1463; 1464;
1468a; 1817; 1820; 1828; 1831e; 1831o; 1831p-1; 1881-1884; 3207;
3339; 15 U.S.C. 78b; 78l; 78m; 78n; 78p; 78q; 78w; 31 U.S.C. 5318;
42 U.S.C. 4106.
Subpart T also issued under 12 U.S.C. 1462a; 1463; 1464; 15
U.S.C. 78c; 78l; 78m; 78n; 78w.
Subpart U also issued under 12 U.S.C. 1462a; 1463; 1464; 15
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w; 78d-1; 7241; 7242; 7243; 7244;
7261; 7264; 7265.
Subpart V also issued under 12 U.S.C. 3201-3208.
Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w.
Subpart Y also issued under 12 U.S.C.1831o.
Subpart Z also issued under 12 U.S.C. 1462; 1462a; 1463; 1464;
1828 (note).
Subpart X--[Removed and Reserved]
0
14. Remove and reserve subpart X consisting of Sec. Sec. 390.440
through 390.447.
Bureau of Consumer Financial Protection
Authority and Issuance
For the reasons stated above, the Bureau amends Regulation Z, 12
CFR part 1026, as follows:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
15. The authority citation for part 1026 is revised to read as follows:
Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353,
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.
Subpart A--General
0
16. Section 1026.1 is amended by revising paragraph (a) to read as
follows:
Sec. 1026.1 Authority, purpose, coverage, organization, enforcement,
and liability.
(a) Authority. This part, known as Regulation Z, is issued by the
Bureau of Consumer Financial Protection to implement the Federal Truth
in Lending Act, which is contained in title I of the Consumer Credit
Protection Act, as amended (15 U.S.C. 1601 et seq.). This part also
implements title XII, section 1204 of the Competitive Equality Banking
Act of 1987 (Pub. L. 100-86, 101 Stat. 552). Furthermore, this part
implements certain provisions of the Real Estate Settlement Procedures
Act of 1974, as amended (12 U.S.C. 2601 et seq.). In addition, this
part implements certain provisions of the Financial Institutions
Reform, Recovery, and Enforcement Act, as amended (12 U.S.C. 3331 et
seq.). The Bureau's information-collection requirements contained in
this part have been approved by the Office of Management and Budget
(OMB) under the provisions of 44 U.S.C. 3501 et seq. and have been
assigned OMB No. 3170-0015 (Truth in Lending).
* * * * *
Subpart E--Special Rules for Certain Home Mortgage Transactions
0
17. Section 1026.42 is amended by adding paragraph (h) to read as
follows:
Sec. 1026.42 Valuation independence.
* * * * *
(h) The Bureau issued a joint rule to implement the appraisal
management company minimum requirements in the Financial Institutions
Reform, Recovery, and Enforcement Act, as amended by section 1473 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act. See 12
CFR part 34.
Federal Housing Finance Agency
Authority and Issuance
For the reasons set forth in the SUPPLEMENTARY INFORMATION, FHFA
amends 12 CFR part 1222, as follows:
PART 1222--APPRAISALS
0
18. The authority citation for part 1222 is revised to read as follows:
Authority: 12 U.S.C. 4501 et seq., 12 U.S.C. 4526 and 15 U.S.C.
1639h.
0
19. Add subpart B to part 1222 to read as follows:
Subpart B--Appraisal Management Company Minimum Requirements
Sec.
1222.20 Authority, purpose, and scope.
1222.21 Definitions.
1222.22 Appraiser panel--annual size calculation.
1222.23 Appraisal management company registration.
1222.24 Ownership limitations for State-registered appraisal
management companies.
1222.25 Requirements for Federally regulated appraisal management
companies.
1222.26 Information to be presented to the Appraisal Subcommittee by
participating States.
Sec. 1222.20 Authority, purpose, and scope.
(a) Authority. This subpart is issued by the Federal Housing
Finance Agency pursuant to 12 U.S.C. 4501 et seq., 12 U.S.C. 4526, and
Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act (FIRREA), as amended by the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the Dodd-Frank Act) (Pub. L. 111-
203, 124 Stat. 1376 (2010)), 12 U.S.C. 3331 et seq.
(b) Purpose. The purpose of this subpart is to implement sections
1109, 1117, 1121, and 1124 of FIRREA Title XI, 12 U.S.C. 3338, 3346,
3350, and 3353.
(c) Scope. This subpart applies to States and to appraisal
management companies (AMCs) providing appraisal management services in
connection with consumer credit transactions secured by a consumer's
principal dwelling or securitizations of those transactions.
(d) Rule of construction. Nothing in this subpart should be
construed to prevent a State from establishing requirements in addition
to those in this subpart. In addition, nothing in this subpart should
be construed to alter guidance in, and applicability of, the
Interagency Appraisal and Evaluation Guidelines \1\ or other relevant
agency guidance that cautions banks, bank holding companies, Federal
savings associations, state savings associations, and credit unions, as
applicable, that each such entity is accountable for overseeing the
activities of third-party service providers and ensuring that any
services provided by a third party comply with applicable laws,
regulations, and supervisory guidance applicable directly to the
financial institution.
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\1\ 75 FR 77450 (December 10, 2010).
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Sec. 1222.21 Definitions.
For purposes of this subpart:
(a) Affiliate has the meaning provided in 12 U.S.C. 1841.
(b) AMC National Registry means the registry of State-registered
AMCs and Federally regulated AMCs maintained by the Appraisal
Subcommittee.
(c)(1) Appraisal management company (AMC) means a person that:
(i) Provides appraisal management services to creditors or to
secondary mortgage market participants, including affiliates;
(ii) Provides such services in connection with valuing a consumer's
principal dwelling as security for a consumer credit transaction or
incorporating such transactions into securitizations; and
(iii) Within a given 12-month period, as defined in Sec.
1222.22(d), oversees an appraiser panel of more than 15 State-certified
or State-licensed appraisers in a State or 25 or more State-certified
or State-licensed appraisers in two or more States, as described in
Sec. 1222.22;
(2) An AMC does not include a department or division of an entity
that
[[Page 32688]]
provides appraisal management services only to that entity.
(d) Appraisal management services means one or more of the
following:
(1) Recruiting, selecting, and retaining appraisers;
(2) Contracting with State-certified or State-licensed appraisers
to perform appraisal assignments;
(3) Managing the process of having an appraisal performed,
including providing administrative services such as receiving appraisal
orders and appraisal reports, submitting completed appraisal reports to
creditors and secondary market participants, collecting fees from
creditors and secondary market participants for services provided, and
paying appraisers for services performed; and
(4) Reviewing and verifying the work of appraisers.
(e) Appraiser panel means a network, list or roster of licensed or
certified appraisers approved by an AMC to perform appraisals as
independent contractors for the AMC. Appraisers on an AMC's ``appraiser
panel'' under this part include both appraisers accepted by the AMC for
consideration for future appraisal assignments in covered transactions
or for secondary mortgage market participants in connection with
covered transactions and appraisers engaged by the AMC to perform one
or more appraisals in covered transactions or for secondary mortgage
market participants in connection with covered transactions. An
appraiser is an independent contractor for purposes of this subpart if
the appraiser is treated as an independent contractor by the AMC for
purposes of Federal income taxation.
(f) Appraisal Subcommittee means the Appraisal Subcommittee of the
Federal Financial Institutions Examination Council.
(g) Consumer credit means credit offered or extended to a consumer
primarily for personal, family, or household purposes.
(h) Covered transaction means any consumer credit transaction
secured by the consumer's principal dwelling.
(i) Creditor means:
(1) A person who regularly extends consumer credit that is subject
to a finance charge or is payable by written agreement in more than
four installments (not including a down payment), and to whom the
obligation is initially payable, either on the face of the note or
contract, or by agreement when there is no note or contract.
(2) A person regularly extends consumer credit if the person
extended credit (other than credit subject to the requirements of 12
CFR 1026.32) more than 5 times for transactions secured by a dwelling
in the preceding calendar year. If a person did not meet these
numerical standards in the preceding calendar year, the numerical
standards shall be applied to the current calendar year. A person
regularly extends consumer credit if, in any 12-month period, the
person originates more than one credit extension that is subject to the
requirements of 12 CFR 1026.32 or one or more such credit extensions
through a mortgage broker.
(j) Dwelling means:
(1) A residential structure that contains one to four units,
whether or not that structure is attached to real property. The term
includes an individual condominium unit, cooperative unit, mobile home,
and trailer, if it is used as a residence.
(2) A consumer can have only one ``principal'' dwelling at a time.
Thus, a vacation or other second home would not be a principal
dwelling. However, if a consumer buys or builds a new dwelling that
will become the consumer's principal dwelling within a year or upon the
completion of construction, the new dwelling is considered the
principal dwelling for purposes of this section.
(k) Federally regulated AMC means an AMC that is owned and
controlled by an insured depository institution, as defined in 12
U.S.C. 1813 and that is regulated by the Office of the Comptroller of
the Currency, the Board of Governors of the Federal Reserve System, or
the Federal Deposit Insurance Corporation.
(l) Federally related transaction regulations means regulations
established by the Office of the Comptroller of the Currency, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, or the National Credit Union Administration,
pursuant to sections 1112, 1113, and 1114 of FIRREA Title XI, 12 U.S.C.
3341-3343.
(m) Person means a natural person or an organization, including a
corporation, partnership, proprietorship, association, cooperative,
estate, trust, or government unit.
(n) Secondary mortgage market participant means a guarantor or
insurer of mortgage-backed securities, or an underwriter or issuer of
mortgage-backed securities. Secondary mortgage market participant only
includes an individual investor in a mortgage-backed security if that
investor also serves in the capacity of a guarantor, insurer,
underwriter, or issuer for the mortgage-backed security.
(o) States mean the 50 States and the District of Columbia and the
territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin
Islands.
(p) Uniform Standards of Professional Appraisal Practice (USPAP)
means the appraisal standards promulgated by the Appraisal Standards
Board of the Appraisal Foundation.
Sec. 1222.22 Appraiser panel--annual size calculation.
For purposes of determining whether, within a 12-month period, an
AMC oversees an appraiser panel of more than 15 State-certified or
State-licensed appraisers in a State or 25 or more State-certified or
State-licensed appraisers in two or more States pursuant to Sec.
1222.21(c)(1)(iii)--
(a) An appraiser is deemed part of the AMC's appraiser panel as of
the earliest date on which the AMC:
(1) Accepts the appraiser for the AMC's consideration for future
appraisal assignments in covered transactions or for secondary mortgage
market participants in connection with covered transactions; or
(2) Engages the appraiser to perform one or more appraisals on
behalf of a creditor for a covered transaction or secondary mortgage
market participant in connection with covered transactions.
(b) An appraiser who is deemed part of the AMC's appraiser panel
pursuant to paragraph (a) of this section is deemed to remain on the
panel until the date on which the AMC:
(1) Sends written notice to the appraiser removing the appraiser
from the appraiser panel, with an explanation of its action; or
(2) Receives written notice from the appraiser asking to be removed
from the appraiser panel or notice of the death or incapacity of the
appraiser.
(c) If an appraiser is removed from an AMC's appraiser panel
pursuant to paragraph (b) of this section, but the AMC subsequently
accepts the appraiser for consideration for future assignments or
engages the appraiser at any time during the twelve months after the
AMC's removal, the removal will be deemed not to have occurred, and the
appraiser will be deemed to have been part of the AMC's appraiser panel
without interruption.
(d) The period for purposes of counting appraisers on an AMC's
appraiser panel may be the calendar year or a 12-month period
established by law or rule of each State with which the AMC is required
to register.
Sec. 1222.23 Appraisal management company registration.
Each State electing to register AMCs pursuant to paragraph (b)(1)
of this section must:
[[Page 32689]]
(a) Establish and maintain within the State appraiser certifying
and licensing agency a licensing program that is subject to the
limitations set forth in Sec. 1222.24 and with the legal authority and
mechanisms to:
(1) Review and approve or deny an AMC's application for initial
registration;
(2) Review and renew or review and deny an AMC's registration
periodically;
(3) Examine the books and records of an AMC operating in the State
and require the AMC to submit reports, information, and documents;
(4) Verify that the appraisers on the AMC's panel hold valid State
certifications or licenses, as applicable;
(5) Conduct investigations of AMCs to assess potential violations
of applicable appraisal-related laws, regulations, or orders;
(6) Discipline, suspend, terminate, or deny renewal of the
registration of an AMC that violates applicable appraisal-related laws,
regulations, or orders; and
(7) Report an AMC's violation of applicable appraisal-related laws,
regulations, or orders, as well as disciplinary and enforcement actions
and other relevant information about an AMC's operations, to the
Appraisal Subcommittee.
(b) Impose requirements on AMCs that are not owned and controlled
by an insured depository institution and not regulated by a Federal
financial institutions regulatory agency to:
(1) Register with and be subject to supervision by the State
appraiser certifying and licensing agency;
(2) Engage only State-certified or State-licensed appraisers for
Federally related transactions in conformity with any Federally related
transaction regulations;
(3) Establish and comply with processes and controls reasonably
designed to ensure that the AMC, in engaging an appraiser, selects an
appraiser who is independent of the transaction and who has the
requisite education, expertise, and experience necessary to competently
complete the appraisal assignment for the particular market and
property type;
(4) Direct the appraiser to perform the assignment in accordance
with USPAP; and
(5) Establish and comply with processes and controls reasonably
designed to ensure that the AMC conducts its appraisal management
services in accordance with the requirements of section 129E(a)-(i) of
the Truth in Lending Act, 15 U.S.C. 1639e(a)-(i), and regulations
thereunder.
Sec. 1222.24 Ownership limitations for State-registered appraisal
management companies.
(a) Appraiser certification or licensing of owners. (1) An AMC
subject to State registration pursuant to Sec. 1222.23 shall not be
registered by a State or included on the AMC National Registry if such
AMC, in whole or in part, directly or indirectly, is owned by any
person who has had an appraiser license or certificate refused, denied,
cancelled, surrendered in lieu of revocation, or revoked in any State
for a substantive cause, as determined by the appropriate State
appraiser certifying and licensing agency.
(2) An AMC subject to State registration pursuant to Sec. 1222.23
is not barred by paragraph (a)(1) of this section from being registered
by a State or included on the AMC National Registry if the license or
certificate of the appraiser with an ownership interest was not revoked
for a substantive cause and has been reinstated by the State or States
in which the appraiser was licensed or certified.
(b) Good moral character of owners. An AMC shall not be registered
by a State if any person that owns more than 10 percent of the AMC--
(1) Is determined by the State appraiser certifying and licensing
agency not to have good moral character; or
(2) Fails to submit to a background investigation carried out by
the State appraiser certifying and licensing agency.
Sec. 1222.25 Requirements for Federally regulated appraisal
management companies.
(a) Requirements in providing services. To provide appraisal
management services for a creditor or secondary mortgage market
participant relating to a covered transaction, a Federally regulated
AMC must comply with the requirements in Sec. 1222.23(b)(2) through
(5).
(b) Ownership limitations. (1) A Federally regulated AMC shall not
be included on the AMC National Registry if such AMC, in whole or in
part, directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State for a
substantive cause, as determined by the ASC.
(2) A Federally regulated AMC is not barred pursuant to paragraph
(b)(1) of this section from being included on the AMC National Registry
if the license or certificate of the appraiser with an ownership
interest was not revoked for substantive cause and has been reinstated
by the State or States in which the appraiser was licensed or
certified.
(c) Reporting information for the AMC National Registry. A
Federally regulated AMC must report to the State or States in which it
operates the information required to be submitted by the State to the
Appraisal Subcommittee pursuant to the Appraisal Subcommittee's
policies regarding the determination of the AMC National Registry fee,
including but not necessarily limited to the collection of information
related to the limitations set forth in this section, as applicable.
Sec. 1222.26 Information to be presented to the Appraisal
Subcommittee by participating States.
Each State electing to register AMCs for purposes of permitting
AMCs to provide appraisal management services relating to covered
transactions in the State must submit to the Appraisal Subcommittee the
information required to be submitted by Appraisal Subcommittee
regulations or guidance concerning AMCs that operate in the State.
Dated: April 21, 2015.
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, April 29, 2015
Robert deV. Frierson,
Secretary of the Board.
Dated: April 21, 2015.
Robert E. Feldman,
Executive Secretary.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Dated: April 14, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
Dated: March 23, 2015.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
In concurrence:
Dated: April 22, 2015.
Gerard Poliquin,
Secretary of the Board, NCUA.
[FR Doc. 2015-12719 Filed 6-8-15; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 7535-01-P; 4810-AM-P;
8070-01-P