[Federal Register Volume 83, Number 86 (Thursday, May 3, 2018)]
[Notices]
[Pages 19558-19560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09419]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

[Docket No. AS18-07]


Final Order Denying Temporary Waiver Relief

AGENCY: Appraisal Subcommittee of the Federal Financial Institutions 
Examination Council.

ACTION: Final Order denying temporary waiver relief.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council (FFIEC) is issuing a final order 
denying temporary waiver relief pursuant to the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, as amended. This order 
denies a request for temporary waiver relief received from TriStar 
Bank, notice of which was published in the Federal Register on March 9, 
2018.

DATES: Applicable May 3, 2018.

FOR FURTHER INFORMATION CONTACT: James R. Park, Executive Director, at 
(202) 595-7575, or Alice M. Ritter, General Counsel, at (202) 595-7577, 
ASC, 1401 H Street NW, Suite 760, Washington, DC 20005.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Relevant statutory provisions and regulations

    Title XI established the ASC.\1\ The purpose of Title XI is ``to 
provide that Federal financial and public policy interests in real 
estate related transactions will be protected by requiring that real 
estate appraisals utilized in connection with federally related 
transactions are performed in writing, in accordance with uniform 
standards, by individuals whose competency has been demonstrated and 
whose professional conduct will be subject to effective supervision.'' 
\2\ Section 1119(b) of Title XI authorizes the ASC to waive, on a 
temporary basis and with approval of the FFIEC, ``any requirement 
relating to certification or licensing of a person to perform 
appraisals under [Title XI] upon a written determination that there is 
a scarcity of certified or licensed appraisers to perform appraisals in 
connection with federally related transactions \3\ in a State, or in 
any geographical political subdivision of a State, leading to 
significant delays in the performance of such appraisals.'' \4\ 
Congress intended that the ASC exercise this waiver authority 
``cautiously.'' \5\
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    \1\ The ASC Board is comprised of seven members. Five members 
are designated by the heads of the FFIEC agencies (Board of 
Governors of the Federal Reserve System [Board], Bureau of Consumer 
Financial Protection [Bureau], Federal Deposit Insurance Corporation 
[FDIC], Office of the Comptroller of the Currency [OCC], and 
National Credit Union Administration [NCUA]). The other two members 
are designated by the heads of the Department of Housing and Urban 
Development (HUD) and the Federal Housing Finance Agency (FHFA).
    \2\ Title XI Sec.  1101, 12 U.S.C. 3331.
    \3\ ``Federally related transaction'' (FRT) refers to any real 
estate related financial transaction which: (a) A federal financial 
institutions regulatory agency engages in, contracts for, or 
regulates; and (b) requires the services of an appraiser. (Title XI 
Sec.  1121 (4), 12 U.S.C. 3350.)
    \4\ 12 U.S.C. 3348(b).
    \5\ House Comm. on Banking, Finance and Urban Affairs, Report 
Together with Additional, Supplemental, Minority, Individual, and 
Dissenting Views, Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989, H.R. Rep. No. 101-54 Part 1, 101st Cong., 
1st Sess., at 482-83.
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    The ASC has issued procedures \6\ governing the processing of 
temporary waiver requests. After receiving a waiver request, the ASC is 
required to issue a public notice in the Federal Register requesting 
comment on the request for a proposed temporary waiver. Within 15 days 
of the close of the 30-day comment period, the ASC, by order, must 
grant or deny a waiver, in whole or in part, and upon specified terms 
or conditions, including provisions for waiver termination. The ASC's 
order must respond to comments received, provide reasons for its 
finding, and be published promptly in the Federal Register.
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    \6\ 12 CFR part 1102, subpart A.
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B. Procedural Status

    On November 20, 2017, the ASC received a letter requesting 
consideration of a temporary waiver from TriStar Bank, a state-
chartered bank located in Dickson, Tennessee (Requester). On November 
30, 2017, ASC staff replied by letter to the Requester, in which ASC 
staff described the information required to file a completed waiver 
request pursuant to 12 CFR Sec. Sec.  1102.2 and 1102.3. On January 22, 
2018, the Requester submitted additional information (dated January 10, 
2018) in response to the ASC's November 30, 2017 letter. On March 9, 
2018, the ASC published a Notice of Received Request for a Temporary 
Waiver giving interested persons 30 days to submit comments, including 
submission of written data, views and arguments.\7\ On April 3, 2018, 
the Requester submitted correspondence with additional information in 
response to a comment letter submitted by the Tennessee Real Estate 
Appraiser Commission (discussed infra). The comment period closed on 
April 9, 2018. A discussion of the public comments received by the ASC 
concerning the request for temporary waiver relief follows in Section 
III below.
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    \7\ 83 FR 10480 (March 9, 2018).
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    The ASC called a special meeting to consider this matter on April 
23, 2018, and voted to approve the issuance of this final order denying 
temporary waiver relief.

II. Request for a Temporary Waiver

    The request submitted by the Requester sought temporary waiver 
relief ``to receive a one-year waiver of the appraisal regulation's 
requirements to utilize a certified appraiser. . . . for appraisals 
completed within the Nashville MSA. . . . mostly in Dickson, Maury, 
Williamson and Davidson

[[Page 19559]]

counties.'' \8\ The Requester stated that the shortage of appraisers, 
time delay and added cost is negatively impacting clients.
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    \8\ Letter from Requester to the ASC requesting a temporary 
waiver (Nov. 20, 2017).
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    The Requester submitted data to support the request alleging a 
scarcity of certified general appraisers and delays experienced in 
receiving commercial appraisals/evaluations. The Requester stated, 
``[w]e reviewed our appraisal logs in 2013 and in 2017 to determine the 
trend of pricing and timeliness of appraisals/evaluations during each 
year. Since 2013, the logs reflect an average increase of 82% in wait 
time to receive commercial appraisals/evaluations. During that time, 
the average cost to our clients for commercial appraisals/evaluations 
has increased 23%. The cost of time and money is putting pressure on 
our clients' ability to find value in our work.'' \9\ The Requester 
further stated concern that ``the new requirements to become a 
certified general appraiser are not producing enough qualified 
appraisers in the market. A current appraiser has little motivation to 
train someone that he or she will have to compete against in the future 
or the time to commit to train an apprentice during this time of 
tremendous growth.'' \10\
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    \9\ Id.
    \10\ Id.
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    The Requester stated there is only one certified general appraiser 
in the county of Dickson, and the demand is so great in the Nashville 
MSA area that the Requester is having a difficult time receiving 
appraisals in a reasonable amount of time. The Requester expressed 
concern that ``current regulation and requirements are not allowing a 
healthy marketplace to obtain independent values.'' \11\
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    \11\ Letter from Requester to the ASC providing additional 
information on the request for a temporary waiver (Jan. 10, 2018).
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III. Summary of Comments

    The ASC received 166 comment letters in response to the published 
notice of received request for a temporary waiver and request for 
comment. These comment letters were received from State appraiser 
certifying and licensing agencies, appraiser and real estate trade 
associations, professional associations, AMCs, appraisal firms and 
appraisers. The majority of comments received were from appraisers 
opposing the granting of a temporary waiver. Several comments were also 
received from appraisal trade organizations opposing the granting of a 
temporary waiver.\12\ Several appraisers credentialed in Tennessee 
responded to the ASC's request for comments by stating they have 
contacted TriStar offering to perform appraisals for the bank, but have 
not been assigned any appraisals or evaluations to date. A few 
commenters did not oppose or support the granting of a temporary waiver 
in response to this request, but requested the ASC exercise such waiver 
authority with caution. A few commenters supported the request for a 
waiver, but expressed support of a waiver of the requirement for an 
appraisal, which is beyond the scope of authority set forth in the 
statute authorizing the ASC to waive, on a temporary basis and with 
approval of the FFIEC, credentialing requirements.
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    \12\ A number of commenters indicated that granting the waiver 
would erode the public trust, and a number of other commenters 
cautioned that granting of the waiver would result in the same 
conditions that led to the financial crisis in 2008.
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    One commenter who had provided appraisal and evaluation services 
for the Requester since 2012 provided data that in some cases 
contradicted data provided by the Requester. For example, the commenter 
claimed to have completed a number of commercial appraisals that were 
not included in the data submitted by the Requester. In addition, the 
commenter provided an explanation for lengthy turn-around times on two 
of the commercial properties listed in the Requester's data.
    The Tennessee Real Estate Appraiser Commission (TN REAC) provided 
comment on this request, stating that it ``disagrees that there is a 
shortage of appraisers in those cited counties.'' \13\ TN REAC also 
provided data showing that 174 Certified General appraisers and 491 
total credentialed appraisers are available in the four counties and 
the directly surrounding area. This information is supported by the 
National Registry.\14\
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    \13\ Letter from TN REAC to the ASC responding to request for 
comments on the temporary waiver request. (Jan. 23, 2018).
    \14\ Title XI requires the ASC to maintain a National Registry 
of State certified and licensed appraisers who are eligible to 
perform appraisals in FRTs. (Title XI Sec.  1109(b)1), 12 U.S.C. 
3338(b)(1).)
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IV. ASC Discussion

    In order to grant a temporary waiver, the ASC must make a 
determination that a scarcity of credentialed appraisers is leading to 
significant delays in obtaining appraisals for FRTs in the geographic 
area \15\ specified in the request. In considering this request, the 
ASC examined both evidence of a scarcity of appraisers in the area, and 
evidence of significant delay, taking into account the comments 
received.
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    \15\ The ASC's section 1119(b) temporary waiver authority is 
with respect to a State or any geographical political subdivision of 
a State.
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    Regarding the scarcity of appraisers, the Requester's comments 
focused on Dickson County. The Requester provided little discussion of 
scarcity in Maury, Davidson, and Williamson counties and no discussion 
of other counties in the Nashville MSA. As noted, TN REAC disagreed 
that a scarcity exists, and submitted more comprehensive information 
concerning the number of appraisers in this area.
    Regarding the delay in obtaining appraisals, the Requester 
submitted data to show that the delivery time for the appraisals and 
evaluations it has ordered and received increased between 2013 and 
2017. Because the request for a temporary waiver applies only to 
appraisals, the ASC focused on data related to delivery time for 
appraisals. Delivery times for appraisals alone have increased by a 
smaller percentage than the aggregated delivery times. In addition, the 
ASC believes it is useful to look at the median appraisal delivery 
times, especially in light of the small sample size presented by the 
Requester. Using the median time also results in an analysis that is 
more resistant to the influence of outliers in the data. The data 
provided by the Requester indicates that the delivery time for a 
commercial appraisal it ordered in the subject counties in 2013 was 21 
days. In 2017, the delivery time was 27 days. Comparing the median 
numbers yields a six-day increase in the appraisal time between 2013 
and 2017, based on the data provided by TriStar. But it appears the 
Requester's data may be incomplete. One commenter asserted that he 
completed additional commercial appraisals for the Requester in 2017 
that were not reported. If these appraisals are considered in 
calculating the median, the delivery time for the Requester's 
commercial appraisals in 2017 was 24 days. This an increase of only 
three days.
    In order to grant a temporary waiver request, the ASC must find 
both that there is a scarcity of appraisers in the relevant geographic 
area and that this scarcity has caused significant delays in appraisal 
services for FRTs. In this case, the information submitted to the ASC 
does not support a finding that there is a scarcity of appraisers that 
has resulted in a significant delay in the delivery times for 
appraisals. Thus, this request is denied.

VI. Order

    For the reasons stated above, and pursuant to section 1119(b) of 
Title XI and 12 CFR part 1102, subpart A, the

[[Page 19560]]

ASC denies the request for temporary waiver relief from the State 
certification requirements for certified general appraisers to perform 
commercial appraisals for FRTs in the Tennessee counties of Dickson, 
Maury, Williamson and Davidson.
* * * * *

    By the Appraisal Subcommittee.
    Dated April 27, 2018.
Arthur Lindo,
Chairman.
[FR Doc. 2018-09419 Filed 5-2-18; 8:45 am]
BILLING CODE 6700-01-P