[Federal Register Volume 87, Number 9 (Thursday, January 13, 2022)]
[Proposed Rules]
[Pages 2079-2085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00342]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 87, No. 9 / Thursday, January 13, 2022 / 
Proposed Rules  

[[Page 2079]]



FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

12 CFR Part 1102

[Docket No. AS22-01]


Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver 
Requests

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

ACTION: Notice of proposed rulemaking; request for public comment.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council (FFIEC) proposes to amend existing 
rules of practice and procedure governing temporary waiver proceedings, 
which were promulgated in 1992 pursuant to Title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989, as amended 
(Title XI). The proposed amendments are intended to provide for greater 
transparency and clarity on temporary waiver proceedings.

DATES: Comments must be received on or before March 14, 2022.

ADDRESSES: Commenters are encouraged to submit comments by the Federal 
eRulemaking Portal or email, if possible. You may submit comments, 
identified by Docket Number AS22-01, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. Click on the 
``Support'' button on the Regulations.gov home page to get information 
on using Regulations.gov, including instructions for submitting public 
comments.
     Email: [email protected]. Include the docket number in the 
subject line of the message.
     Mail: Address to Appraisal Subcommittee, Attn: Lori 
Schuster, Management and Program Analyst, 1325 G Street NW, Suite 500, 
Washington, DC 20005.
     Hand Delivery/Courier: 1325 G Street NW, Suite 500, 
Washington, DC 20005.
    In general, the ASC will enter all comments received into the 
docket and publish those comments on the Regulations.gov website 
without change, including any business or personal information that you 
provide, such as name and address information, email addresses, or 
phone numbers. Comments received, including attachments and other 
supporting materials, are part of the public record and subject to 
public disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure. At the close of the comment period, all public 
comments will also be made available on the ASC's website at https://www.asc.gov (follow link in ``What's New'') as submitted, unless 
modified for technical reasons.
    You may review comments and other related materials that pertain to 
this rulemaking action by the following method:
     Viewing Comments Electronically: Go to https://www.regulations.gov. Enter ``Docket ID AS22-01'' in the Search box and 
click ``Search.'' Click on the ``Support'' tab on the Regulations.gov 
home page to get information on using Regulations.gov, including 
instructions for viewing public comments, viewing other supporting and 
related materials, and viewing the docket after the close of the 
comment period.

FOR FURTHER INFORMATION CONTACT: Lori Schuster, Management and Program 
Analyst, [email protected], (202) 595-7578, or Alice M. Ritter, General 
Counsel, [email protected], (202) 595-7577, ASC, 1325 G Street NW, Suite 
500, Washington, DC 20005.

SUPPLEMENTARY INFORMATION:

I. Background

    The purpose of Title XI \1\ 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 [FRTs] 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\
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    \1\ The ASC was established by Title XI. The ASC Board consists 
of seven members. Five members are designated by the heads of the 
FFIEC federal member 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. See also, 12 U.S.C. 3331.
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    Title XI requires that real property appraisals performed in 
connection with FRTs be performed in accordance with the Uniform 
Standards of Professional Appraisal Practice (USPAP) \3\ as promulgated 
by the Appraisal Standards Board (ASB) of the Appraisal Foundation. The 
Federal financial institutions regulatory agencies' appraisal 
regulations require appraisals for FRTs to meet these minimum appraisal 
standards as evidenced by USPAP.\4\ Title XI also requires that 
certified and licensed appraisers meet the minimum qualification 
criteria as set forth in The Real Property Appraiser Qualification 
Criteria (AQB Criteria) issued by the Appraiser Qualifications Board 
(AQB) of the Appraisal Foundation.\5\ The State appraiser regulatory 
agencies enforce these federal minimum requirements for credentialed 
appraisers in their respective States and are subject to federal 
oversight by the ASC.\6\
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    \3\ Title XI Sec.  1109(1). See also, 12 U.S.C. 3339(1).
    \4\ Title XI Sec.  1121(4), 12 U.S.C. 3350, implemented by the 
Office of the Comptroller of the Currency: 12 CFR 34.44; Federal 
Reserve Board: 12 CFR 225.64; Federal Deposit Insurance Corporation: 
12 CFR 323.4; and National Credit Union Administration: 12 CFR 
722.4.
    \5\ Title XI Sec.  1116(a) and (c). See also, 12 U.S.C. 3345(a) 
and (c).
    \6\ Title XI Sec.  1118. See also, 12 U.S.C. 3347. ``State 
appraiser regulatory agencies'' are referred to in the proposed rule 
as ``State Appraisal Agencies.''
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    Section 1119(b) of Title XI authorizes the ASC to waive, on a 
temporary basis, subject to approval of the FFIEC:

any requirement relating to certification or licensing of a person 
to perform appraisals under [Title XI] if the [ASC] or a [State 
appraiser regulatory agency] makes a written determination that 
there is a scarcity of certified or licensed appraisers to perform 
appraisals in connection with [FRTs] in a State, or in any 
geographical political subdivision of a State, leading to 
significant delays in the performance of such appraisals.

[[Page 2080]]

A waiver terminates when the [ASC] determines that such significant 
delays have been eliminated.\7\
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    \7\ Title XI Sec.  1119(b). See also, 12 U.S.C. 3348(b).

Congress intended that the ASC exercise this waiver authority 
``cautiously.'' \8\
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    \8\ 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 published rules of practice and procedure governing 
temporary waiver proceedings in 1992.\9\ The ASC has ordered temporary 
waiver relief on two occasions. The first was for the Commonwealth of 
the Northern Mariana Islands in February 1993 (preceded by an interim 
order for relief issued in December 1992). The second was in August 
2019 for the State of North Dakota (which was extended in part for one 
additional year in 2020).
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    \9\ 12 CFR part 1102, subpart A.
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    Under the existing rules of practice and procedure, when the ASC 
receives a request from a State appraiser regulatory agency that meets 
the requirements set forth in 12 CFR 1102.2, Requirements for requests, 
including a written duly authorized determination that there is a 
scarcity of certified or licensed appraisers leading to significant 
delays in obtaining appraisals in FRTs, the request is published 
promptly in the Federal Register for comment. In the absence of such a 
written determination, the State appraiser regulatory agency must ask 
the ASC for such a determination. When the ASC receives a submission 
pursuant to 12 CFR 1102.3, Other requests and information submissions, 
the ASC has the discretion to determine whether or not to initiate a 
temporary waiver proceeding. If the ASC makes a determination to 
initiate a temporary waiver proceeding, the ASC will promptly publish 
notice of the proceeding in the Federal Register. Within 45 calendar 
days of the date of publication in the Federal Register, the existing 
rules provide that the ASC will grant or deny a waiver, in whole or in 
part, by Order. The ASC must seek FFIEC approval if the waiver is 
granted, and the waiver cannot take effect unless approved by the 
FFIEC.
    Application of the existing rules of practice and procedure in the 
present day led the ASC to recognize there may be advantages in 
proposing revisions to the existing rules to define terms and provide 
greater clarity on the proceedings. The ASC also believes there may be 
advantages in proposing revisions to the timeframes in the existing 
rules of practice and procedure (as established in 1992 to accommodate 
newly formed State appraiser regulatory agencies) to be more conducive 
to deliberation by the ASC or FFIEC. Accordingly, the ASC proposes to 
amend the existing rules of practice and procedure as set forth below. 
The ASC created a flow chart for temporary waiver proceedings as set 
forth in this notice of proposed rulemaking: https://www.asc.gov/Documents/FedralRegisterDocuments/Temporary%20Waiver%20Flow%20Chart%20for%20NPRM%20-%20Docket%20No.%20AS22-01.pdf.
    The ASC is also proposing interpretations of several of the terms 
used in Sec.  1119(b) of Title XI. These interpretations are proposed 
to be included in the ``definitions'' section of the rule.
    Though neither procedural rules nor published agency 
interpretations of their statutory authority require notice and comment 
under the Administrative Procedure Act (APA),\10\ the ASC is 
voluntarily submitting this proposed rule and interpretations for 
public comment in order to seek feedback from interested parties.
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    \10\ 5 U.S.C. 553(b).
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II. The Proposed Rule

Authority, Purpose, and Scope

    Proposed Sec.  1102.1 would clarify the purpose and scope of the 
processes available for ASC consideration of temporary waiver relief by 
making a clear distinction between: (1) A request from a State 
appraiser regulatory agency accompanied by a written determination, 
referred to in the proposed rule as a ``Request for Temporary Waiver''; 
and (2) information received from other persons or entities (which 
could include a State appraiser regulatory agency) referred to in the 
proposed rule as a ``Petition.'' As subsequent sections in the proposed 
amended rule clarify, the procedure followed varies depending on 
whether the ASC has received a Request for Temporary Waiver or a 
Petition requesting that the ASC initiate a temporary waiver 
proceeding.
    The basis for this distinction is in the statute itself. Section 
1119(b) of Title XI authorizes the ASC to grant a temporary waiver only 
when the ASC or a State appraiser regulatory agency has made the 
statutorily required written determination that: (1) There is a 
scarcity of certified or licensed appraisers to perform appraisals in 
connection with FRTs in a State, or in any geographical political 
subdivision of a State; and (2) such scarcity is leading to significant 
delays in the performance of such appraisals for FRTs.\11\ Accordingly, 
the proposed rules seek to clarify the procedural differences in 
processing a Request for Temporary Waiver accompanied by a written 
determination as compared to a Petition requesting the ASC exercise its 
discretion to initiate a temporary waiver proceeding.
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    \11\ Title XI Sec.  1119(b). See also, 12 U.S.C. 3348(b).
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Definitions

    Proposed Sec.  1102.2 would establish definitions for the following 
terms:
    Federally related transaction (FRT). Proposed Sec.  1102.2(a) 
proposes to define federally related transaction (FRT) to mean 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 under the interagency 
appraisal rules. [(Title XI Sec.  1121(4), 12 U.S.C. 3350), implemented 
by the Office of the Comptroller of the Currency: 12 CFR 34.42(g) and 
34.43(a); Federal Reserve Board: 12 CFR 225.62 and 225.63(a); Federal 
Deposit Insurance Corporation: 12 CFR 323.2(f) and 323.3(a); and 
National Credit Union Administration: 12 CFR 722.2(f) and 722.3(a)].
    Performance of appraisals. Proposed Sec.  1102.2(b) proposes to 
define performance of appraisals to mean that the appraisal service 
requested of an appraiser has been provided to the lender or appraisal 
management company (AMC).
    Petition. Proposed Sec.  1102.2(c) proposes to define Petition to 
mean information submitted to the ASC by the Federal financial 
institutions regulatory agencies, their respective regulated financial 
institutions, or other persons or institutions with a demonstrable 
interest in appraiser regulation, including a State Appraisal Agency 
(defined below), asking the ASC to exercise its discretionary authority 
to initiate a temporary waiver proceeding, and that meets the 
requirements, as determined by the ASC, set forth in proposed Sec.  
1102.4.
    Request for Temporary Waiver. Proposed Sec.  1102.2(d) proposes to 
define Request for Temporary Waiver to mean information submitted to 
the ASC with a written determination from a State Appraisal Agency 
(defined below) requesting a temporary waiver that meets the 
requirements, as determined by the ASC, set forth in proposed Sec.  
1102.3.
    Scarcity of certified or licensed appraisers. Proposed Sec.  
1102.2(e) proposes to define scarcity of certified

[[Page 2081]]

or licensed appraisers to mean the number of active certified or 
licensed appraisers within a State or a specified geographical 
political subdivision is insufficient to meet the demand for appraisal 
services and such appraisers are difficult to retain.
    Significant delays in the performance of appraisals. Proposed Sec.  
1102.2(f) proposes to define significant delays in the performance of 
appraisals to mean delays that are substantially out of the ordinary 
when compared to performance of appraisals for similarly situated 
federally related transactions based on factors such as geographic 
location (e.g., rural versus urban) and assignment type, and the delay 
is not the result of intervening circumstances outside the appraiser's 
control or brought about by the appraiser's client (e.g., inability to 
access the subject property).
    State Appraisal Agency. Proposed Sec.  1102.2(g) proposes to define 
State Appraisal Agency to mean the State appraiser certifying and 
licensing agency.\12\
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    \12\ Title XI Sec.  1121(1). See also, 12 U.S.C. 3350(1).
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    Temporary waiver. Proposed Sec.  1102.2(h) proposes to define 
Temporary waiver to mean a waiver of any or all credentialing 
requirements for persons eligible to perform appraisals for FRTs; if 
granted, a temporary waiver does not waive the requirement for a USPAP-
compliant appraisal.\13\
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    \13\ The regulations of the Federal financial institutions 
regulatory agencies (agencies' appraisal regulations) require 
appraisals for FRTs to meet minimum appraisal standards including 
conformance to generally accepted appraisal standards as evidenced 
by USPAP. The ASC cannot waive the requirement for USPAP-compliant 
appraisals where applicable under the agencies' appraisal 
regulations. Therefore, when a waiver is in effect, appraisals that 
comply with the agencies' appraisal regulations (including 
conformance with USPAP) would still be required when applicable 
under those regulations, but they could be performed by persons who 
are not credentialed. (See 12 CFR 34.44(a); 12 CFR 225.64(a); 12 CFR 
323.4(a); and 12 CFR 722.4(a)).
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Request for Temporary Waiver

    Proposed Sec.  1102.3 clarifies: Who can file a Request for 
Temporary Waiver; what a Request for Temporary Waiver should contain; 
ASC review of a Request for Temporary Waiver for purposes of 
determining sufficiency of the document's content and receipt by the 
ASC; and what is required in the event a Request for Temporary Waiver 
is not deemed to be received, and thereby is either denied or referred 
back to the State Appraisal Agency.
    Proposed Sec.  1102.3(a) states that the State Appraisal Agency for 
the State in which temporary waiver relief is sought may file a Request 
for Temporary Waiver as distinguished from a Petition from other 
persons or entities as proposed in Sec.  1102.4. A State Appraisal 
Agency may alternatively submit a Petition as set forth in proposed 
Sec.  1102.4. The ASC believes this is consistent with the intent of 
the existing rules.\14\
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    \14\ ``The rules provide persons other than the State appraisal 
regulatory agencies (`State agencies') with the opportunity to 
submit informational submissions to the ASC. They also may request 
that the ASC exercise its discretionary authority to provide 
temporary waiver relief. The ASC will consider such submissions and 
requests in determining whether it should initiate a temporary 
waiver proceeding.'' 57 Federal Register 10980 (April 1992).
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    Proposed Sec.  1102.3(b) states that a Request for Temporary Waiver 
will not be deemed to have been received by the ASC unless it fully and 
accurately sets out:

    (1) A written determination by the State Appraisal Agency that 
there is a scarcity of certified or licensed appraisers leading to 
significant delays in the performance of appraisals for FRTs or a 
specified class of FRTs within either a portion of, or the entire 
State;
    (2) the requirement(s) of State law from which relief is being 
sought;
    (3) the nature of the scarcity of certified or licensed 
appraisers (including supporting documentation, statistical or 
otherwise verifiable);
    (4) the extent of the delays anticipated or experienced in the 
performance of appraisals by certified or licensed appraisers 
(including supporting documentation, statistical or otherwise 
verifiable);
    (5) how complaints concerning appraisals by persons who are not 
certified or licensed would be processed in the event a temporary 
waiver is granted; and
    (6) meaningful suggestions and recommendations for remedying the 
situation.

    The existing rules state that in the absence of a written 
determination by the State Appraisal Agency, it must ask the ASC for 
such a determination. That language is removed from this proposed 
subsection for the reason that if the ASC were to make such a 
determination when asked to do so by a State Appraisal Agency, it would 
be processed as an ASC Order initiating a temporary waiver proceeding 
pursuant to proposed Sec.  1102.5(a).
    The proposed amendments to this subsection seek to provide clarity 
on information that should be included in a Request for Temporary 
Waiver and to remove redundancy from that information. For example, the 
existing rules, in addition to the above, ask for ``[a] description of 
all significant problems currently being encountered in efforts to 
comply with [T]itle XI'' which would be captured in the information 
sought in proposed Sec.  1102.3(b). The proposed amendments also modify 
the requirement for a State Appraisal Agency to provide ``a specific 
plan for expeditiously alleviating the scarcity and service delays'' to 
``meaningful suggestions and recommendations for remedying the 
situation'' recognizing that the situation creating scarcity and delay 
may be completely outside the control of the State Appraisal Agency.
    The proposed amendments include the phrase ``supporting 
documentation, statistical or otherwise verifiable.'' This is intended 
to provide clarification as to what a Request for Temporary Waiver 
should include to support the existence of a scarcity of certified or 
licensed appraisers leading to significant delays in the performance of 
appraisals for FRTs or a specified class of FRTs for either a portion 
of, or the entire State, and what the ASC will consider in determining 
receipt (see proposed Sec.  1102.3(c) below). A Request for Temporary 
Waiver should include clear and specific data to support a claim that 
there is a scarcity of appraisers leading to significant delays in the 
performance of covered appraisals. The data supporting such a claim may 
vary from location to location and situation to situation. Information 
about the following could assist the ASC in reviewing a Request for 
Temporary Waiver:

    1. Geography--location(s) of the scarcity leading to significant 
delay.
    2. Transactions--types of FRTs impacted (i.e., property and 
transaction type(s) and transaction amount(s)).
    3. Time--length of time for waiver requested.

    Proposed Sec.  1102.3(b) includes that a Request for Temporary 
Waiver address how complaints concerning appraisals by persons who are 
not certified or licensed would be processed in the event a temporary 
waiver is granted.
    Proposed Sec.  1102.3(c) is intended to clarify that a Request for 
Temporary Waiver shall be deemed received for purposes of publication 
in the Federal Register for notice and comment if the ASC determines 
that the information submitted meets the requirements of Sec.  
1102.3(b).
    Proposed Sec.  1102.3(d) sets forth what is required in the event a 
Request for Temporary Waiver is not deemed to be received, and thereby 
is either denied or referred back to the State Appraisal Agency. In 
either case, written notice from the ASC would be required with an 
explanation for such a determination.

[[Page 2082]]

Petition Requesting the ASC Initiate a Temporary Waiver Proceeding

    Proposed Sec.  1102.4 clarifies: Who can file a Petition requesting 
that the ASC exercise its discretionary authority to issue an Order, 
thereby initiating a temporary waiver proceeding; what a Petition 
should contain; the need to forward a copy of a Petition to the State 
Appraisal Agency of the impacted State; what the ASC may review for 
purposes of determining whether the Petition may be processed for 
further action; what is required in the event a Petition does not meet 
the requirements of Sec.  1102.4(b), Contents of a Petition, and 
thereby is either denied or referred back to the petitioner; and what 
further action may be taken.
    Proposed Sec.  1102.4(a) states that a Petition may be filed by the 
Federal financial institutions regulatory agencies, their respective 
regulated financial institutions, and other persons or institutions 
with a demonstrable interest in appraiser regulation, including a State 
Appraisal Agency.
    Proposed Sec.  1102.4(b) states that a Petition should include:

    (1) Information (statistical or otherwise verifiable) to support 
the existence of a scarcity of certified or licensed appraisers 
leading to significant delays in the performance of appraisals for 
FRTs or a specified class of FRTs for either a portion of, or the 
entire State; and
    (2) the extent of the delays anticipated or experienced in the 
performance of appraisals by certified or licensed appraisers 
(including supporting documentation, statistical or otherwise 
verifiable).

A Petition may also include meaningful suggestions and recommendations 
for remedying the situation.
    The existing rules generally request the same information from 
State Appraisal Agencies as they do from other persons or institutions 
seeking consideration of temporary waiver relief (with the exception of 
``a specific plan to alleviate scarcity and service delays'' which is 
unique to State Appraisal Agencies). The proposed amendments to this 
subsection seek to provide clarity on information that should be 
included in a Petition while easing the expectation that a Petition 
contain the specificity of a Request for Temporary Waiver from a State 
Appraisal Agency.
    The proposed amendments include the phrase ``supporting 
documentation, statistical or otherwise verifiable.'' This is intended 
to clarify what a Petition should include to support the existence of a 
scarcity of certified or licensed appraisers leading to significant 
delays in the performance of appraisals for FRTs or a specified class 
of FRTs for either a portion of, or the entire State, and what the ASC 
will consider in determining whether to process a Petition for further 
action (see proposed Sec.  1102.4(d) below).
    Proposed Sec.  1102.4(c) clarifies the existing requirement for a 
petitioner to provide a copy of their Petition to the State Appraisal 
Agency, unless the party filing the Petition is the State Appraisal 
Agency.
    Proposed Sec.  1102.4(d) provides that a Petition may be processed 
for further action if the ASC determines that the information submitted 
meets the requirements of proposed Sec.  1102.4(b) and that further 
action should be taken to determine whether a scarcity of appraisers 
exists and that the scarcity is leading to significant delays in the 
performance of appraisals for FRTs or a specified class of FRTs within 
either a portion of, or the entire State.
    Proposed Sec.  1102.4(e) sets forth what is required in the event a 
Petition does not meet the requirements of Sec.  1102.4(b), Contents of 
a Petition, and thereby is either denied or referred back to the 
petitioner. In either case, written notice from the ASC would be 
required with an explanation for such a determination.
    Proposed Sec.  1102.4(f) states that if a Petition is processed for 
further action, the ASC may initially refer a Petition to the State 
Appraisal Agency where temporary waiver relief is sought for evaluation 
and further study, or the ASC may take further action without referring 
a Petition to the State Appraisal Agency. Alternatively, a Petition may 
be denied or referred back to the petitioner for further action.
    Proposed Sec.  1102.4(g) states that in the event the State 
Appraisal Agency opts to conduct evaluation and further study on a 
Petition, the State Appraisal Agency may issue a written determination 
that there is a scarcity of certified or licensed appraisers leading to 
significant delays in the performance of appraisals for FRTs or a class 
of FRTs within either a portion of, or the entire State. Assuming the 
State Appraisal Agency has addressed the items that would be included 
in a Request for Temporary Waiver as set forth in proposed Sec.  
1102.3(b), the Petition would now be subject to the procedures and 
requirements for a Request for Temporary Waiver.
    The State Appraisal Agency could alternatively recommend that the 
ASC take no further action on the Petition, or moreover decline to 
conduct evaluation and further study on a Petition. In either case, the 
ASC may exercise its discretion in determining whether to issue an 
Order initiating a temporary waiver proceeding.
    Proposed Sec.  1102.5 clarifies that an Order initiating a 
temporary waiver proceeding may be in response to a Petition or may be 
initiated by the ASC without a Petition having been submitted. In 
either event, such an Order would include consideration of certain 
items that would be addressed in a Request for Temporary Waiver. (See 
e.g., Sec.  1102.3(b)(2)-(6), Contents and Receipt of a Request for 
Temporary Waiver). If such an Order is issued, the ASC shall publish a 
Federal Register notice in accordance with Sec.  1102.6(b). This is 
consistent with the existing rules of practice and procedure.

Notice and Comment

    Proposed Sec.  1102.6 does not vary in substance from the existing 
rules of practice and procedure, Sec.  1102.4, Notice and comment, 
which provides for a 30-day notice and comment period on either a 
Request for Temporary Waiver or an Order initiating a temporary waiver 
proceeding.

ASC Determination

    Proposed Sec.  1102.7 would expand the existing 45-day deadline, 
which commences on the date of publication above, for the ASC to make a 
determination. With respect to recent requests for temporary waivers, 
or other information submissions requesting the ASC initiate a 
proceeding, the 45-day turnaround limited the time available to process 
and evaluate information submitted, including comments received during 
the notice and comment period.
    The ASC believes that the 45-day time period was imposed in 1992 
primarily because States were still in the process of setting up State 
appraiser regulatory programs, and absent a temporary waiver, could 
have been left without any means to provide appraisals for FRTs. That 
is not the case today. Even absent a temporary waiver, a State would 
likely be able to continue to provide appraisals, especially given the 
use of temporary practice permits and reciprocity.
    The ASC proposes to expand the timeframe for an ASC determination, 
on either a Request for Temporary Waiver or an Order initiating a 
temporary waiver proceeding, from 45 calendar days to 90 calendar days 
from the date of publication in the Federal Register to allow 
sufficient time for thorough processing and consideration. Proposed 
Sec.  1102.7 also seeks to clarify that in the event the ASC issues an 
Order approving a temporary waiver, which is only effective upon FFIEC 
approval of the waiver, that the FFIEC consideration of the waiver 
would not be subject to

[[Page 2083]]

the ASC's proposed 90-day timeframe for a determination.
    The existing rules of practice and procedure allow the ASC to issue 
an interim approval Order simultaneously with a publication for notice 
and comment, and apply when the ASC determines that an emergency 
exists. A waiver approved by such an Order also requires approval by 
the FFIEC. For the reasons stated above, the ASC believes the existing 
rules were intended to accommodate nascent State Programs, which is not 
applicable today. States now have options to cope with an emergency 
that were not available when the existing rules of practice and 
procedure were finalized. Additionally, the ASC believes that notice 
and comment is critical to thorough processing of a Request for 
Temporary Waiver or a Petition. Therefore, as proposed, Sec.  1102.6 
would eliminate the interim Order from the rules of practice and 
procedure.

Waiver Extension

    Proposed Sec.  1102.8 does not vary in substance from the existing 
rules of practice and procedure, Sec.  1102.6, Waiver extension.

Waiver Termination

    Proposed Sec.  1102.9 would clarify the distinction between 
mandatory waiver termination versus discretionary waiver termination. 
Section 1119(b) of Title XI states, ``[t]he waiver terminates when the 
[ASC] determines that such significant delays have been eliminated.'' 
Therefore, proposed Sec.  1102.9 would require termination in the event 
of such a finding by the ASC. Proposed Sec.  1102.9 would retain the 
provision for a discretionary termination in the event the ASC finds 
that the terms and conditions of the waiver Order are not being 
satisfied and the procedure for the ASC's publication in the Federal 
Register for notice and comment in the case of discretionary waiver 
termination, which does not vary in substance from the existing rules 
of practice and procedure, Sec.  1102.7, Waiver termination. In the 
absence of further ASC action to the contrary, the finding of a 
discretionary waiver termination automatically shall become final 21 
calendar days after the close of the comment period.

III. Request for Comment

    The ASC requests comment on all aspects of the proposed amendments 
to the existing rules of practice and procedure governing temporary 
waiver proceedings.

IV. Regulatory Requirements

    The ASC has concluded that, if finalized, the proposed amendments 
to the procedural rule would, like the current rule, constitute a rule 
of agency organization, procedure, or practice, and that they would 
therefore be exempt from the notice-and-comment rulemaking requirements 
of the APA.\15\ For the same reason, the proposed amendments would not 
be subject to the 30-day delayed effective date for substantive rules 
under the APA.\16\ Moreover, agency interpretations of terms used in 
their statutory authority are exempt from the notice and comment 
requirement. Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\17\
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    \15\ 5 U.S.C. 553(b).
    \16\ 5 U.S.C. 553(d).
    \17\ 5 U.S.C. 603(a) and 604(a).
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Paperwork Reduction Act
    There is no collection of information that would be required by 
this proposed rule that would be subject to the Paperwork Reduction Act 
of 1995, 44 U.S.C. 3501 et seq. The Paperwork Reduction Act of 1995 
\18\ (PRA) states that no agency may conduct or sponsor, nor is the 
respondent required to respond to, an information collection unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. The ASC has reviewed this notice of proposed rulemaking 
and determined that it does not contain any information collection 
requirements subject to the PRA. Accordingly, no submissions to OMB 
will be made with respect to this proposed rule.
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    \18\ 44 U.S.C. 3501-3521.
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Unfunded Mandates Reform Act of 1995 Determination
    This proposed rule if finalized would not have a significant or 
unique effect on State, local, or tribal governments or the private 
sector. The proposed rule would amend the existing rule to provide 
definitions of terms and greater clarity on the proceedings for a 
temporary waiver. A statement containing the information required by 
the Unfunded Mandates Reform Act, 2 U.S.C. 1531 et seq. is not 
required.

List of Subjects in 12 CFR Part 1102

    Administrative practice and procedure, Appraisers, Appraisal 
Management Company Registry Fees, Banks, Banking, Freedom of 
information, Mortgages, Reporting and recordkeeping requirements.
Authority and Issuance
    For the reasons set forth in the preamble, the ASC proposes to 
amend 12 CFR part 1102 as follows:

PART 1102--APPRAISER REGULATION

0
1. The authority citation for part 1102, subpart A continues to read as 
follows:

    Authority:  12 U.S.C. 3348(b).

0
2. Revise part 1102, subpart A to read as follows:

Subpart A--Temporary Waiver Requests

Sec.
1102.1 Authority, purpose, and scope.
1102.2 Definitions.
1102.3 Request for Temporary Waiver.
1102.4 Petition requesting the ASC initiate a temporary waiver 
proceeding.
1102.5 Order initiating a temporary waiver proceeding.
1102.6 Notice and comment.
1102.7 ASC determination.
1102.8 Waiver extension.
1102.9 Waiver termination.


Sec.  1102.1  Authority, purpose and scope.

    (a) Authority. This subpart is issued under Sec.  1119(b) of Title 
XI of the Financial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (Title XI; 12 U.S.C. 3348(b)).
    (b) Purpose and scope. This subpart prescribes rules of practice 
and procedure governing temporary waiver proceedings under Sec.  
1119(b) of Title XI (12 U.S.C. 3348(b)). These procedures apply 
whenever a Request for Temporary Waiver is submitted to the Appraisal 
Subcommittee (ASC) of the Federal Financial Institutions Examination 
Council (FFIEC) for a temporary waiver of any requirement relating to 
State certification or licensing (credentialing requirements) of 
persons eligible to perform appraisals for federally related 
transactions (FRTs) under Title XI. These procedures also apply in the 
event the ASC receives a Petition requesting the ASC initiate a 
temporary waiver proceeding. This subpart also contains the ASC's 
interpretations of terms used in Sec.  1119(b) of Title XI.


Sec.  1102.2   Definitions.

    For purposes of this subpart:
    (a) Federally related transaction (FRT) means 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 under the interagency 
appraisal rules. [(Title XI Sec.  1121(4), 12 U.S.C. 3350), implemented 
by the Office

[[Page 2084]]

of the Comptroller of the Currency: 12 CFR 34.42(g) and 34.43(a); 
Federal Reserve Board: 12 CFR 225.62and 225.63(a); Federal Deposit 
Insurance Corporation: 12 CFR 323.2(f) and 323.3(a); and National 
Credit Union Administration: 12 CFR 722.2(f) and 722.3(a)].
    (b) Performance of appraisals means the appraisal service requested 
of an appraiser is provided to the lender or appraisal management 
company (AMC).
    (c) Petition means information submitted to the ASC by the Federal 
financial institutions regulatory agencies, their respective regulated 
financial institutions, or other persons or institutions with a 
demonstrable interest in appraiser regulation, including a State 
Appraisal Agency, asking the ASC to exercise its discretionary 
authority to initiate a temporary waiver proceeding, and that meets the 
requirements, as determined by the ASC, set forth in Sec.  1102.4.
    (d) Request for Temporary Waiver means information submitted to the 
ASC by a State Appraisal Agency with a written determination requesting 
a temporary waiver that meets the requirements, as determined by the 
ASC, set forth in Sec.  1102.3.
    (e) Scarcity of certified or licensed appraisers means the number 
of active certified or licensed appraisers within a State or a 
specified geographical political subdivision is insufficient to meet 
the demand for appraisal services and such appraisers are difficult to 
retain.
    (f) Significant delays in the performance of appraisals means 
delays that are substantially out of the ordinary when compared to 
performance of appraisals for similarly situated FRTs based on factors 
such as geographic location (e.g., rural versus urban) and assignment 
type, and the delay is not the result of intervening circumstances 
outside the appraiser's control or brought about by the appraiser's 
client (e.g., inability to access the subject property).
    (g) State Appraisal Agency means the State appraiser certifying and 
licensing agency.\19\
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    \19\ Title XI Sec.  1121(1). See also, 12 U.S.C. 3350(1).
---------------------------------------------------------------------------

    (h) Temporary waiver means a waiver of any or all credentialing 
requirements for persons eligible to perform appraisals for FRTs; if 
granted, a temporary waiver does not waive the requirement for a 
Uniform Standards of Professional Appraisal Practice (USPAP)-compliant 
appraisal.


Sec.  1102.3  Request for Temporary Waiver.

    (a) Who can file a Request for Temporary Waiver. The State 
Appraisal Agency for the State in which the temporary waiver relief is 
sought may file a Request for Temporary Waiver.
    (b) Contents and Receipt of a Request for Temporary Waiver. A 
Request for Temporary Waiver from a State Appraisal Agency will not be 
deemed received by the ASC unless it fully and accurately sets out:
    (1) A written determination by the State Appraisal Agency that 
there is a scarcity of certified or licensed appraisers leading to 
significant delays in the performance of appraisals for FRTs or a 
specified class of FRTs within either a portion of, or the entire 
State;
    (2) The requirement(s) of State law from which relief is being 
sought;
    (3) The nature of the scarcity of certified or licensed appraisers 
(including supporting documentation, statistical or otherwise 
verifiable);
    (4) The extent of the delays anticipated or experienced in the 
performance of appraisals by certified or licensed appraisers 
(including supporting documentation, statistical or otherwise 
verifiable);
    (5) How complaints concerning appraisals by persons who are not 
certified or licensed would be processed in the event a temporary 
waiver is granted; and
    (6) Meaningful suggestions and recommendations for remedying the 
situation.
    (c) Receipt of a Request for Temporary Waiver. A Request for 
Temporary Waiver shall be deemed received for purposes of publication 
in the Federal Register for notice and comment if the ASC determines 
that the information submitted meets the requirements of Sec.  
1102.3(b), Contents and Receipt of a Request for Temporary Waiver, to 
support that a scarcity of appraisers exists and that the scarcity is 
leading to significant delays in the performance of appraisals for FRTs 
or a specified class of FRTs within either a portion of, or the entire 
State.
    (d) Deny or Refer back. In the event the Request for Temporary 
Waiver is not deemed received, it may be denied in its entirety or 
referred back to the State Appraisal Agency for further action. In 
either case, the ASC shall provide written notice to the State 
Appraisal Agency providing an explanation for the determination.


Sec.  1102.4   Petition requesting the ASC initiate a temporary waiver 
proceeding.

    (a) Who can file a Petition requesting the ASC initiate a temporary 
waiver proceeding. The Federal financial institutions regulatory 
agencies, their respective regulated financial institutions, and other 
persons or institutions with a demonstrable interest in appraiser 
regulation, including a State Appraisal Agency, may petition the ASC to 
exercise its discretionary authority to initiate a temporary waiver 
proceeding.
    (b) Contents of a Petition. (1) A Petition should include:
    (i) Information (statistical or otherwise verifiable) to support 
the existence of a scarcity of certified or licensed appraisers leading 
to significant delays in the performance of appraisals for FRTs or a 
specified class of FRTs for either a portion of, or the entire State;
    and
    (ii) The extent of the delays anticipated or experienced in the 
performance of appraisals by certified or licensed appraisers 
(including supporting documentation, statistical or otherwise 
verifiable).
    (2) A Petition may also include meaningful suggestions and 
recommendations for remedying the situation.
    (c) Copy of Petition to State Appraisal Agency. In the case of a 
Petition from a party other than a State Appraisal Agency, the party 
must promptly provide a copy of its Petition to the State Appraisal 
Agency.
    (d) ASC review of a Petition. A Petition may be processed for 
further action if the ASC determines that the information submitted 
meets the requirements of Sec.  1102.4(b), Contents of a Petition, and 
that further action should be taken to determine whether a scarcity of 
appraisers exists and that the scarcity is leading to significant 
delays in the performance of appraisals for FRTs or a specified class 
of FRTs within either a portion of, or the entire State.
    (e) Deny or Refer back. In the event a Petition does not meet the 
requirements of Sec.  1102.4(b), Contents of a Petition, it may be 
denied in its entirety or referred back to the petitioner for further 
action. In either event, the ASC shall provide written notice to the 
petitioner providing an explanation for the determination.
    (f) Further action on a Petition. If the ASC determines that a 
Petition should be processed for further action, at its discretion the 
ASC may:
    (1) Refer a Petition to the State Appraisal Agency where temporary 
waiver relief is sought for further evaluation and study, to include 
items that would be addressed in a Request for Temporary Waiver (see 
Sec.  1102.3(b), Contents and Receipt of a Request for Temporary 
Waiver); or

[[Page 2085]]

    (2) Take further action without referring the Petition to the State 
Appraisal Agency.
    (g) State Appraisal Agency Action.
    (1) In the event the State Appraisal Agency opts to conduct further 
evaluation and study on a Petition, the State Appraisal Agency may:
    (i) Issue a written determination that there is a scarcity of 
certified or licensed appraisers leading to significant delays in the 
performance of appraisals for FRTs or a class of FRTs within either a 
portion of, or the entire State (or request that the ASC issue such a 
written determination), in which case, the procedures and requirements 
of Sec.  1102.3 and 1102.6(a) shall apply; or
    (ii) Recommend that the ASC take no further action.
    (2) In the event the State Appraisal Agency either recommends no 
further action or declines to conduct further evaluation and study on a 
Petition, the ASC may exercise its discretion in determining whether to 
issue an Order initiating a temporary waiver proceeding in accordance 
with Sec.  1102.5(a).


Sec.  1102.5  Order initiating a temporary waiver proceeding.

    The ASC may exercise discretion in determining whether to issue an 
Order initiating a temporary waiver proceeding in response to a 
Petition, or alternatively, the ASC may exercise discretion to initiate 
a temporary waiver proceeding on its own initiative without a Petition 
being submitted. In either event, such an Order would include 
consideration of certain items that would be addressed in a Request for 
Temporary Waiver. (See e.g., Sec.  1102.3(b)(2) through (6), Contents 
and Receipt of a Request for Temporary Waiver). If such an Order is 
issued, the ASC shall publish a Federal Register notice in accordance 
with Sec.  1102.6(b).


Sec.  1102.6  Notice and comment.

    The ASC shall publish promptly in the Federal Register a notice 
respecting:
    (a) A received Request for Temporary Waiver (see Sec.  1102.3(c)); 
or
    (b) An ASC Order initiating a temporary waiver proceeding (see 
Sec.  1102.5).

The notice of a received Request for Temporary Waiver or ASC Order 
initiating a temporary waiver proceeding shall contain a concise 
statement of the nature and basis for the action and shall give 
interested persons 30 calendar days from its publication in which to 
submit written data, views, and arguments.


Sec.  1102.7  ASC determination.

    (a) Order by the ASC. Within 90 calendar days of the date of 
publication of the notice in the Federal Register, the ASC, by Order, 
shall either grant or deny a waiver, in whole or in part, and upon 
specified terms and conditions, including provisions for waiver 
termination. The Order shall be published in the Federal Register, 
which in the case of an Order approving a waiver, shall only be 
published after FFIEC approval of the waiver (see paragraph (b) of this 
section). Such Order shall respond to comments received from interested 
members of the public and shall provide the reasons for the ASC's 
finding(s).
    (b) Approval by the FFIEC. Any ASC Order approving a waiver shall 
be effective only upon FFIEC approval of the waiver. FFIEC 
consideration of a waiver is not subject to the ASC's 90-day timeframe 
for a determination.


Sec.  1102.8  Waiver extension.

    The ASC may initiate an extension of temporary waiver relief and 
shall follow Sec. Sec.  1102.6, 1102.7 and 1102.9 of this subpart. A 
State Appraisal Agency also may seek an extension of temporary waiver 
relief by forwarding an additional written Request for Temporary Waiver 
to the ASC. A request for an extension from a State Appraisal Agency 
shall be subject to all the requirements of this subpart.


Sec.  1102.9   Waiver termination.

    (a) Mandatory waiver termination. The ASC shall terminate a 
temporary waiver Order when the ASC determines that significant delays 
in the performance of appraisals by certified or licensed appraisers no 
longer exist.
    (b) Discretionary waiver termination. The ASC at any time may 
terminate a waiver Order on the finding that the terms and conditions 
of the waiver Order are not being satisfied. In the case of a 
discretionary waiver termination, the ASC shall publish a finding of 
waiver termination promptly in the Federal Register, giving interested 
persons no less than 30 calendar days from publication in which to 
submit written data, views, and arguments. In the absence of further 
ASC action to the contrary, the finding of discretionary waiver 
termination automatically shall become final 21 calendar days after the 
close of the comment period.

    By the Appraisal Subcommittee.

    Dated: January 6, 2022.
Tim Segerson,
Chairman.
[FR Doc. 2022-00342 Filed 1-12-22; 8:45 am]
BILLING CODE 6700-01-P