[Federal Register Volume 87, Number 194 (Friday, October 7, 2022)]
[Rules and Regulations]
[Pages 60870-60877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-21606]


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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

12 CFR Part 1102

[Docket No. AS22-06]


Appraisal Subcommittee; Appraiser Regulation; Temporary Waiver 
Requests

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

ACTION: Final rule.

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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial 
Institutions Examination Council (FFIEC) is adopting a final rule to 
amend 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).

DATES: This final rule is effective on December 6, 2022.

FOR FURTHER INFORMATION CONTACT: Lori Schuster, Management and Program 
Analyst, [email protected], or Alice M. Ritter, General Counsel, 
[email protected], 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\ Title XI established the ASC. 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 section 1101. See also, 12 U.S.C. 3331.
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    As directed by Title XI, the Federal financial institutions 
regulatory agencies' appraisal regulations require appraisals for FRTs 
to meet minimum appraisal standards as evidenced by the Uniform 
Standards of Professional Appraisal Practice (USPAP) promulgated by the 
Appraisal Standards Board (ASB) of the Appraisal Foundation.\3\ 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.\4\ 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.\5\
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    \3\ Title XI section 1110, 12 U.S.C. 3339, 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.
    \4\ Title XI section 1116(a) and (c). See also, 12 U.S.C. 
3345(a) and (c).
    \5\ Title XI section 1118. See also, 12 U.S.C. 3347. ``State 
appraiser regulatory agencies'' are referred to in the final 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. A waiver terminates when the ASC determines that such 
significant delays have been eliminated.\6\
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    \6\ Title XI section 1119(b). See also, 12 U.S.C. 3348(b).
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    Congress intended that the ASC exercise this waiver authority 
``cautiously.'' \7\
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    \7\ 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.\8\ The ASC has ordered temporary 
waiver relief on two occasions. The first was for the Commonwealth of 
the Northern Mariana

[[Page 60871]]

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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    \8\ 12 CFR part 1102, subpart A.
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    Application of the rules of practice and procedure in the present 
day have led the ASC to recognize advantages to revising the rules to 
provide greater clarity, define certain terms and amend timeframes in 
the procedural process to be more conducive to deliberation by the ASC, 
and in the event of approval, deliberation by the FFIEC. The ASC is 
also adopting interpretations of several terms used in section 1119(b) 
of Title XI. These interpretations are included in the ``definitions'' 
section of the final rule.
    Though neither procedural rules nor published agency 
interpretations of their statutory authority require notice and comment 
under the Administrative Procedure Act (APA),\9\ the ASC voluntarily 
submitted the proposed rule and interpretations for public comment in 
order to seek feedback from interested parties. On January 13, 2022, 
the ASC published a proposed rule to amend the rules of practice and 
procedure governing temporary waiver proceedings with a 60-day public 
comment period.\10\
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    \9\ 5 U.S.C. 553(b).
    \10\ 87 FR 2079.
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II. The Final Rule

    The final rule amends rules of practice and procedure governing 
temporary waiver proceedings which were promulgated in 1992 pursuant to 
section 1119(b) of Title XI.\11\ For the reasons discussed in section 
III of this SUPPLEMENTARY INFORMATION, the final rule adopts and amends 
the rules of practice and procedure substantially as proposed, with the 
following modifications:
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    \11\ The flow chart included in the preamble of the proposed 
rule also applies to the final rule and can be accessed here: 
https://www.asc.gov/Documents/FedralRegisterDocuments/2022.07.25%20Temporary%20Waiver%20Flow%20Chart%20for%20Final.pdf. 
This is for reference purposes only and is not part of this final 
rule.
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    (1) definition of ``Petition'' to include State financial 
institutions regulatory agencies as potential petitioners; and
    (2) clarification that either a mandatory or discretionary waiver 
termination requires publication in the Federal Register, and that a 
discretionary waiver termination requires such publication with a 30-
day comment period.

III. The Final Rule and Public Comments on the Proposed Rule

    The following is a section-by-section review and discussion of the 
public comments received by the ASC concerning the proposal. The ASC 
requested comment on all aspects of the proposed amendments to the 
rules of practice and procedure governing temporary waiver proceedings. 
The ASC received four comment letters in response to the published 
proposal. These comment letters were received from appraiser trade 
associations, a state department of financial institutions, a national 
advocacy association for the credit union system and a national 
association of state bank supervisors.

A. Section 1102.1: Authority, Purpose, and Scope

    Section 1102.1 finalizes proposed Sec.  1102.1 without change and 
clarifies the distinction between: (1) a request from a State appraiser 
regulatory agency, 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.'' The procedures set 
forth in the final rule for ASC's consideration of a temporary waiver 
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.
    One commenter asserted that Title XI's temporary waiver provision 
was meant to support implementation of State program requirements 
enacted by Congress rather than to provide regulatory relief, which has 
caused confusion in the marketplace. The commenter did indicate general 
support for the proposed actions regarding the temporary waiver process 
but expressed concern over negative consequences and continued 
confusion. Although the ASC acknowledges this comment, there is no 
provision in Title XI that sunsets the temporary waiver provision.
    Another commenter stated that the process is cumbersome, 
bureaucratic and did not offer any real assistance, and added that the 
proposed revisions to the rule are seemingly designed to ensure the 
process is burdensome to the point applications are not received or 
will be deemed incomplete. While the current rule and this final rule 
seek to obtain appropriate information to inform the ASC in potentially 
exercising this waiver authority which Congress intended that the ASC 
exercise cautiously,\12\ the final rule clarifies the information to be 
submitted and the procedures to be followed to the extent the ASC can 
exercise such authority in a procedural rulemaking.
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    \12\ Supra note 7.
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B. Section 1102.2: Definitions

    Section 1102.2 finalizes proposed Sec.  1102.2 with modification to 
the definition of ``Petition'' as discussed below. The following is a 
discussion of those definitions on which the ASC received public 
comment. Definitions on which the ASC did not receive comment are not 
discussed below.
    One commenter noted that the proposed definition of ``Petition'' 
identified Federal financial institution regulators but failed to 
include State financial institution regulators. The ASC agrees, and 
therefore proposed Sec.  1102.2(c) is adopted with modification to the 
definition of ``Petition'' to include State financial institutions 
regulatory agencies as a potential petitioner.
    Several commenters asked for reconsideration of the proposed 
definitions of ``scarcity'' and ``delay'' to be measured or objectively 
determined as recommended in the report released in December 2021 by 
the Government Accountability Office (GAO).\13\ The ASC appreciates the 
commenters' request for more precise definitions of these terms. The 
ASC has considered these comments and determined that ``scarcity'' and 
``delay'' are best understood in the context of the individual State or 
geographical political subdivision of a State waiver applicant. 
Further, more precise definitions would limit the ASC's flexibility in 
making waiver determinations. However, the ASC has included new or 
revised definitions and interpretations of terms in the final rule in 
order to provide more clarity on the processing of a Request or 
Petition.
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    \13\ https://www.gao.gov/products/gao-22-104472.
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    Another commenter asserted that having geographic location as a 
factor to consider in determining if a delay is out of the ordinary and 
opens the door to government-sanctioned discrimination. The 
acknowledgement of geographic location is built into the statute in 
section 1119(b) of Title XI, which references a finding of 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. The language in the current rule and this final rule 
reflects that language and recognizes varying circumstances in 
political subdivisions

[[Page 60872]]

within a State. The ASC agrees it should not be applied to deprive 
anyone of equal access to credit.

C. Section 1102.3: Request for Temporary Waiver

    Section 1102.3 finalizes proposed Sec.  1102.3 without change. 
Section 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. Section 1102.3(b) provides that a Request for 
Temporary Waiver will not be deemed to have been received by the ASC 
unless it fully and accurately sets out:
     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;
     the requirement(s) of State law from which relief is being 
sought;
     the nature of the scarcity of certified or licensed 
appraisers (including supporting documentation, statistical or 
otherwise verifiable);
     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);
     how complaints concerning appraisals by persons who are 
not certified or licensed would be processed in the event a temporary 
waiver is granted; and
     meaningful suggestions and recommendations for remedying 
the situation.
    The amendments to paragraph (b) provide clarity on information that 
should be included in a Request for Temporary Waiver. The 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 amendments include the phrase ``supporting documentation, 
statistical or otherwise verifiable.'' 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 appraisals for FRTs, or a specified class of FRTs, for 
either a portion of, or the entire State. 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.
    Section 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. Section 1102.3(c) clarifies that a Request for 
Temporary Waiver will 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). 
Section 1102.3(d) sets forth what the process is in the event a Request 
for Temporary Waiver is not deemed to be received; written notice from 
the ASC would be required with an explanation for such a determination.
    One commenter expressed concern over the requirement for a Request 
for Temporary Waiver to include ``the extent of the delays anticipated 
or experienced in the performance of appraisals,'' stating that 
granting a request based solely on anticipated delays is troubling. The 
commenter suggested requiring clear, convincing and specific evidence. 
While the ASC acknowledges the basis for this concern, this is language 
carried over from the current rule, and was helpful information for the 
ASC in considering more recent temporary waiver requests. The ASC would 
not consider ``anticipated delay'' alone, but rather would take this 
into account with all other information received.
    The commenter addressed the need for applicants to understand the 
limited scope of temporary waivers to FRTs, that a temporary waiver 
does not remove the requirement for an appraisal for FRTs, and that 
many mortgage transactions are guided by underwriting requirements of 
an entity not covered under the FRT definition. The ASC agrees with the 
commenter's observations. The commenter also expressed concern that all 
available options should be exhausted prior to temporary waivers being 
considered, such as temporary practice permits and reciprocal 
licensing, and that States should be required to do so. While the ASC 
agrees that such options may be useful to minimize appraiser shortages, 
imposing such a requirement would be outside of the scope of this 
rulemaking, which is to amend existing rules of practice and procedure 
for temporary waivers.
    The commenter also asserted that the ASC should afford great 
deference to the State appraiser regulatory agency in the processing of 
a Request for Temporary Waiver, and that the ASC should have clear and 
convincing evidence if it proceeds contrary to the State's position. 
The final rule has deference built into the process for a State's 
Request for Temporary Waiver. If all information is properly submitted, 
it is promptly published in the Federal Register. Even in the case of a 
Petition requesting the ASC exercise its discretionary authority to 
initiate a temporary waiver proceeding, the final rule incorporates the 
option for ASC referral and consultation with the State, while at the 
same time, maintaining the statutory responsibility for the ASC to make 
the determination, which would require FFIEC approval in the case of a 
temporary waiver being granted.
    One commenter asked for reconsideration of the new requirement to 
address how complaints concerning appraisals by persons who are not 
credentialed would be processed stating that it is unnecessary since 
State regulators would continue to review and process complaints. 
Another commenter questioned this requirement stating that it is 
unnecessary since transactions would be governed by FFIEC agencies 
chartering or licensing the lender. While State appraiser regulatory 
agencies are charged with effective supervision of credentialed 
appraisers, some States may not have the authority to process 
complaints about unlicensed or uncredentialed individuals. The ASC 
found this to be a void when a temporary waiver was granted, and 
therefore review and processing of complaints should be addressed 
proactively in considering a Request for Temporary Waiver. If a State 
regulator would indeed continue to review and process such complaints, 
it would merely need to state that in the Request for Temporary Waiver. 
If the State lacks authority to do so, other options could be explored 
in a proactive manner.
    A commenter stated that the ASC's request for documentation, 
statistical or otherwise verifiable, is a request for something that 
does not exist due to lack of a centralized reporting or gathering 
mechanism for such data. The final rule includes the phrase 
``supporting documentation, statistical or otherwise verifiable.'' This 
is to provide clarification, without being overly prescriptive, as to 
what a Request or Petition for temporary waiver should include to 
support the existence of a

[[Page 60873]]

scarcity and delay, and what the ASC will consider in determining 
receipt of a Request or Petition. This leaves options open for a 
requester or petitioner to provide 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, while recognizing the 
data supporting such a claim may vary from location to location and 
situation to situation.

D. Section 1102.4: Petition Requesting the ASC Initiate a Temporary 
Waiver Proceeding

    Section 1102.4 finalizes proposed Sec.  1102.4 with modification to 
Sec.  1102.4(a) to include State financial institutions regulatory 
agencies as a potential petitioner, consistent with the modification to 
the definition of ``Petition'' in Sec.  1102.2(c).
    Section 1102.4 clarifies that a Petition is a request for the ASC 
to exercise its discretionary authority to initiate a temporary waiver 
proceeding. Section 1102.4(a), as modified, states that a Petition may 
be filed by the Federal or State 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.
    Section 1102.4(b) provides that a Petition should include:
     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
     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 amendments to this 
subsection 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 amendments include the phrase ``supporting documentation, 
statistical or otherwise verifiable.'' A Petition should include data 
to support a claim that there is a scarcity of 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. 
Section 1102.4(c) clarifies the 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.
    Section 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 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. Section 1102.4(e) sets forth 
what is required in the event a Petition does not meet the requirements 
of Sec.  1102.4(b) 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.
    Section 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. If the ASC refers a Petition 
to the State Appraisal Agency, 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 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 simply 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.
    One commenter stated that the proposed option to refer a Petition 
to the State appraiser regulatory agency may cause delay and that there 
is no statutory requirement for such a referral. Another commenter 
asserted that the option to refer a Petition to the State appraiser 
regulatory agency results in a delegation to the State appraiser 
regulatory agency and will create inconsistencies between States. The 
final rule incorporates the option for referral with the State while at 
the same time maintaining the statutory responsibility for the ASC to 
make a determination. It is important to note that the decision-making 
authority is with the ASC with approval from the FFIEC in the case of a 
temporary waiver being granted. However, given State regulators may be 
the most knowledgeable concerning any scarcity or delay within their 
borders, the ASC believes it appropriate to include the option to refer 
or consult with State regulators in the event of a Petition being 
filed.
    Another commenter stated that the rule as proposed creates two 
classes of applicants, and that governmental agencies such as State 
bank regulators need the ability to directly apply for a waiver without 
being referred to State appraiser regulatory agencies. Section 
1102.3(a) states that the State appraiser regulatory 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. Alternatively, a State appraiser 
regulatory agency may submit a Petition as set forth in proposed Sec.  
1102.4. The ASC believes this is consistent with the intent of the 
current rule \14\ and agrees with the rationale set forth in the 
preamble of the current rule. The State appraiser regulatory agencies 
have always been given a more direct path to seek temporary waiver 
relief. Referral of a Petition from other persons or entities is an 
option the ASC may exercise but is not required as the commenter seems 
to suggest.
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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.'' See 57 FR 10980 (April 1992).
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    The commenter added that the rule as proposed requires applicants 
to provide meaningful suggestions and recommendations for remedying the 
situation, and that the cause is often complex, and the applicant may 
not be in a position to understand the greater political, legal or 
socioeconomic forces causing the shortage. As clarification, and as 
proposed, the final rule states that a Petition ``may'' include 
meaningful suggestions and recommendations for remedying the situation. 
This is not new and was

[[Page 60874]]

carried over from the current rule. The ASC has acknowledged this is 
not a problem for the applicant alone to resolve. Particularly in the 
North Dakota temporary waiver process, the complexity of the problem 
was recognized, which was the basis for the condition to the Order 
granting a temporary waiver: ``During the one-year period, the 
Requester is expected to develop a plan through continued dialogue with 
North Dakota stakeholders, including the Appraiser Board, to identify 
potential solutions to address appraiser scarcity and appraisal 
delay.'' \15\
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    \15\ 84 FR 38630, 38633 (Aug. 7, 2019).
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    One commenter expressed concern about availability of appraisal 
services, especially in rural areas, and the difficulty in securing 
timely appraisals. While recognizing multiple reasons for scarcity in 
areas, the commenter expressed support for revision of minimum 
credentialing requirements as established by the Appraisal Foundation's 
Appraiser Qualifications Board (AQB) to ensure new entrants into the 
profession and increase diversity. While the ASC supports a review of 
minimum credentialing requirements as established by the AQB to ensure 
they do not impose a barrier to entry into the profession and promote 
diversity, revisions to minimal credentialing requirements is outside 
the scope of this procedural rulemaking.\16\
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    \16\ See Agency Actions to Advance Valuation Equity; Building a 
well-trained, accessible, and diverse appraiser workforce 3.1: 
``Update appraiser qualification criteria related to appraiser 
education, experience, and examination requirements to lower 
barriers to entry in the appraiser profession.'' Action Plan to 
Advance Property Appraisal and Valuation Equity; Closing the Racial 
Wealth Gap by Addressing Mis-valuations for Families and Communities 
of Color at 5 (March 2022).
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    The commenter asked for reconsideration of what they understood to 
be a new requirement for a written determination by the State appraiser 
regulatory agency. That requirement is only in the case of a Request 
for Temporary Waiver and is not required in the case of a Petition. 
Moreover, the requirement is part of the statute and the current rule: 
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. . . .'' The final rule clarifies the application of this 
statutory requirement.

E. Section 1102.5: Order Initiating a Temporary Waiver Proceeding

    Section 1102.5 finalizes proposed Sec.  1102.5 without change. 
Section 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) 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).

F. Section 1102.6: Notice and Comment

    Section 1102.6 finalizes proposed Sec.  1102.6 without change and 
does not vary in substance from Sec.  1102.4 of the current rule, 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.

G. Section 1102.7: ASC Determination

    Section 1102.7 finalizes proposed Sec.  1102.7 without change. 
Section 1102.7 expands the current 45-day deadline for the ASC to make 
a determination. Section 1102.7 also, for reasons set forth in the 
proposed rule, eliminates the interim Order from the rules of practice 
and procedure. 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 timeframe for an ASC determination, 
on either a Request for Temporary Waiver or an Order initiating a 
temporary waiver proceeding, is expanded 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. 
Section 1102.7 also clarifies that in the event the ASC issues an Order 
approving a temporary waiver, which is only effective upon FFIEC 
approval of the waiver, the FFIEC's consideration of the waiver is not 
subject to the ASC's 90-day timeframe for a determination.
    One commenter asked for reconsideration of extending the ASC's 
timeframe for action on temporary waivers. The final rule provides 
clarity on what is expected to avoid delays in submitting proper 
information to the ASC. The ASC found the 45-day turnaround period, 
which allows only 15 days for consideration of comments received during 
the notice and comment period, to be a constraint on proper 
deliberation.
    Another commenter expressed concern over removing the 45-day 
requirement for the ASC to take action stating that the ASC may deem a 
Request or Petition incomplete which may result in further delay. Under 
either the current rule or this final rule, the timeframe for taking 
action would not commence in either event until a Petition or Request 
is deemed received. Incomplete information submitted by an applicant 
would be the cause of delay in either circumstance. The final rule 
provides more clarity, particularly regarding the type of information 
that is expected in a Petition or a Request. This degree of specificity 
is intended to avoid rejection or supplementation of a Request or 
Petition, which was the case in the North Dakota request, resulting in 
a delay of nearly one year.

H. Section 1102.8: Waiver Extension

    Section 1102.8 finalizes proposed Sec.  1102.8 without change and 
does not vary in substance from Sec.  1102.6 of the current rule.

I. Section 1102.9: Waiver Termination

    Section 1102.9 finalizes proposed Sec.  1102.9 with clarification 
that either a mandatory or discretionary waiver termination requires 
publication in the Federal Register, and that a discretionary waiver 
termination requires such publication with a 30-day comment period. 
Section 1102.9 distinguishes 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, Sec.  1102.9(a) 
requires termination in the event of such a finding by the ASC. Section 
1102.9(b) retains the provision for a discretionary waiver termination 
in the event the ASC finds that the terms and conditions of the waiver 
Order are not being satisfied. Section 1102.9(c) requires publication 
in the Federal Register of either a mandatory or discretionary waiver 
termination, and Section 1102.9 finalizes proposed Sec.  1102.9 with 
clarification that either a mandatory or discretionary waiver 
termination requires publication in the Federal Register, and that a 
discretionary waiver termination requires such publication with a 30-
day comment period. In the absence of

[[Page 60875]]

further ASC action to the contrary, a discretionary waiver termination 
automatically becomes final 21 calendar days after the close of the 
comment period. Consistent with statute, a mandatory waiver termination 
is final upon such a determination being made by the ASC.

IV. Regulatory Requirements

    The ASC has concluded that the final rule constitutes a rule of 
agency organization, procedure, or practice, and is therefore exempt 
from the notice-and-comment rulemaking requirements of the APA.\17\ For 
the same reason, the amendments are not subject to the 30-day delayed 
effective date for substantive rules under the APA.\18\ 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.\19\
---------------------------------------------------------------------------

    \17\ 5 U.S.C. 553(b).
    \18\ 5 U.S.C. 553(d).
    \19\ 5 U.S.C. 603(a) and 604(a).
---------------------------------------------------------------------------

Paperwork Reduction Act

    There is no collection of information required by this final 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 \20\ (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 final rule 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 final rule.
---------------------------------------------------------------------------

    \20\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

Unfunded Mandates Reform Act of 1995 Determination

    This final rule will not have a significant or unique effect on 
State, local, or tribal governments or the private sector. This final 
rule amends the current 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, Appraisal management company 
registry fees, Appraisers, Banks, Banking, Freedom of information, 
Mortgages, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the ASC amends 12 CFR 
part 1102 as follows:

PART 1102--APPRAISER REGULATION

0
1. The authority for part 1102 continues to read as follows:

    Authority: 12 U.S.C. 3348(a), 3332, 3335, 3338 (a)(4)(B), 
3348(c), 5 U.S.C. 552a, 553(e); Executive Order 12600, 52 FR 23781 
(3 CFR, 1987 Comp., p. 235).


0
2. Subpart A is revised 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.

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


Sec.  1102.1  Authority, purpose, and scope.

    (a) Authority. This subpart is issued under section 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 section 
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 section 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:
    (1) A Federal financial institutions regulatory agency engages in, 
contracts for, or regulates; and
    (2) Requires the services of an appraiser under the interagency 
appraisal rules. ((Title XI, section 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).)
    (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 
or State 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 (Title XI, section 1121(1); see also 12 U.S.C. 
3350(1)).
    (h) Temporary waiver means a waiver of any or all credentialing 
requirements

[[Page 60876]]

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 paragraph (b) 
of this section 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 or State 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 paragraph (b) of this section 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 paragraph (b) of this section 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)); or
    (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. 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).) 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.

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

[[Page 60877]]

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. 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.
    (c) Publication in the Federal Register. The ASC shall publish 
either a mandatory or discretionary waiver termination in the Federal 
Register, and a discretionary waiver termination requires such 
publication with a 30-day comment period. In the absence of further ASC 
action to the contrary, a discretionary waiver termination 
automatically becomes final 21 calendar days after the close of the 
comment period. A mandatory waiver termination is final upon such a 
determination being made by the ASC.

    By the Appraisal Subcommittee.

    Dated: September 29, 2022.
Zixta Martinez,
Chairperson.
[FR Doc. 2022-21606 Filed 10-6-22; 8:45 am]
BILLING CODE 6700-01-P