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F ederal R eserve Bank
OF DALLAS
W ILLIA M

H. WALLACE

FIRST VIC E P R ES ID EN T
AND CH IE F O PER A TIN G O FFICER

,

November 9, 1990

DALLAS, TEXAS 7 5 2 2 2

Circular 90-83

TO:

The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Personal

Property Appraisals
DETAILS

The Appraisal Subcommittee of the Federal Financial Institutions
Examination Council (FFIEC) has requested public comment on the feasibility
and desirability of extending the provisions of Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to the
function of personal property appraising and personal property appraisers.
Title XI of FIRREA requires that real estate appraisals utilized in
connection with federally related transactions be performed in writing in
accordance with uniform standards by individuals whose competency has been
demonstrated and whose professional conduct will be subject to effective
supervision.
Section 1122 of Title XI directs the Appraisal Subcommittee of
the FFIEC to conduct a study to determine the feasibility and desirability of
extending the provisions of Title XI to the function of personal property
appraising and personal property appraisers in connection with federal
financial and public policy interests. The Appraisal Subcommittee is to
report its findings to Congress in February 1991.
Comments should be received by the Appraisal Subcommittee, Federal
Financial Institutions Examination Council, 1776 G Street, N.W., Suite 850B,
Washington, D.C. 20006.
Comments are due by December 24, 1990.
ATTACHMENT
The FF I E C ’s notice as published in the Federal Register dated
October 24, 1990, is attached.

For additional copies of any circular, please contact the Public Affairs Departm ent at (214) 651-6289. Bankers and others are encouraged to use the following
toll-free num ber in contacting the Federal R eserve Bank of Dallas: (800) 333-4460.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

- 2 -

MORE INFORMATION
Questions concerning the FF I E C ’s proposal should be addressed to Jim
Porter at (202) 906-5743.
For additional copies of this circular, please
contact the Public Affairs Department at (214) 651-6289.
Sincerely yours,

Federal Register / Vol. 55, No. 206 / W ednesday, October 24, 1990 / Notices

42891

FEDERAL FIN ANC IA L 1NSTSTUTJONS
EXA M IN A TIO N CO UNCIL
Request fo r C o m m en t o n Personal
Property Appraising

A p p ra is a l S ubcom m ittee.
F e d e ra l F in an c ia l In stitu tio ns
E x a m in a tio n Council.
ACTION: R eq u est for com m ents.
agency:

SUMMARY: T h e A p p ra is a l S u b co m m ittee

of the F e d eral F in an c ial In stitu tio ns
E x am in a tio n C ouncil (“A p p ra isa l
S ub co m m ittee") is issuing a re q u e s t for
c om m en ts on the feasib ility a n d

42892
— ’■T T rm ni T 'ir T ' " iiiwi i mi

Federal Register / Vol. 55, No. 206 / Wednesday, October 24, 1930 / Notices
n > tt - ti' u i m r w i i i i f

mm m u

ii ii

ii i r ~ i r r r - |- B f - r r m n i i T n T i i « i i i w i w —

d e sira b iiiiy o f ex ten d in g the p ro v isio n s
o f title XI o f th e F in a n c ial In stitu tio n s
Reform, R ecovery, a n d E nfo rcem ent A ct
c f 1989 to th e fu n ctio n o f p e rs o n a l
p ro p e rty ap p ra isin g a n d p e rs o n a l
p ro p e rty a p p ra ise rs .
T his re q u e s t for co m m en ts affo rd s all
in te re s te d p a rtie s a n o p p o rtu n ity to
p ro v id e su b sta n tiv e c o m m en ts an d d a ta
o n th e po ssib ility of creatin g a n
a p p ra is a l regu lato ry fra m e w o rk for
p e rs o n a l p ro p e rty e v a lu a tio n s sim ilar to
the su p erv iso ry sch em e fo r re a l e s ta te
a p p ra isa ls. T h e A p p ra is a l S u b co m m ittee
w ill c earefu ily re v ie w a n d c o n sid e r the
co m m en ts re c eiv e d w ith in the c o n te x t of
co m pleting its study.
d a t e s : C o m m ents m u st b e re ce iv ed on
or b efo re D e c e m b e r 24,1990.
ADDRESSES: All co m m en ts sho u ld be
s e n t to th e A p p ra is a l S ubcom m ittee,
F e d e ra l F in a n c ia l In stitu tio n s
E x a m in a tio n C ouncil, 1776 G S tre et
NW ., suite 850B, W a sh in g to n , DC 20006
o r d e liv e re d to th e sa m e a d d re s s
b e tw e e n the h o u rs o f 9 a.m. a n d 5 p.m.
o n b u sin e ss d ay s.
FOR FURTHER SNFORf&ATSON CONTACT:

Jim P o rter a t (202) 906-5743.
SUPPLEMENTARY INFORMATION: T he
p u rp o s e of title XI of the F in an c ial
In stitu tio n s Reform, R ecovery, a n d
E nfo rce m en t A c t o f 1989 is to p ro m o te
the sa fe ty a n d s o u n d n e s s o f in su red
in stitu tio n s b y req uiring the re a l e sta te
a p p ra is a ls utilized in co n n ectio n w ith
fed e rally re la te d tr a n s a c tio n s be
p erfo rm ed in w ritin g in a c c o rd a n c e w ith
uniform s ta n d a r d s b y in d iv id u a ls w h o se
c o m p e te n c y h a s b e e n d e m o n s tr a te d a n d
w h o se p ro fe ssio n al c o n d u ct w ill b e
su b je c t to effective su p ervision . S ection
1122 of title XI d irec ts the A p p ra is a l
S u b co m m ittee o f the F ed eral F inanc ial
Institu tion s E x am in a tio n C ouncil to
c o n d u ct a stu d y to d e term in e the
feasibility a n d d e sira b ly o f ex ten d in g
the p ro v isio n s of title XI to the function
of p e rs o n a l p ro p e rty ap p ra isin g a n d
p e rs o n a l p ro p e rty a p p ra is e rs in
c o n n ec tio n w ith F e d e ra l fin a n c ia l a n d
public p o licy in te re sts. T h e A p p ra is a l
S u bcom m ittee is to rep o rt its findings to
C o n g ress in F e b ru a ry 1991.
For the p u rp o s e s o f this N otice for
Public C om m ent, “p e rso n a ! p ro p e rty ” is
d e fin e d as:
identifiable portable and tangible objects
with are considered by the general public as
being “personal,” e.g. furnishings, artwork,
antiques, gems, and jewelry, collectibles,
m achinery and equipment; ail property that is
not classified a s real estate. {Source: Uniform
S tandards of Professional A ppraisal Practice
published by The A ppraisal Foundation.)

A s p a rt o f this stu d y the A p p ra is a l
S u b co m m ittee is seeking, from all
in te re s te d p a rtie s , s u b sta n tiv e

i n

h
p

hi

— i n w n r n i i w r n i w h 'itw— r — n T i T T f - r i i i ----------- f r m n i n r —

c o m m en ts o n issu e s surro u n d in g the
co sts a n d b e n e fits o f e x te n d in g th e rea l
e s ta te a p p ra is a l re g u lato ry sch e m e to
p e rs o n a l p ro p e rty e v a lu atio n . T h e
follow ing q u e stio n s ra is e significant
issu es o n w h ich c o m m e n t is sought, b u t
a re n o t in te n d e d to be limiting in n atu re.
C o m m e n ts a re in v ited on an y
su b s ta n tiv e issu e relating to p e rs o n a l
p ro p e rty ap p ra isin g a n d p e rs o n a l
p ro p e rty a p p ra ise rs . T h e S u b co m m ittee
is e sp ec ially in te re s te d in a n y fa ctu a l
su p p o rtin g in fo rm atio n or e x a m p le s th a t
se rv e a s th e b a s is for co m m en ts, in
p a rtic u lar, in fo rm atio n p re s e n te d in the
form of lists, c h a rts, grap h s, a n d ta b les,
w h ich d e ta il specific d a ta . P le a se
re s p o n d to a s m a n y o f the follow ing
q u e stio n s a s you c o n sid e r ap p ro p riate .
G en e ral
(1) R e sp o n d en t Affiliation:
(a) A fin an cial in s titu tio n w ith
fed erally in s u re d d e p o sits.
(b) A fin an c ial in stitu tio n w ith tra d e
a sso c ia tio n .
(c) A p e rs o n a l p ro p e rty a p p ra is a l firm
or individual.
(d) A p e rs o n a l p ro p e rty a p p ra is e r
tr a d e asso ciatio n .
(e) A re a l e s ta te a p p ra is a l firm o r
in dividual.
(f) A re a l e s ta te a p p ra is e r tra d e
asso c iatio n .
(g) Law firm o r ind iv id u al.
(h) A cco u n tin g firm or individual.
(i) G o v e rn m e n ta l agency.
(j) O ther.
(2) W h a t a re th e m a jo r c a teg o ries of
p e rs o n a l p ro p e rty u sed a s co lla te ra l for
lo a n s a n d w h a t a re th e m e th o d s for
e v a lu a tio n o f e a c h category?
(3) W h a t ty p e s of lo a n s co lla te ra liz e d
b y p e rs o n a l p ro p e rty h a v e c a u s e d the
larg est lo sse s to fin an cial in stitu tio ns?
(4) W h a t role h a v e w e a k n e s s e s in the
p e rs o n a l p ro p e rty e v a lu a tio n p ro c e s s
h a d in the lo s se s on lo a n s co lla te ra liz e d
b y p e rs o n a l p ro p erty ? If p ossib le,
seg re g ate lo sse s a s s o c ia te d w ith failure
to p e rfec t a n in te re s t in c o lla te ra l a n d
lo sse s from a s s e ts th a t a re ex p c c te d to
d e p re c ia te m o re ra p id ly th a n th e re la te d
le a n am o rtiz es from lo sse s c a u s e d b y
faulty ev alu atio n.
(5) W h a t ty p e s of lo a n s c o lla teralize d
b y p e rs o n a l p ro p e rty h a v e a good reco rd
o f p erfo rm a n c e an d ho w h a s the
c o lla te ra l e v a lu a tio n p ro c e s s a s s is te d in
m a in ta in in g th e fa v o ra b le reco rd ?
(6) W h a t fa c to rs sh o u ld b e u se d in
d eterm in g th e level o f d e ta il re q u ire d in
a p e rs o n a l p ro p e rty e v a lu atio n ?
(7) W h a t a r e the sim ila rities a n d
d ifferen ces b e tw e e n p e rs o n a l p ro p erty
le n din g a n d re a l e s t a te lending? (For
ex am p le, lo a n term s, lo a n-to -valu e
ratio s, e m p h a sis o n c o llate ra l p ro tectio n ,
p a y m e n t so urces, m e th o d s for

rm r

ev alu atin g c o llate ral a n d o th e r p e rtin e n t
a s p e c ts of the credit d e c isio n p rocess.)
P e rso n a l P ro p erty A p p ra is a l S ta n d a rd s
(8) C o n sid erin g the d iv e rsity of
ca teg o rie s of p e rs o n n a l p ro perty, is it
feasib le to h a v e o n e se t o f uniform
a p p ra is a l s ta n d a rd s for all p o ssib le
ty p e s o f n o n -re al a s s e ts o r w o u ld th e re
h a v e to b e differen t s ta n d a rd s for m a jo r
ca teg o rie s of p e rs o n a l prop erty ?
(9) W h a t w o u ld b e th e d irect a n d
in d irect c o st o f requiring fe d erally
m a n d a te d uniform p e rs o n n a l p ro p e rty
a p p ra is a l s ta n d a r d s a n d h o w c a n th e se
c o sts b e m e a su re d ?
(I) H o w w o u ld pu blic policy in terests
b en e fit from the c re a tio n o f uniform
p e rs o n a l p ro p e rty a p p ra is a l s ta n d a r d s
a n d h o w c a n th e se b e n e fits b y
q uantified?
P e rso n a l P ro p e rty L icensing P ro c ed u re s
a n d Q u alificatio n C riteria
(II) If th e re is licensing, sh o uld th e re
b e one licen sin g p ro c e s s for all
ca teg o rie s o f p e rs o n a l p ro p e rty
a p p ra is e rs o r sh o u ld th e re be different
licensing p ro c e d u re s for e a c h m a jo r
categ o ry o f p e rs o n a l prop erty ?
(12) W h a t sh o u ld b e th e m inim um
q u alific atio n s c riteria for a p p ra is e rs th a t
co n d u c t p erso n a! p ro p e rty e v a lu a tio n s
for in su red fin an cial institu tio n s?
(13) W h a t w o u ld b e th e d ire c t a n d
in d irect co sts o f fe d erally m a n d a te d
licensing a n d h o w c a n th e se c o sts b e
m e asu re d ?
(14) W o u ld fin an c ial in stitu tio n s a n d
the fe d e ra l d e p o sit in s u ra n c e sy stem
b e n efit from the c re a tio n o f a licensing
p ro ce ss ar.d how c a n th e se b e n efits b e
q ualified?
R eg u latio n a n d S u p erv isio n o f P erso n al
P ro p e rty A p p raise rs
(For discussion purposes only, questions #15
through #23 assum e that uniform personal
property appraisal sta n d ard s and licensing of
personal property appraisers are both
feasible and desirable.)

(15) W h o sh o u ld e sta b lish the uniform
e v a lu a tio n s ta n d a r d s — fin an cial
in stitu tio n tra d e a sso c ia tio n s, p e rso n al
p ro p erty a p ra is e r tra d e asso cia tio n s,
re g u lato ry agen cies, fe d e ra l o r sta te
legislative bo d ie s, o r others?
(16) W h a t ty p e o f p ro c e d u re sh o u ld be
re q u ire d to initially fo rm u late uniform,
s ta n d a r d s a n d w h a t w o u ld b e the
p ro cess fo r am e n d in g th e sta n d a rd s ?
(17) W h o sh o u ld e s ta b lis h th e
q u alificatio n a n d te stin g c rite ria —
fin an c ia l in stitu tio n tr a d e asso cia tio n s,
p e rso n a ! p ro p e rty a p p ra is e r tra d e
a sso c ia tio n s, re g u la to ry agencies,
fe d e ra l o r s ta te legislative b o d ie s, o r
others?

Federal Register / Vol. 55, No. 206 / W ednesday, O ctober 24, 1990 / Notices
(18) S h ould th e licen sing a n d testing
b o a rd s b e sta te o r fed e ra l agencies,
tra d e a sso c ia tio n s, o r so m e o th e r form
o f o rg anization?
(19) W h a t ty p e o f p ro c e d u re s sh ou ld
b e re q u ire d initially to fo rm u late
licen sing q u alificatio n b e n c h m a rk s a n d
w h a t sh o u ld b e the p ro c e s s for
a m en d in g the criteria?
(20) If un ifo rm p e rs o n a l p ro p e rty
a p p ra is a l s ta n d a rd s a re d ev elo p ed ,
w h a t level of su p erv iso ry e n fo rc e m e n t is
re q u ire d — sh o u ld s ta n d a rd s be m a d e
into reg u la tio n s carry in g th e force of
law , b e in fo rm a tio n a l sa fe ty a n d
s o u n d n e s s guidelines, o r h a v e som e
o th e r form?
(21) S h o u ld the s ta n d a rd s , licensing
req u ire m en ts, a n d re g u lato ry stru ctu re
b e im p o sed o n a fin a n cial in stitu tio n 's
p u rc h a s e of, a n d in v e stm e n t in, p e rs o n a l
p ro p erty , or lim ited only to lending
co lla te ra liz e d b y p e rs o n a l p ro p erty ?
(22) If the licen sin g b o d y is n o t a
fe d e ra l agency, sh o u ld it b e su b je c t to
fe d e ra l m onitoring a n d su p e rv isio n a n d
w h a t ty p e o f disc ip lin a ry p o w e rs sh o u ld
th e fe d e ra l ag e n cy h av e , if any?
(23) If licen sin g is im p lem ented ,
sh o u ld registry fees for p e rs o n a l
p ro p e rty a p p ra is e r b e th e sa m e a s th ose
le v ied o n re a l p ro p erty a p p ra isers?
O th e r C o m m e n ts
(24) P le a se d is c u ss o th e r issu es
co n cern in g th e fea sib ility a n d
d e sira b ility o f e x te n d in g th e prov ision s
o f title XI to th e fun ctio n o f p e rs o n a l
p ro p e rty a p p ra isin g a n d p e rs o n a l
p ro p e rty a p p ra is e rs n o t a d d r e s s e d in the
p rev io u s q u estio n s.
(25) In su m m ary , do y ou b eliev e that
u n ifo rm p e rs o n a l p ro p e rty s ta n d a rd s
a n d licen sin g o f p e rs o n a l p ro p e rty
a p p ra is e rs are:
(a) D e sira b le a n d —
(b) F easible?
W hy?
In fo rm atio n g e n e ra te d from th e
co m m en ts re c e iv e d w ill b e u se d to
au g m en t o th e r so u rce s of d a ta a v a ila b le
to the A p p ra is a l S u b co m m itte e a n d
e n su re s th a t th e S u b c o m m itte e ’s
findings reflect th e b ro a d e s t ra n g e of
p o ssibilities.
Dated: O ctober 19,1990,
Fred D. Finke,

Acting Chair o f the Appraisal Subcommittee
o f the Federal Financial Institutions
Examination Council.
(FR Doc. 90-25110 Filed 10-23-90; 8:45 am]
B ILLIN G C O D E 6 2 1 0 - 0 1 - M

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102