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Federal R eserve Bank
OF DALLAS
W ILLIA M
H. WALLACE
FIRST V IC E P R E S ID E N T
March 1, 1990
DALLAS, TEXAS 7 5 2 2 2
AN D C H IE F O P E R ATIN G O FFIC E R
Circular 90-10
TO:
The Chief Executive Officer of all
member banks and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Appraisal Standards for State Member Banks and Bank Holding Companies
DETAILS
The Federal Reserve Board has requested public comment on a proposed
regulation that would set standards for appraisals conducted for state member
banks and bank holding companies in federally related transactions. The
proposed regulation identifies which transactions would require an appraiser,
sets forth minimum standards for performing appraisals, and distinguishes those
appraisals requiring the services of a state certified appraiser from those
requiring a state licensed appraiser. The Board is specifically requesting
comment on the following aspects of the
proposal:
(1) the definitions used in the proposal, in particular the
definitions of "complex l-to-4 family residential property appraisal" and
"transaction value;"
(2) the amount below which a state certified or licensed appraiser is
not required;
(3) the criteria that determine when a state certified appraiser is
required and when a state licensed appraiser is required; and
(4) the appraisal standards set forth in the proposed regulation.
Comments should be received by the Board by April 10, 1990, and should be
addressed to William W. Wiles, Secretary, Board of Governors of the Federal
Reserve System, 20th and Constitution Avenue, N.W., Washington, D.C. 20551.
All comments should refer to Docket No. R-0658.
ATTACHMENTS
The text of the B o a r d ’s proposal is attached.
MORE INFORMATION
For more information, please contact Gary Krumm at (214) 744-7434.
additional copies of this circular, please contact the Public Affairs
Department at (214) 651-6289.
For
Sincerely yours,
For additional copies of any circu la r please con tact the Public A ffa irs D epartment at (214) 651-6289. Banks and others are
encouraged to use the follow ing incom ing WATS numbers in con tacting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
4810
Federal Register / Vol. 55, No. 28 / Friday, February 9, 1990 / Proposed Rules
FEDERAL RESERVE SYSTEM
Board’s Rules Regarding Availability of
Information, 12 CFR 261.8.
12 CFR Parts 208 and 225
FOR FURTHER INFORMATION CONTACT:
(Regulation H, Regulation Y; Docket No. R 0658]
Appraisal Standards for Federally
Related Transactions
AGENCY: JBoard of Governors of the
Federal Reserve System.
a c t i o n : Notice of proposed rulemaking.
SUMMARY: Title XI of the Federal
Financial Institutions Reform, Recovery
and Enforcement Act of 1989
(“FIRREA”)1 requires the Board to
propose regulations regarding the
performance and utilization of
appraisals by state member banks and
bank holding companies. Title XI and
these implementing regulations are
intended to protect federal financial and
public policy interests in real estaterelated financial transactions requiring
the services of an appraiser. This
proposed regulation, and similar
regulations proposed by the other
financial institutions regulatory
agencies 2 and the Resolution Trust
Corporation, provide the affected
federal entities with added assurance
that real estate appraisals used in
connection with federal responsibilities
and requirements are performed in
accordance with uniform standards by
individuals whose competency has been
demonstrated and whose professional
conduct will be subject to effective
supervision. Toward this end, the
proposed regulation identifies which
transactions require an appraiser, sets
forth minimum standards for performing
appraisals, and distinguishes those
appraisals requiring the services of a
State certified appraiser from those
requiring a State licensed appraiser.
OATES: Comments must be submitted on
or before April 10,1990.
ADDRESSES: Comments, which should
refer to Docket No. R-0658, may be
mailed to the Board of Governors of the
Federal Reserve System, 20th and
Constitution Avenue, NW., Washington,
DC 20551, to the attention of Mr.
William W. Wiles, Secretary; or
delivered to room B-2223, Eccles
Building, between 8:45 a.m. and 5:15 p.m.
Comments may be inspected in room B1122 between 9:00 a.m. and 5:00 p.m.,
except as provided in § 261.8 of the
1 Pub. L. No. 101-73,103 Stat. 183 (1989).
* The Federal Deposit Insurance Corporation
f'FDIC"), the Office of the Comptroller of the
Currency ("OCC"), the Office of Thrift Supervision
(“OTS"). and the National Credit Union
Administration.
Roger Cole, Assistant Director (202/4522618), Rhoger H. Pugh, Manager {202/
728-5883), or Stanley B. Rediger, Senior
Financial Analyst (202/452-2629),
Division of Banking Supervision and
Regulation, Board of Governors; or
Michael J. O’Rourke, Senior Attorney
(202/452-3288) or Mark J. TenhundfekL
Attorney (202/452-3612), Legal Division,
Board of Governors. For the hearing
impaired only, Telecommunication
Device for the Deaf (TDD), Eamestine
Hill or Dorothea Thompson (202/4523544).
SUPPLEMENTARY INFORMATION:
A. Background. Title XI of FIRREA
requires the Board to establish
standards for performing appraisals in
connection with federally related
transactions within the Board's
jurisdiction. In addition, title XI requires
the Board to identify those
circumstances that require a State
certified appraiser from those that
require a State certified or licensed
appraisers. In response to this legislative
mandate, the Board is proposing this
regulation which is designed to address
problems perceived by Congress and the
Board.
Section 1121 of FIRREA defines a
“federally related transaction” as a real
estate-related financial transaction
which, inter alia, requires the services of
an appraiser. The Board is proposing to
require State certified or licensed
appraisers to be used for all real estaterelated financial transactions except
those transactions in which (i) a Hen is
placed on real property solely through
an abundance of caution or (ii) die
transaction value (as defined in the
proposed regulation) is less than or
equal to $15,000. The Board, acting
pursuant to section 1112 of FIRREA. also
is proposing to require State certified
appraisers to be used for all appraisals
except non-complex l-to-4 family
residential property appraisals rendered
in connection with a federally related
transaction having a transaction value
below a specified amount.
In addition, the Board is proposing
standards, pursuant to section 1110 of
FIRREA, for the performance of
appraisals in connection with federally
related transactions within the Board's
jurisdiction. These standards would
require that all such appraisals be
written and that they conform to fee
Uniform Standards of Professional
Appraisal Practice (“USPAP”)
promulgated by the Appraisal
Foundation3 and the additional
standards set forth in this proposal.
This proposed regulation is intended
to supplement the Board's appraisal
guidelines4 currently in effect. These
guidelines will remain in effect, subject
to amendment.
The Board proposes this regulation to
improve the safety and soundness of all
financial institutions covered by title XI
within the Board’s jurisdiction. The
soundness of real estate loans and
investments made by financial
institutions covered by title XI depends
upon the adequacy of the underwriting
or analysis used to support these
transactions. A real estate appraisal is
one of several essential components of
the lending process. Accordingly,
through the integration of existing
guidance on real estate appraisals with
the additional requirements imposed by
title XI, this proposal is intended to
provide the affected entities with a
reasonable degree of assurance that real
estate appraisals used in connection
with federally related transactions will
be reliable.
Public comment is solicited on all
aspects of the proposed rule. In addition,
public comment is specifically requested
on the following:
(1) The definitions used in this
proposal, in particular the definitions of
“complex l-to-4 family residential
property appraisal” and “transaction
value;"
(2) The amount and appropriateness
of the de m inim is provision below which
a State certified or licensed appraiser is
not required;
(3) The criteria that determine when a
State certified appraiser is required and
when a State licensed appraiser is
required; and
(4) The additional appraisal standards
set forth in the proposed regulation.
B. Section-by-section analysis.
Section 225.61—Authority, purpose, and
scope. This section identifies title XI of
FIRREA as the authority under which
feis regulation is promulgated. Further, it
identifies those institutions, including
fee Board and institutions primarily or
exclusively regulated by the Board
[“regulated institutions”), which must
comply with the regulation. State
member banks, bank holding companies,
and nonbank subsidiaries of bank
* The Appraisal Foundation was established by
veveral professional appraisal organization as a notfor-profit corporation under the laws of Illinois in
aider to enhance the quality of professional
a^ratsaS*.
* See Guidelines for R eal Estate Appraisal
Policietnod Review Procedures, distributed by the
tow — divisions of bank supervision at the FDIC,
fee OCC, and the Board.
Federal Register / Vol. 55, No. 28 / Friday, February 9, 1990 / Proposed Rules
holding companies are specifically
covered.
Section 225.62—Definitions. Except
where noted below, the definitions set
forth in title XI shall apply to the terms
used in this regulation.
—"Appraisal.” This definition
currently is used by nineteen federal
agencies.® The Board believes that this
widespread use and acceptance will
produce consistent appraisals.
—“Complex l-to-4 family residential
property appraisal.” Section 1113 of
FIRREA allows the use of a State
licensed appraiser for, among other
federally related transactions, l-to-4
family residential property appraisals,
“unless the size and complexity requires
a State certified appraiser.” The
definition of “complex l-to-4 family
residential property appraisal” provides
guidance on factors that will determine
if the services of a State certified or
licensed appraiser are required. This list
is illustrative only.
—“Market value.” This definition is
commonly used in connection with
mortgage lending by a number of
government agencies and others. The
definition contemplates the
consummation of a sale as of a specified
date and the passing of title from seller
to buyer under open and competitive
market conditions requisite to a fair
sale. It is designed to provide an
accurate and reliable measure of the
economic potential of property involved
in federally related transactions.
Moreover, the Board believes that
widespread acceptance and use of this
definition will provide consistency to
appraisals.
In applying this definition of market
value, adjustments to the comparables
must be made for special or creative
financing or sales concessions. No
adjustments are necessary for those
costs that are normally paid by sellers
as a result of tradition or law in a
market area; these costs are readily
identifiable since the seller pays these
costs in virtually all sales transactions.
Special or creative financing
adjustments can be made to the
comparable property by comparisons to
financing terms offered by a third party
financial institution that is not already
involved in the property or transaction.
Any adjustment should not be
calculated on a mechanical dollar-fordollar cost of the financing or
concession, but the dollar amount of any
adjustment should approximate the
market’s reaction to the financing or
• See 49 CFR part 24, “Uniform Relocation
Assistance and Real Property Acquisition
Regulations for Federal and Federally Assisted
Programs," 54 Federal Register 8,913 (1989).
concessions based on the appraiser’s
judgment.6
—“Real estate-related financial
transaction.” This definition is the same
as that set forth in section 1121(5) of
FIRREA, except that "and” is replaced
with “or” throughout so as to clarify the
intent of Congress that the safeguards of
title XI apply as broadly as possible.7
—"State certified appraiser.” This
classification applies to appraisers who
are recognized by the States as being
more knowledgeable of and experienced
in appraisals than are licensed
appraisers. Section 1116 of FIRREA
contemplates that each state or territory
will adopt standards and procedures,
consistent with the purposes of title XI,
for obtaining the designation of “State
certified appraiser.” To be consistent
with title XI, each state’s standards and
procedures must require its certified
appraisers to meet, at a minimum, the
criteria for certification issued by the
Appraisal Foundation. Moreover, no
state or territory may certify an
appraiser under title XI unless that
individual passes an examination,
administered by the state or territory,
that is consistent with the equivalent to
the Uniform State Certification
Examination issued or endorsed by the
Appraisal Foundation. The proposed
rule does not prevent a state from
establishing additional certification
criteria.
Under FIRREA, the Board is
authorized to establish certification
criteria in addition to those adopted by
a given state. Additionally, the
Appraisal Subcommittee of the Federal
Financial Institutions Examination
Council may issue a written finding that
the certification criteria of a state or
territory are inadequate for specified
reasons. Thus, an individual may be a
“State certified appraiser” only if (a) the
individual complies with all stateimposed criteria and additional criteria,
if any, imposed by the Board, and (b) the
appraiser certifications and licenses of a
state have not been rejected by the
Appraisal Subcommittee. As of July 1,
1991, appraisals for federally related
transactions must be performed by State
certified or licensed appraisers, unless
6 This paragraph regarding comparables is taken
from the standard definition of “market value" used
by the Federal Home Loan Mortgage Corporation
(“FHLMC”), the Federal National Mortgage
Association ("FNMA”), and OTS, among others. By
including this paragraph in the preamble rather than
the regulation, the Board does not intend to suggest
any change in the interpretation or application of
the definition of “market value” as this term
currently is used.
7 See, e.g., Report of the House Banking, Finance
and Urban Affairs, H.R. Rept. 101-54, part 1 ,101st
Cong., 1st Sess. (the “House Banking Committee
Report”) 480, 481 (1989).
4811
this deadline is extended by the
Appraisal Subcommittee for a given
state pursuant to provisions of title XI.
—“State licensed appraiser.” Each
state may elect to adopt licensing
criteria that are less rigorous than
certification criteria. However, licensing
criteria must be adequate to protect
federal financial and public policy
interests. For example, simply
“grandfathering” all existing appraisers
generally would not be acceptable.
Rather, the states and territories are to
design criteria that will ensure that
licensed appraisers will have the
experience and training sufficient to
perform l-to-4 family residential
property appraisals that are below the
dollar thresholds set forth in this
proposed regulation and that are not
“complex l-to-4 family residential
property appraisals” as this term is
defined in this proposal.
As with State certified appraiser
criteria, the Board is authorized to
impose additional licensing
requirements. Moreover, the Appraisal
Subcommittee is charged with
monitoring state appraiser certifying and
licensing agencies, and may reject state
certifications and licenses if a state’s
appraisal policies, practices, or
procedures are found to be inconsistent
with title XI or this proposed regulation.
—“Tier 1 capital.” This term is applied
in determining circumstances when a
State certified appraiser is required. The
calculation of Tier 1 capital is set forth
in appendices to the Board’s Regulation
H (for state member banks) and
Regulation Y (for bank holding
companies).
—"Tract development.” A tract
development may be units in a
subdivision, condominium project,
timeshare project, or any similar project
meant to be sold as individual units over
a period of time.
—'Transaction value.” This definition
is intended to clarify certain
circumstances under which appraisals
must be performed by a State certified
appraiser. For example, a State certified
appraiser is required when, among other
instances, a 1- to 4-family residential
property appraisal is performed in
connection with a federally related
transaction having a transaction value
greater than $1,000,000 or 10 percent of a
regulated institution’s Tier 1 capital,
whichever is less.
Section 225.63—Transaction requiring
State certified or licensed appraiser.
(a) Appraiser not required. Section
1121(4) of FIRREA defines a federally
related transaction as a real estaterelated financial transaction that, among
other things, requires the services of an
4812
Federal Register / VoL 55, No. 28 J. Friday, February 9. 1990 / Proposed Rules
appraiser. The Board recognizes that not
all real estate-related financial
transactions will require an appraiser.
For instance, and appraisal would not
be needed where a lien on real property
has been taken as collateral solely
through an abundance of caution and
where the terms as a consequence have
not been made more favorable than they
would have been in the absence of the
lien. In addition, the Board proposes not
to require a State certified or licensed
appraiser for real estate-related
financial transactions having a
transaction value less than or equal to
$15,000. However, the Board does not
intend for the de m inim is exception to
discourage any regulated institution
from obtaining an appraisal of property
even though not otherwise required by
law to do so.
(b) Transactions requiring State
certified appraiser. The legislative
history evidences a clear intent that
State certified appraisers be used for
most appraisals performed in
connection with federally related
transactions.8 The proposed regulation
accomplishes this goal by requiring
State certified appraisers for all
federally related transactions that do
not involve 1- to 4-family residential
property. Moreover, a State certified
appraiser is to be used even for
appraisals of 1- to 4-family residential
properties in three circumstances: first,
for federally related transactions
entered into by the Board, if the
transaction value exceeds $1,000,000;
second, for federally related
transactions entered into by regulated
institutions, if the transaction value
exceeds $1,000,000 or 10 percent of Tier
1 capital, whichever is less; and third,
for federally related transactions that
involve a “complex 1- to 4-family
residential property appraisal” as this
term is defind.
(c) Transactions requiring either a
State certified or licensed appraiser.
Any federally related transaction that
does not require the services of a State
certified appraiser must be performed
by, at a minimum, a State licensed
appraiser. State licensed appraisers may
perform appraisals rendered in
connection with federally related
transactions involving only 1-to 4-family
residential properties, and only if the
transaction value is below the threshold
set forth above and the transaction does
not involve a “complex 1- to 4-family
residential property appraisal.*'
Section 225.64—Appraisal standards.
(a) M inimum standards. Section 1110
of FIRREA instructs the Board to
* See. £^g.. House Banking Committee R«*port at
481.
prescribe appropriate standards for die
performance of appraisals made in
connection with federally related
transactions within its jurisdiction.
Further, section 1110 mandates that the
standards require, at a minimum, that
appraisals be written and that they
conform to the generally accepted
appraisal standards promulgated by the
Appraisal Foundation. The Board is
empowered to require compliance with
additional appraisal standards if it
makes a written determination that such
additional standards are required in
order to properly carry out its statutory
responsibilities. Section 225.63 of the
proposed regulation incorporates the
minimum standards set forth in the
statute, while listing additional criteria
that shall apply to all appraisals
performed in connection with federally
related transactions.
In enacting title XI of FIRREA,
Congress was responding to perceived
problems in the appraisal industry.
These problems were identified by the
House Committee on Government
Operations during a series of hearings,*
and have been cited repeatedly in the
legislative history of title XI.10 The
Board is proposing to adopt the
following standards to further the
legislative intent in addressing these
problems. These standards are designed
to contribute to safe and sound banking
practices by requiring reliable appraisal
reports. Appraisals performed in
connection with federally related
transactions are to comply with these
standards by August 9,1990.
—(1) Compliance with USPAP;
departure provision. This standard
incorporates the current standards in
the USPAP, and clarifies that the
Departure Provisions 11 in the USPAP is
inapplicable to appraisals conducted in
connection with federally related
transactions within the Board's
jurisdiction. The Board believes that the
Departure Provision allows appraisal
services to be performed which produce
something different form an "appraisal"
as contemplated by title XI of FIRREA.
For instance, in accordance with the
* House Comm, on Government Operations,
Impact o f Appraisal Problems on Real Estate
Lending. Mortgage Insurance, and Investm ent in the
Secondary M arket H.R. 99-891.99th Cong, 2d Sess.
(1986).
10 See. eg~ 135 Cong. Rec. S40G4 (daily ed. April
17.1989) (statement of Sen. Dodd); H it. Rep. No.
100- 1001, 100 th Cong. 2d Sess. p t L at la 21-26; 133
Cong. Rec. H107G9 (daily ed. Nov. 20.1987)
(statement of Cong. Barnard); 132 Cong. Rec. 113452
(daily ed. June 6.1988) (statement of Cong. Barnard).
11 The Departure Provision enables appraisers to
"perform an assignment that calls for something less
than or different from the work that would
otherwise be required by the (USPAP)." USPAP at
IV.
Departure Provisions and consistent
with current USPAP requirements, a
letter opinion might be produced that
could be silent about trends of rents,
vacancies, or overbuilding. Explanatory
comments in the USPAP regarding the
Departure Provision in the USPAP cite
examples of when the departure
provision might apply;18 however, for
purposes of the proposed regulation,
such services are not appraisals as this
term is used in title XI. The Board
believes that the Departure Provision in
the USPAP allows for the omission of
data that should be included in all
appraisals rendered in connection with
federally related transactions and.
therefore, has proposed that the
Departure Provision shall not apply to
such appraisals.
Changes in the USPAP will apply to
federally related transactions unless the
Board has stated in writing that the
changes shall not apply to federally
related transactions within its primary
or exclusive jurisdiction.
—(2) Disclosure o f competency. An
appraiser is required to have the
appropriate knowledge and experience
that will be required to complete an
assignment competently. If such
knowledge and experience is initially
lacking, the appraiser must disclose in
the appraisal both this fact and the steps
taken to comply with the Competency
Provision in the USPAP.
—(3) M arket value. This standard
requires an appraisal to document an
appraiser’s opinion of a property’s
“market value'" as this term is defined.
The definition of "market value" was
developed by FNMA and FHLMC with
the input of many professional appraisal
organizations. Without such a standard,
a lender might select a definition of
value that allows the vlaue of real
property to be increased by favorable
financing, going concern value, or
special value to a specific user. This
standard proposes to provide to
interested parties the information
necessary to determine the value of a
property.
—(4} W ritten appraisals; forms. This
standard sets forth the legislative
mandate that all appraisals be written.
Moreover, it requires an appraisal to be
sufficiently descriptive to enable a
reviewer to readily ascertain the
estimated value reported and the
rationale for that estimate. The
appraisal may be in a narrative format
12 These examples include introducing into
evidence during a judicial proceeding a fine page
summary that incorporates by reference an
appraiser’s file or preparing a brief update of i
previously prepared appraisal.
Federal Register / VoL 55, N o. 28 / Friday. February 9. 1990 / Proposed Rules
or on a form chosen by an appraiser, but
the appraisal mast comply with all other
provisions of the regulation. A form not
initially designed for use in connection
with federally related transactions may
be used provided that it is modified as
necessary to comply with the
requirements of Title XI and this
proposed regulation. Regardless of the
format selected, the appraisal must be
readily understood by a third party and
must reflect the complexity of the
property that is appraised. This will
enable the reader of the appraisal to
independently determine its adequacy
based upon the characteristics of the
collateral appraised.
—(5) Sales history. This standard is
designed to enable a reviewer to
compare an appraiser’s opinion of a
property's market value with recent
sales prices. In addition to giving the
reviewer a basis by which to evaluate
the accuracy of the subject property
appraisal, it also will assist the reviewer
in identifying recent trends in market
prices. For instance, a sales history may
identify a single sale or a series of sales
at artificially inflated prices.
Sales histories are required for one
year for l-to-4 family residential
property and for three years for all other
types of property. A more demanding
reporting standard for nonresidentiai
property is appropriate because larger
loan amounts are generally granted, and
hence larger risk to the regulated
institution incurred, when the loan
security is not a l-to-4 family dwelling.
—(6) Rents and vacancies. An
appraisal should disclose current
income produced by a property if the
property will continue to be used to
generate income after a transaction is
consummated. This information is
essential for an accurate picture of the
market value of an income-producing
property. Appraisal values should be
predicted upon current rents and current
vacancies for property utilized in such a
manner. That is, appraisals should be
based upon income that can realistically
be earned under current market and
economic conditions (in light of rents
being earned on comparable properties),
rather than upon estimated or projected
income that cannot be supported by
current market conditions. If an
appraiser reports a high current
vacancy, this condition may require a
lender to impose special conditions on
the loan.
—(7) M arketing period. This standard
requires an appraiser to employ a
marketing period that is reasonable in
light of a given property's characteristics
and market conditions, and to disclose
the assumptions used. An appraiser's
opinion of market value will depend in
part on the appraiser's estimate of how
long a given piece of property wiH
remain for sale. For instance, an
appraisal using a long marketing period
is likely to produce a higher market
value than would an appraisal using a
shorter marketing period. This
information will better enable the reader
of the appraisal to assess its accuracy.
—(8) Trend analysis. An appraisal
should inform the reader of any market
trends, regardless of whether the trend
reflects rising or declining values. Such
trends might include, for example,
increasing vacancy rates, greater use of
rent concessions, or declining sales
prices. Identification of negative trends
is particularly important so that a
regulated institution may avoid
extending credit on the basis of
insufficient collateral. Market trends
may be indicated in market activity on
the subject property, such as listings,
options, or sales agreements;
accordingly, such activity should be
disclosed.
—(9) Deductions and discounts. This
standard is designed to avoid having
appraisals prepared using unrealistic
assumptions. For federally related
transactions, the subject property must
always be valued in its "as is" condition
as of the date of valuation. Further,
appropriate deductions or discounts are
to be made from an estimated retail or
stabilized value to arrive at the market
value as of the date of valuation
identified in the appraisal. Unsold units
or unleased space poses a significant
risk to an owner, buyer, or lender. For
this reason, the impact of such risks
must be reflected in the market value
estimate.
—(10) Prohibited influences. All
appraisals are to be performed without
pressure from someone who desires a
specific value. AccortEngly, every
appraisal rendered in connection with a
federally related transaction shall
include a statement to the effect that
employment of the appraiser was not
conditioned upon the appraisal
producing a specific value or a value
within a given range. Similarly, future
employment prospects should not be
dependent upon an appraisal producing
a specified value. Employment and
compensation should not be based on
whether a loan application is approved,
as this, too, would exert pressure on an
appraiser to render whatever appraisal
is necessary for the loan to be approved.
—(11) Self-contained appraisals. This
standard requires an appraisal to
contain all information necessary to
enable a reader of an appraisal to
understand the appraiser's opinion. The
appraisal should not incorporate by
reference a document that is not readily
4&13
available to the reader. Studies prepared
by a third party should be verified to the
extent his or her assumptions or
conclusions are used. In addition, the
appraiser’s acceptance or rejection of a
third party study and its impact on value
should be fully explained. The appraisal
itself should enable the reader to
understand the conclusion without
having to refer to numerous other
documents. Moreover, the conclusion
must be reasonable in light of the
information set forth in the appraisal.
These requirements will force an
appraiser to obtain adequate data
before issuing an opinion of value.
—(12) Legal description. A legal
description of the property is to be
included in an appraisal so as to avoid
confusion that may arise from less
precise identification. This requirement
enables a reader to compare the legal
description in the appraisal to die legal
description in the loan documents. The
legal description is to be provided in
addition to, and not in lieu of. the
description required in the USPAP.
—(13) Personal property, fixtures, and
intangible item s. An appraisal is to
include a separate assessment of
personal property, fixtures, or intangible
items that are attached to or located on
real property if the personal property,
fixture, or intangible item affects the
market value of the real property.
Furniture and fixtures should have
separate valuations because their
economic life is shorter than real
property improvements and may require
special lending or investment
considerations. If the personal property,
fixture, or intangible item is not a part of
the transaction, then this fact should be
stated and the impact on market value
should be disclosed. Favorable loan
financing or any business interest or
other intangible item should be valued
separately within the appraisal. These
requirements will help provide a reader
with a more complete understanding of
the market value of the real property as
it will be at the time the transaction is
entered into.
—(14) Use o f recognized appraisal
approaches. At the request of clients,
some appraisers have not prepared cost
estimates of value, estimates of value
based on the capitalization of income, or
value estimates based on direct sales
comparisons. This standard requires an
appraiser to employ each of these
recognized approaches to market value
and explain how each approach was
used. However, if one or more
approaches cannot be used, an
appraiser is to explain the elimination of
any approach. This requirement is
intended to produce appraisals made
4814
Federal Register / Vol. 55, No. 28 / Friday, February 9, 1990 / Proposed Rules
only after the three major approaches to
market value have been considered and
reconciled, thereby improving the
accuracy of the appraisal. Disclosure of
the fact that an approach was not used
will assist the reader in evaluating the
adequacy of the appraisal.
(b) U navailability o f information. The
Board realizes that some information
required by the USPAP or this regulation
to be in an appraisal may, on occasion,
be unavailable. For example, historic
rents will not exist for a building under
construction at the time of appraisal.
However, an appraisal should inform
the reader of any material information
that is unavailable and why such
information could not be obtained, so as
to assist the reader in reviewing the
appraisal.
(c) Additional standards. The
standards required by this regulation are
the minimum standards to be met by
every appraisal made in connection with
a federally related transaction.
However, the Board and regulated
institutions may employ additional
standards if circumstances so warrant.
Section 225.65—Appraiser
independence. An appraiser's goal
should be to produce an objective
opinion about the market value of a
property. This objectivity may be
compromised if the appraiser is involved
in the transaction, such as deciding
whether to extend credit to be secured
by such property. Similarly, a direct or
indirect interest in the property
appraised may undermine the accuracy
of the appraisal. A direct interest would
arise, for example, by owning all or part
of property being appraised. An indirect
interest would arise if, for example, an
appraiser owns property adjacent to the
parcel being appraised. This indirect
interest would extend to any property
whose value is likely to be affected by
an appraisal, if the appraisal is the
proximate cause for the effect.
Moreover, the interest may be
nonpecuniary, such as a desire to help
an associate obtain a loan.
To further the goal of appraiser
independence, the Board proposes to
require that fee appraisers (that is,
appraisers not permanently employed
by a given regulated institution) be hired
by a regulated institution or its agent
rather than the borrower. In order to
avoid potential conflicts of interest, staff
appraisers (appraisers that are
permanently employed by a regulated
institution) should not be supervised,
controlled, or influenced by loan
underwriters, loan officers, or collection
officers.
The Board recognizes that in certain
cases it may be necessary for loan
officers and directors to perform
appraisals. Such cases would depend on
a bank's particular circumstances; an
example would be a small rural bank
where the only qualified individual to
perform appraisals is a loan officer, and
separating this person from the loan and
collection departments is impossible. In
such situtations, the Board recommends
that this individual perform appraisal
work on loans in which he or she is not
otherwise involved. In cases where loan
officers or directors perform appraisals,
regulated institutions are expected to
ensure that the appraisers are qualified
and that appraisal reports are
adequate.13 Directors and offiercers
should abstain from any vote and/or
approval involving assets on which they
had performed an appraisal. In all,
sufficient safeguards should be in place
to permit appraisers to exercise
independent judgment, thereby ensuring
the validity of the appraisal process.
Section 225.66—Professional
association membership; competency.
(a) M embership in appraisal
organizations. The legislative history of
tide XI evidences an intent to prohibit
discrimination against appraisers solely
by virtue of membership or lack of
membership in a particular appraisal
organization.14 Accordingly, this
regulation prohibits any entity covered
by Title XI from basing decisions
regarding the employment of appraisers
solely on membership or lack of
membership in an appraisal
organization. An institution should
review the qualifications of appraisers
rather than the qualifications of
appraisal organizations to insure that a
qualified individual is being employed.
Membership in an organization may be
considered; however, it may not be the
sole determining factor in accepting or
rejecting an appraiser.
(b) Competency. Not all appraisers
are competent to perform every type of
appraisal that will be needed in
connection with federally related
transactions. For instance, an appraiser
who is experienced in appraising
shopping centers may not possess
sufficient expertise to appraise a golf
course. A financial institution should
look beyond an individual's title to
determine if he or she has the
experience and training needed to
perform the appraisal. This provision is
not intended to prohibit, in every
circumstance, an individual from
appraising a type of property with which
“ It should be noted that directors and officers
who perform appraisals in connection with
federally related transactions must be licensed or
certified, as appropriate.
14 See, e.g.. House Banking Committee Report at
484; see also HR. Conf. Rep. No. 101-222.101st
Cong., 1st Sess., at 457 (1989).
he or she is not familiar. However, in
such instances, an appraiser may
perform the appraisal only in
accordance with the Competency
Provision in the USPAP. In addition, an
individual who is not a. State certified or
licensed appraiser may assist in the
preparation of an appraisal if he or she
is directly supervised by a licensed or
certified appraiser (as appropriate), and
the appraisal is approved and signed by
a certified or licensed appraiser.
Section 225.67—Enforcement. Section
1120 of FIRREA vests the Board with the
authority to bring an action for civil
money penalties against a regulated
institution within the agency’s primary
jurisdiction. The proposed regulation
makes clear that additional enforcement
remedies available to the Board under
section 8 of the Federal Deposit
Insurance Act also apply. These can
include civil money penalties and cease
and desist orders, as well as orders of
removal and prohibitions against
institutions and institution-affiliated
parties. FIRREA specifically provides
that “Institution-affiliated parties”
includes, but is not limited to,
appraisers.18
Differences Between the Agencies.
The federal financial institutions
regulatory agencies and the RTC have
attempted to develop uniform
regulations regarding the appraisal
requirements for federally related
transactions. However, the agencies and
the RTC have proposed different
approaches on the following points:
(1) De m inim is test. The Board
proposes not to require a State certified
or licensed appraiser for real estaterelated financial transactions having a
transaction value less than or equal to
$15,000.
(2) Tier 1 capital. The Board proposes
to adopt the definition of Tier 1 capital
as set forth in appendices to the Board's
Regulation H (for state member banks)
and Regulation Y (for bank holding
companies).
(3) Bridge banks operating under 12
U.S.C. 1821(n) and depository
institutions operated by the FDIC or the
RTC as receiver, liquidator, or
conservator are not addressed in the
Board's proposal.
Regulatory Flexibility Act Analysis
Title XI of FIRREA requires the Board
to establish standards for performing
appraisals in connection with federally
related transactions within the Board’s
jurisdiction. In addition, title XI requires
the Board to distinguish those
transactions that require State certified
ls See FIRREA, section 204(f)(6) and 901(b)(1).
Federal Register / Vol. 55, No. 28 / Friday, Febniary 9. 1990 / Proposed Rales
appraisers from those that require State
certified or licensed appraisers. This
proposed regulation is in response to
this legislative mandate.
Title XI provides no exemption for
small business entities. However, the
Board has attempted to alleviate the
economic impact on small businesses,
including small regulated institutions, by
not requiring a State certified or
licensed appraiser for transactions in
which (i) the transaction value is below
the de m inim is cutoff established in the
regulation, or (iij a lien on real estate is
taken as collateral solely as an
abundance of caution.
The Board invites comments on the
costs and benefits of the proposed
regulation with regard to the operation
of depository institutions, the provision
of real estate credit, the impact on loan
losses, and the cost of appraisals.
The Board anticipates that the
proposed regulation may increase, to
some degree, costs for borrowers and
member banks and bank holding
companies of all sizes. However,
increased costs should be mitigated by
savings resulting from decreased loan
losses. The cost increase may stem from
at least two aspects of the rule. First,
since member banks and bank holding
companies are required to use certified
or licensed appraisers, the cost of an
appraisal may rise som ewhat Some
borrowers may resist the increased
appraisal cost and decide not to take out
a loan secured by real estate. On die
other hand, some banking organizations
may elect to absorb aB or a portion of
any increased appraisal cost, thereby
reducing lending profits. Second, the
proposed regulation includes certain
items that go beyond the Federal
Reserve’s existing appraisal guidelines.
Those items could add to appraisal
costs.
The Board also expects the proposed
regulation to decrease costs to member
banks and bank holding companies of
all sizes. Such banking organizations
will have better information about the
value of the real estate involved in
federally related transactions and can
better ensure that each loan is
collateralized adequately. As a result
the events of default should be reduced,
with a correspondent reduction in loan
losses. In addition, for those
organization that already have strong
appraisal policies or procedures that
exceed minimum supervisory standards,
the marginal costs of the proposed
regulation should be limited. On
balance, the Board believes that
adoption of this proposal would not have
a significant adverse economic impact
on a substantial number of small
business entities, in accordance with the
4815
spirit and purposes of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.}.
Enforcement Act of 1989 (12 U.S.C 3310 and
3331-3351).
List of Subjects
12 CFR Part 208
Agricultural loan losses. Applications,
Appraisals, Banks, Banking, Branches,
Capital adequacy. Federal Reserve
System, Flood insurance. Publication of
reports of condition. Reporting and
recordkeeping requirements. Securities,
State member banks.
12 CFR Part 225
Administrative practice and
procedure. Appraisals, Banks, Banking,
Federal Reserve System, Holding
companies, Reporting and recordkeeping
requirements. Securities,
For the reasons set forth in this notice,
the Board proposes to amend 12 CFR
parts 208 and 225 as follows:
2. Subpart G. consisting of §§225.61
through 225.67, is added immediately
following Subpart F to read as follows:
PART 208—MEMBERSHIP OF STATE
BANKING INSTITUTIONS IN THE
FEDERAL RESERVE SYSTEM
1. The authority citation for part 208 is
revised to read as follows:
Authority; Sections 0,11(a)', 11(c), 19, 21,25,
and 25{a) of the Federal Reserve Act, as
amended (12 U.S.C. 321-338,248(a). 248(c);
461,481-486,601, and 611, respectively):
sections 4 and 13(j) of the Federal Deposit
Insurance Act, aa amended (12U&C. 1814
and 1823(j), respectively); section 7(a) of the
International Lending Supervision Act of 1978
(12 U.S.C. 3105); sections 907-910 of fee
International Banking Act of1983 (12 U.S.C.
3906-3908): sections 2,12(b), 12(g), 12(i),
15B(c)(5), 17,17A, and 23 of the Securities
Exchange Act of 1934 (15 ILS.C. 78b. 781(b).
781(g), 78l(i), 78o-4fcp), 78q. 78*HU and 78w.
respectively); section 5155 of the Revised
Statutes (12U.S-C. 36) as amended by the
McFadden Act of 1927; and sections 11011122 of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (12
U.S.C. 3310 and 3331-3351).
2. Section 208.18 is added to read aa
follows:
§ 208.18 Appraisal standards for
federally related transactions.
The standards applicable to
appraisals rendered in connection with
federally related transactions entered
into by member banks are set forth in
subpart G of the Board’s Regulation Y,
12 CFR part 225.
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL
1. The authority citation for Part 225 is
revised to read as follows:
Authority: 12 U.S.C 1817(j)(13). 1818.
1843(c)(8), 1844(b). 3106,3108,3907. and 3909;
and sections 1101-1122 of the Financial
Institutions Reform, Recovery and
Subpart G—Appraisal Standards for
Federally Related Transactions
225.61 Authority, purpose, and scope.
225.62 Definitions.
225.63 Transactions requiring State certified
or licensed appraiser.
225.64 Appraisal standards.
225.65 Appraiser independence.
225.66 Professional association membership;
competency.
225.67 Enforcement
Subpart G—Appraisal Standards for
Federally Related Transactions
§225.61
Authority, purpose, and scope.
(a) Authority. This subpart is issued
by the Board of Governors of the
Federal Reserve System (die “Board”)
under title XI of the Financial
Institutions Reform, Recovery, and
Enforcement Act of 1989 (“FIRREA”)
(Pub. L. No. 101-73,103 Stat. 183 (1989)).
(b) Purpose and scope, (lj Title XI
provides protection for federal financial
and public policy interests in real estate
related transactions by requiring real
estate appraisals used in connection
with federally related transactions to be
performed in writing, in accordance with
uniform standards, by appraisers whose
competency has been demonstrated and
whose professional conduct is subject to
effective supervision. This subpart
implements the requirements of title XI,
and applies to all federally related
transactions entered into by the Board
or by institutions primarily or
exclusively regulated by the Board
(“regulated institutions").
(2) This subpart:
(i) Identifies which real estate-related
financial transactions require the
serv ices of an appraiser;
(ii) Prescribes which categories of
federally related transactions shall be
appraised by a State certified appraiser
and which by a State licensed appraiser;
and
(iii) Prescribes minimum standards for
the performance of real estate
appraisals in connection with federally
related transactions under the
jurisdiction of the Board.
§225.62 Definitions.
(a)
"Appraisal” means a written
statement independently and impartially
prepared by a qualified appraiser setting
forth an opinion as to the market value
of an adequately described property as
of a specific date(s), supported by the
4816
Federal Register / Vol. 55, No. 28 / Friday, February 9, 1990 / Proposed Rules
presentation and analysis of relevant
market information.
(b) “Appraisal Foundation” means the
Appraisal Foundation established on
November 30,1987, as a not-for-profit
corporation under the laws of Illinois.
(c) “Appraisal Subcommittee" means
the Appraisal Subcommittee of the
Federal Financial Institutions
Examination Council (“FFIEC").
(d) "Complex l-to-4 family residential
property appraisal” means one in which
the property to be appraised is atypical
of its market. For example, atypical
factors may include:
(1) Age of improvements;
(2) Architectural style;
(3) Size of improvements;
(4) Size of lot;'
(5) Neighborhood land use;
(6) Potential environmental hazard
liability;
(7) Leasehold interests;
(8) Limited readily available
comparable sales data; or
(9) Other unusual factors.
(e) “Federally related transaction”
means any real estate-related financial
transaction that:
(1) Hie Board or any regulated
institution engages in or contracts for;
and
(2) Requires the services of an
appraiser.
(f) “Market value” means the most
probable price which a property should
bring in a competitive and open market
under all conditions requisite to a fair
sale, the buyer and seller each acting
prudently and knowledgeably, and
assuming the price is not affected by
undue stimulus. Implicit in this
definition is the consummation of a sale
as of a specified date and the passing of
title from seller to buyer under
conditions whereby:
(1) Buyer and seller are typically
motivated;
(2) Both parties are well informed or
well advised, and acting in what they
consider their best interests;
(3) A reasonable time is allowed for
exposure in the open market;
(4) Payment is made in terms of cash
in United States dollars or in terms of
financial arrangements comparable
thereto; and
(5) The price represents the normal
consideration for the property sold
unaffected by special or creative
financing or sales concessions granted
by anyone associated with the sale.
(g) “Real estate-related financial
transaction” means any transaction
involving:
(1) The sale, lease, purchase,
investment in or exchange of real
property, including interests in real
property, or the financing thereof; or
(2) The refinancing of real property or
interests in real property; or
(3) The use of real property or
interests in real property as security for
a loan or investment, including
mortgage-backed securities.
(h) “State certified appraiser” means
any individual who has satisfied the
requirements for State certification in a
State or territory whose criteria for
certification as a real estate appraiser
currently meets the minimum criteria for
certification issued by the Appraiser
Qualifications Board of the Appraisal
Foundation. No individual shall be a
State certified appraiser unless such
individual has achieved a passing grade
upon a suitable examination
administered by a State or territory that
is consistent with and equivalent to the
Uniform State Certification Examination
issued or endorsed by the Appraiser
Qualification Board of the Appraisal
Foundation. In addition, the Appraisal
Subcommittee must not have issued a
finding that the State’s policies,
practices, or procedures are inconsistent
with title XI of FIRREA. The Board may,
from time to time, impose additional
qualification criteria for certified
appraisers performing appraisals in
connection with federally related
transactions within the Board’s
jurisdiction.
(i) “State licensed appraiser” means
any individual who has satisfied the
requirements for State licensing in a
State or territory where the licensing
procedures are consistent with Title XI
of FIRREA and where the Appraisal
Subcommittee has not issued a finding
that the State's appraisal policies,
practices, or procedures are inconsitent
with title XI. The Board may, from time
to time, impose additional qualification
criteria for licensed appraisers
performing appraisals in connection
with federally related transactions
within the Board's jurisdiction.
(j) "Tier 1 capital" means such capital
for year-end 1992, as set forth in
appendix A to' part 208 of the Board’s
Regulation H for state-chartered banks
that are members of the Federal Reserve
System and in appendix A to part 225 of
the Board’s Regulation Y for bank
holding companies. Tier 1 capital shall
be calculated as of the date of the
regulated institution’s latest call report.
(k) “Tract development” means a
project of five units or more that is
constructed as a single development.
(1) “Transaction value” means:
(1) For loans or other extensions of
credit, the amount of the loan or
extension of credit; and
(2) For sales, leases, purchases, and
investments in or exchanges of real
property, the market value of the real
property involved.
§ 225.63 Transactions requiring State
certified or licensed appraiser.
(a) Appraiser not required. An
appraisal performed by a State certified
or licensed appraiser is not required for:
(1) Any real estate-related financial
transaction in which the transaction
value is $15,000 or less; or
(2) Any real estate-related financial
transaction in which a lien on real
property has been taken as collateral
solely through an abundance of caution
and where the terms of the transaction
as a consequence have not been made
more favorable than they would have
been in the absence of a lien.
(b) Transactions requiring State
certified appraiser.
(1) All federally related transactions,
other than those involving appraisals of
1- to 4-family residential properties,
shall require an appraisal performed by
a State certified appraiser.
(2) All appraisals of 1- to 4-family
residential properties made in
connection with federally related
transactions shall require a State
certified appraiser if:
(i) For federally related transactions
entered into by the Board, the
transaction value exceeds $1,000,000; or
(ii) For federally related transactions
entered into by regulated institutions,
the transaction value exceeds:
(A) 10 percent of the regulated
institution’s Tier 1 capital; or
(B) $1,000,000, whichever is less.
(3) All complex 1- to 4-family
residential property appraisals rendered
in connection with federally related
transactions shall require a State
certified appraiser. The regulated
institution shall determine whether the
property is complex and shall make
available, if requested by the Board,
appropriate evidence to support the
determination.
(c) Transactions requiring either a
State certified or licensed appraiser. All
appraisals for federally related
transactions not requiring the services of
a State certified appraiser shall be
performed by either a State certified
appraiser or a State licensed appraiser.
§ 225.64 Appraisal standards.
(a) Minimum standards. For federally
related transactions, all appraisals as
defined in § 225.62(a) of this subpart
shall, at a minimum:
(1) Conform to the current Uniform
Standards of Professional Appraisal
Practice ("USPAP”) as adopted by the
Federal Register / Vol. 55, No. 28L / Friday, February 9, 1990 / Proposed Rules
Appraisal Foundation,18 except that the
Departure Provision of the USPAP shall
not apply to federally related
transactions;
(2) If appropriate, disclose any steps
taken to comply with the Competency
Provision of the USPAP;
(3) Be based upon the conditions
specified in the definition of market
value as set forth in § 225.62(f) of this
subpart;
(4) Be written and presented in a
narrative format, or on forms that satisfy
all the requirements of this section, be
sufficiently descriptive to enable the
reader to ascertain the estimated market
value and the rationale for the estimate,
and provide detail and depth of analysis
that reflects the complexity of the real
estate appraised;
(5) Analyze and report in reasonable
detail any prior sales of the property
being appraised that occurred within the
following time periods:
(i) For 1- to 4-family residential
property, one year preceding the date
when the appraisal was prepared; and
(ii) For all other property, three years
preceding the date when the appraisal
was prepared;
(6) Analyze and report data on current
rents and current vacancies for the
property if it is and will continue to be
income-producing;
(7) Analyze and report a reasonable
marketing period for the subject
property;
(8) Analyze and report on current
market conditions and trends that will
affect projected income or the
absorption period to the extent they
affect the value of the subject property;
(9) Analyze and report appropriate
deductions and discounts for:
(i) Any proposed construction;
(ii) Any completed properties that are
partially leased or are leased at other
than market rents as of the date of the
appraisal; or
(iii) Any tract developments with
unsold units;
(10) Include in the certification
required by the USPAP an additional
statement that the appraisal assignment
was not based on a requested minimum
*• Amendments to the USPAP made after the
effective date of a final rule shall apply to federally
related transactions unless disapproved in writing
by the Board.
valuation, a specific valuation, or
approval of a loan;
(11) Contain sufficient supporting
documentation with all pertinent
information reported so that the
appraiser’s logic, reasoning, judgment,
and analysis in arriving at a final
conclusion indicate to the reader the
reasonableness of the market value
reported;
(12) Include a legal description of the
real estate being appraised in addition
to the description required by the
USPAP;
(13) Identify and separately value any
personal property, fixtures, or intangible
items that are not real property but are
included in the appraisal, and discuss
the impact of their inclusion or
exclusion on the estimate of market
value; and
(14) Follow a reasonable valuation
method that addresses the direct sales
comparison, income, and cost
approaches to market value, and
reconciles those approaches; if one or
more approach cannot be used, explain
the elimination of each approach not
used.
(b) U navailability o f information. If
information required or deemed
pertinent to the completion of an
appraisal is unavailable, that fact shall
be disclosed and explained in the
appraisal report.
(c) A dditional standards. Nothing
contained herein shall prevent-a
regulated institution from requiring
additional appraisal standards if
deemed appropriate.
§ 225.65 Appraiser independence.
(a) S ta ff appraisers. If an appraisal is
prepared by a staff appraiser, that
appraiser must:
(i) Be independent of the lending,
investment, or collection functions and
not involved, except as an appraiser, in
the federally related transaction; and
(ii) Have no direct or indirect interest,
financial or otherwise, in the property.
If the only qualified persons available to
perform an appraisal are involved in the
lending, investment, or collection
functions of the regulated institution, the
regulated institution shall take
appropriate steps to insure that the
appraisers exercise independent
judgment and that the appraisal is
4817
adequate. Such steps include, but are
not limited to, prohibiting an individual
from performing an appraisal in
connection with federally related
transactions in which the appraiser is
otherwise involved and prohibiting
directors and officers from participating
in any vote or approval involving assets
on which they had performed an
appraisal.
(b) Fee appraisers. If an appraisal is
prepared by a fee appraiser, the
appraiser shall be employed directly by
the regulated institution or its agent, and
have no direct or indirect interest,
financial or otherwise, in the property or
transaction.
§ 225.66 Professional association
membership; competency.
(a) M embership in appraisal
organizations. A State certified
appraiser or a State licensed appraiser
may not be excluded from consideration
for an assignment for a federally related
transaction solely by virtue of
membership or lack of membership in
any particular appraisal organization.
(b) Competency. All staff and fee
appraisers performing appraisals in
connection with federally related
transactions must be State certified or
licensed, as appropriate. However, a
State certified or licensed appraiser may
not be considered competent solely by
virtue of being certified or licensed. Any
determination of competency shall be
based upon the individual’s experience
and educational background as they
relate to the particular appraisal
assignment for which he-or sh«i is being
considered.
§ 225.67
Enforcement.
Institutions and institution-affiliated
parties, including staff appraisers and
fee appraisers, may be subject to
removal and/or prohibition orders,
cease and desist orders, and the
imposition of civil money penalties
pursuant to Section 8 of the Federal
Deposit Insurance Act, 12 U.S.C. 1818, as
amended.
Board of Governors of the Federal Reserve
System, February 5,1990.
William W. Wiles,
Secretary of the Board.
[FR Doc. 90-3054 Filed 2-#-90; 8:45 am)
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