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FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No. 10468
July 9, 1991
]
Revised Guidelines Regarding the Use of Certified or Licensed
Real Estate Appraisers in Federally Related TVansactions
To All Federally Regulated Depository Institutions
in the Second District, and Others Concerned:
The Appraisal Subcommittee of the Federal Financial Institutions Examination Council
(FFIEC) has issued the following statement announcing the adoption o f revised guidelines regarding
State certification and licensing of appraisers:
On May 29, 1991, The Appraisal Subcommittee of the Federal Financial Institutions Examination
Council (“ASC”) adopted Revised Guidelines Regarding State Certification and Licensing of Appraisers
(“Revised Guidelines”). The Revised Guidelines are designed to help the States, Territories and District
of Columbia in establishing effective certification and licensing procedures for real estate appraisers in
volved in federally related transactions under Title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989. State certified or licensed appraisers generally must be used for federally
related transactions beginning January 1, 1992.
The Revised Guidelines include changes based on comments received on their original publication
on January 24, 1990 (55 ER. 2409) and incorporate subsequent ASC advisories, opinions, and clari
fications.
Printed on the following pages is the text of the FFIEC’s Revised Guidelines, which has been
reprinted from the Federal Register. Inquiries concerning the Guidelines may be directed to Edwin
W. Baker, Executive Director, or Marc L. Weinberg, General Council, Appraisal Subcommittee,
Federal Financial Institutions Examination Council, 1776 G Street, N. W., Suite 850B, Washington,
D.C. 20006 (Tel. No. 202-357-0133) or, at this Bank, to Gerald P Minehan, Assistant Chief Ex
aminer, Domestic Banking Department (Tel. No. 212-720-5881).
E. G erald C o r r ig a n ,
President.
FEDERAL FINANCIAL INSTITUTION S
EXAM INATION COUNCIL
opinions.*
SUPPLEMENTAL INFORMATION: States are
authorized to establish procedures
under title XI of FIRREA (“title XI”)4 for
the certification and licensing of
Appraisal Subcommittee; Revised
individuals who are qualified to perform
Guidelines Regarding State
appraisals in connection with federally
Certification and Licensing of
related transactions, including a code of
Appraisers
professional responsibility. Title XI and
the subsequent establishment of the
AGENCY: Appraisal Subcommittee,
Subcommittee, as well as the adoption
Federal Financial Institutions
of appraisal regulations by the federal
Examination Council.
financial institutions regulatory
agencies, are intended to protect federal
ACTION: Notice of Revised Guidelines.
financial and public policy interests in
SUMMARY: The Appraisal Subcommittee
real estate-related financial transactions
(“Subcommittee”) of the Federal
requiring the services of an appraiser.
Financial Institutions Examination
Additionally, title XI at a minimum
Council (“FFIEC”) today issued Revised requires an appraisal performed in
Guidelines for state certification and
connection with a federally related
licensing of real estate appraisers. These transaction to meet the standards set
Revised Guidelines are intended to
forth in the Uniform Standards of
assist the States, territories and the
Professional Appraisal Practice
District of Columbia (“States”) in
(“USPAP”),* as adopted by the
establishing effective certification and
Appraisal Standards Board (“ASB”) of
licensing procedures for real estate
the Appraisal Foundation.*
appraisers involved in federally related
Section 1102 of title XL 12 U.S.C. 3310,
transactions.1 Certified or licensed
established the Subcommittee and
appraisers must be used for certain
placed it within the FFIEC H ie
transactions starting January 1,1992.*
*
Subcommittee consists of a
The Revised Guidelines include changes representative appointed by the heads
based on comments received on their
of each FFIRA and the Department of
original issuance and also incorporate
Housing and Urban Development The
later Subcommittee advisories and
Subcommittee has permanent staff to
assist the Subcommittee and provide
[Docket No. AS91-1]
1 The term “federally related transaction" means
any real estate-related financial transaction which a
federal financial institutions regulatory agency
("FFIRA") or the Resolution Trust Company
(“RTC”) engages in. contracts far, or regulates, and
which requires the services of an appraiser. The
FFIRAs are the Board of Governors of the Federal
Reserve System, the Federal Deposit insurance
Corporation, the Comptroller of the Currency, the
Office of Thrift Supervision and the National Credit
Union Administration. Title XI, Section 1121(6). 12
U.S.C. 3350(6).
* The Subcommittee extended this effective date
from July 1 to December 31,1891. pursuant to
Section 1119(a)(2) of title XI of the Financial
Institutions Reform. Recovery, and Enforcement Act
of 1969 (“FIRREA”). 12 U.S.C. 3348(a)(2). 58 FR 20002
(May 1.1991).
* The Subcommittee originally issued these
Guidelines for public comment on January 18,1990.
as Docket AS90-1. 55 FR 2409 (January 24.1990)
(‘ Initial Guidelines"). Clarifications were issued on
February 28,1990, August 8,1990 (Advisory 90-1),
November 28,1990 (Advisory 90-2). and January 25.
1991 (Advisory 91-1).
* Public Law No. 101-73.103 Stat. 511 (1989); 12
U.S.C. 3310, 3331-3351.
6 The FFIRAs and the RTC published pertinent
portions of USPAP as an appendix to their
respective appraisal regulations. See 55 FR 53810
(December 31.1990).
* The Appraisal Foundation was incorporated in
Illinois on November 30,1987. by several
professional appraisal organizations as a not-forprofit corporation to enhance the quality of
professional appraisals. The Foundation is
headquartered in Washington, DC
PRINTED IN NEW YORK. FROM
F E D E R A L R E G IS T E R .
2
advice to the States and to carry out
Subcommittee rules, interpretations,
policies and directives.
The Subcommittee has several
statutory duties under title XI. First, the
subcommittee must monitor the
appraisal regulations adopted by the
FFIRAs and the RTC Those regulations
set out appraisal standards for federally
related transactions and define those
federally related transactions requiring
the services of a State certified or State
licensed appraiser. Second, die
Subcommittee must monitor and review
the practices, procedures, activities., and
organizational structure of the Appraisal
Foundation. Third, the subcommittee
must monitor each State’s certification
and licensing programs for real estate
appraisers. In that regard, each State
with an appraiser certifying and
licensing agency is responsible for
transmitting to the subcommittee a
roster of these individuals, along with
an annual registry fee. The
subcommittee must maintain a national
registry of all state certified and
licensed appraisers who are eligible to
perform appraisals in federally related
transactions. The subcommittee also
must review each State’s compliance
with the requirements of title XI and is
authorized by title XI to take action
against non-complying States.*
These Revised Guidelines are
intended to assist each State in its
efforts to establish and maintain a real
estate appraiser regulatory system
conforming with title XI. More
specifically, the Revised Guidelines are
intended to: (1) Facilitate the timely
implementation of State certification
and licensing programs, (2) promote the
independence of State appraisal
regulatory functions, (3) reduce the
potential for conflicts of interest, and (4)
address concerns regarding, among
other things, exemptions,
grandfathering, mandatory dual
licensing, discrimination and reciprocity.
' See title XL Section 1118,12 U.S.C. 3347.
VOL. 56. NO. 109, pp. 26088-26094
EFFECTIVE d a t e : June 6.1991.
FOR FURTHER INFORMATION CONTACT:
Edwin W. Baker, Executive Director, or
Marc L. Weinberg, General Counsel;
Appraisal Subcommittee, Federal
Financial Institutions Examination
Council; 1770 G Street, NW.; suite 850B;
Washington, DC 20006; (202) 357-0133.
SUMMARY OF COMMENTS: On January 18,
1990, the subcommittee solicited public
comment on its Initial Guidelines to the
States regarding certification and
licensing of real estate appraisers. The
subcommittee received 163 comments
from interested individuals and
organizations, including 44 individual
appraisers and appraisal firms, 27
members of Congress, 23 state
regulatory agencies, and 24 appraiser
trade groups. The remaining 45
comments were snbmitted by real estate
brokers and broker associations, banks
and bank trade associations, savings
and loan associations, attorneys and
law firms, an accounting trade group, a
federal agency and a federal
department. The principal issues raised
by the respondents are discussed below.
Authority, Purpose and Scope
A few respondents suggested the
subcommittee had exceeded its
authority in title XI when it issued the
Initial Guidelines. Repondents believed
the Guidelines mandated the structure
of State appraiser regulatory schemes,
therefore exceeding the subcommittee’s
limited statutory role of monitoring State
compliance with title XI.8 The
subcommittee’s Initial and now-Revised
Guidelines are not requirements. They
provide each State with an
understanding of how the Subcommittee
will evaluate the State’s compliance
with title XL Additionally, consistent
with title XI and the intent of Congress,
the Guidelines promote the
establishment of uniformity and a level
regulatory playing field among the
States.
Location of Agency
Forty-one respondents questioned the
need for a State’s real estate appraiser
regulatory agency (“Appraiser Agency”)
to be totally independent from existing
State regulatory agencies having
responsibilities over affected
industries.* Most respondents believed
* Title XI provides the States with a great deal of
flexibility in structuring their regulatory programs.
* An “affected industry” includes entities that
have a direct or indirect pecuniary interest in
appraisals, such as real estate brokers, financial
institutions, and construction companies.
that die appraiser function could be
supervised by an umbrella regulatory
agency or real estate commission,
provided that adequate safeguards
existed to minimize the potential for
undue influence. To comply with this
Guideline, some States determined their
laws and constitutions would require
amendment which they indicated would
be a costly and burdensome process
(particularly for less populous States).
The subcommittee’s Initial and
Revised Guidelines strongly encourage
States to create a totally independent
Appraiser Agency. The Subcommittee,
however, recognizes that this may not
be possible for every State because of
fiscal (»r other appropriate reasons.
When such reasons exist the
subcommittee expects the State to
structure its Appraisal Agency to
eliminate undue influence by any
affected industry.10
Appointment of the Agency Head
The Initial Guidelines stated that the
appointment of an Appraiser Agency
head or members of the appraiser board
should be made by an individual or
committee not associated with an
affected industry. All fifteen
respondents, including appraisers and
appraisal firms, supported this position,
and the subcommittee has included it in
the Revised Guidelines.
Independence From Affected Industries
The Initial Guidelines called for the
individual head of the Appraiser Agency
to be independent from the appraisal
profession and affected industries while
in office and for a reasonable time
thereafter. For an Appraiser Agency
headed by a board or commission, the
Initial Guidelines also indicated that
board or commission-led Appraiser
Agencies should represent the broad
public interest and should not be
dominated by any one industry or
profession.
A majority of the 94 respondents on
this issue believed that the Initial
Guidelines precluded the best source of
appraisal expertise from serving on
appraiser regulatory boards or
commissions. H ie Subcommittee
recognizes that significant appraiser
representation on an appraiser
regulatory board or commission can
help to ensure that the regulatory body
has adequate knowledge and
experience. This type of representation
has long been allowed on other
professional and industry regulatory
19 An example of undue influence by an affected
industry would be if the majority members on the
Appraiser Agency were real astate brokers or
representatives of the real estate financing industry.
3
boards. In fact, on February 28,1990, the
subcommittee issued a clarification of
the Initial Guidelines to reflect that an
appraiser board or commission
comprised of a majority of appraisers
likely would not result by itself in
subcommittee disapproval or rejection
of a State’s appraiser regulatory
system.11 The subcommittee has
incorporated this clarification into the
Revised Guidelines. The subcommittee
continues its strong view that, as a
m atter of sound public policy, state
appraiser boards or commissions should
adequately represent the broad public
interest and should include meaningful
public representation.
Independence of Decision Making
The Initial Guidelines stressed that
decisions of an Appraiser Agency
should not be made by the same
officials responsible for decisions
regarding affected industries. Thirty-five
respondents addressed this point,
several being States with either
umbrella regulatory schemes or real
estate commissions. Most respondents
indicated that sufficient safeguards
exists to ensure the integrity of
decisions made by die appraiser
regulatory body.
The Subcommittee continues its
strong preference that the State
appraiser regulatory function be
established as a totally independent
agency answerable to a high ranking
state official, e.g., a State cabinet level
officer, who has no regulatory
responsibility over realty related
activities. The subcommittee, however,
understands that this could be a burden
on some States. As a result, the Revised
Guidelines permit other administrative
structures so long as adequate
safeguards exist to eliminate the
influences of affected industries.
The Initial Guidelines also stated that
the appraiser regulatory body’s
decisions should be final and subject
only to judicial review. While most
respondents agreed with this position,
many believed that some existing State
laws that dictate the State’s regulatory
structure may conflict with this aspect
of the Guidelines. In this regard, the
subcommittee* believes that any State
regulatory structure allowing any
affected industry regulatory body to
have “veto power” over the actions of
the Appraiser Agency would adversely
11 The Revised Guidelines contain the
clarification that the subcommittee generally wifi
evaluate each Stale's system for regulating
appraisers in its entirety, including the adequacy of
safeguards to prevent conflicts of interest, before
considering any adverse action against a particular
State's appraisal regulatory system.
affect the indpendence of the decision
making power of the Appraiser Agency
and would be inconsistent with title XI.
Requirements for Certified and Licensed
Appraisers
Under title XI, States may establish
requirements for individuals obtaining
real estate appraiser certification or
licensure. Each State’s certification
requirements must meet the minimum
standards adopted by the Appraiser
Qualifications Board (“AQB”) of the
Appraisal Foundation, and each State
certified appraiser must pass a suitable
State examination. The examination
must be endorsed by the AQB and must
follow the AQB’s Uniform State
Certification Examination Outline.
Licensing is treated differently. While
each State may establish its own
licensing requirements, the
subcommittee believes that, to comply
with the spirit and intent of title XI,
States should include meaningful
education, testing, experience, and
continuing education requirements.121
3
As
guidance to the States, the
subcommittee has indicated that the
AQB’s qualifications for “Licensed Real
Property Appraiser" are acceptable as
meaningful standards for licensing.
Several respondents pointed out that
some State's appraiser classification
terms differ from those used by the
subcommittee. Moreover, a few States
with a significant quantity of very high
priced single family homes have
expressed the need for a “residential
certified appraiser" classification.
The subcommittee prefers that States
use the same designation terms as title
XI, i.e., “State Certified” and “State
Licensed.” Nevertheless, the
subcommittee, in Advisory 91-1, agreed
to accept the “certified residential
appraiser" classification if a State
determines it necessary. The
subcommittee reaffirms the Advisory by
incorporating it in the Revised
Guidelines, and notes that a State
adopting this second certification
classification must follow the AQB’s
“Certified Residential Real Property
Appraiser" qualification standards.18
The State also must require applicants
to pass an examination that is endorsed
by the AQB.
Appraiser Qualifications Criteria
Thirty-four respondents had several
concerns about the AQB’s qualifications
criteria for certification and licensing.
1X In general, the subcommittee encourages the
States to adopt meaningful, but not overly
restrictive, licensing requirements.
13 The residential certification standards were
adopted by the AQB on March 27,1991.
First, some commented that the AQB
failed to provide adequate due process
safeguards for establishing and
modifying its criteria. The subcommittee
does not agree with the respondents. The
AQB went through a detailed, public
proceeding in arriving at the criteria. On
July 24,1990, the AQB issued its
standards for "Residential Real Property
Appraiser" and “General Real Property
Appraiser." 14*Over the next several
months, the AQB worked closely with
its members and the subcommittee to
refine the criteria, and, on December 20,
1990, the AQB issued several exposure
drafts proposing revised criteria for
comment. After consideration of
comments received from interested
members of the public and the
subcommittee, the AQB, on March 27,
1991, adopted its revised standards for
the certified general and certified
residential classifications and its
recommendations for the licensed real
property appraiser classification.
Second, respondents questioned the
number of classroom hours required to
meet the education criteria, as well as a
person’s ability to sit for the
examination before completing the
required course work. The Revised
Guidelines incorporate Advisory 90-2, in
which the subcommittee expressed its
willingness to recognize, on a
transitional basis, State licensed
appraisers who: (1) Have passed the
examination; and (2) have met either the
experience or the education
requirements established by the States.
Licensed appraisers, however, would
need to satisfy the missing requirement
within no more than two years after
passing the appropriate test and being
provisionally licensed by the State. The
subcommittee urges each State to limit
the issuance of transitional licenses to
the first two years after implementation
of its licensing program.1*
Third, many respondents questioned
the appraiser experience requirements,
including the acceptability of real estate
related experience. The subcommittee
addressed these comments when it
issued Advisory 90-2. There, the
subcommittee advised the States that
real estate related experience (such as
real estate lending or real estate
brokering) should be considered
14 In its Initial Guidelines, the subcommittee
endorsed the "General Real Property Appraiser”
qualifications criteria as the minimum standard for
a state certified appraiser and the "Residential Real
Property Appraiser” qualifications criteria as
meaningful standards for a state licensed appraiser.
13 The Revised Guidelines clarify that State
transitional certification provisions are inconsistent
with title XI because the AQB’s certification criteria
compel the completion of all education
requirements before a person can take the
certification examination.
4
acceptable for licensure, if that
experience included the actual
performance or professional review of
appraisals. The subcommittee has
incorporated this Advisory into the
Revised Guidelines.
Exemptions and Grandfathering
The Initial Guidelines stated that no
group of individuals should be exempt
from meeting the certification or
licensing criteria. Twenty-five
respondents had a wide range of views
on this subject. Some indicated that no
groups of certified or licensed appraisers
should be "grandfathered," while others
thought that a grandfathering provision
for licensed appraisers would be
appropriate.
The subcommittee’s position on not
allowing exemptions and grandfathering
remains unchanged. States, however,
can carry over an individual or group’s
existing certification or licensure status,
if the person or group satisfies the
State’s certification or licensing
requirements and those requirements
are consistent with title XI.
Mandatory Dual Licensing
The Revised Guidelines reiterate the
subcommittee’s position that State laws
should not require any applicant for
appraisal certification or licensing to
hold another professional license as a
condition for obtaining an appraisal
license or certification. The majority of
respondents agreed with this position.
Code of Professional Responsibility
Several respondents agreed with the
subcommittee’s Initial Guidelines that
each State should include an
appropriate code of professional
responsibility in its certification and
licensing requirements. The Revised
Guidelines refer specifically to the
Ethics Provision of the USPAP, as
adopted by the ASB, as being an
appropriate code of professional
responsibility.
Other Issues
Several respondents raised various
items that were not discussed in the
Initial Guidelines such as: Reciprocity
among States, discrimination, the role of
the Appraisal Foundation, USPAP, title
XI implementation costs, and States'
rights. Where appropriate, the
subcommittee has addressed these
comments at various points in the
preamble and the Revised Guidelines.
Conclusion
In response to public comment
received on the Initial Guidelines, the
subcommittee is now issuing the
Revised Guidelines. The Revised
Guidelines replace the Initial Guidelines
and clarifications.* *
18
7
1
The subcommittee, as necessary, may
release new Advisories clarifying the
Revised Guidelines.
Dated: May 29,1991.
Fred D. Finke,
Chairman, Appraisal Subcommittee, Federal
Financial Institutions Examination Council.
Introduction
Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA”)17 established the
Appraisal Subcommittee
("subcommittee") of the Federal
Financial Institutions Examination
Council ("FFIEC"). The purpose of title
XI is to protect federal financial and
public policy interests in real estaterelated financial transactions 18
requiring the services of an appraiser.
Among other duties, the subcommittee
must monitor the requirements
established by the States, territories,
and the District of Columbia ("States")
for certification and licensing of
individuals who are qualified to perform
appraisals in connection with federally
related transactions.18 The
subcommittee also must monitor the
activities of the FFIRAs and the RTC,
the States, and the Appraisal
Foundation in meeting the requirements
of title XI.
In exercising its oversight
responsibilities over the States, the
subcommittee must review each State’s
overall regulatory scheme to determine
compliance with title XI. This does not
mean that all matters must be covered
by legislative enactment. Many can be a
matter of regulation, procedure, and
practice. Conversely, an otherwise
adequate set of statutes or regulations
can be invalidated by inadequate
18 See note 3 supra.
17 Public Law No. 101-73,103 Stat. 511 (1989); 12
U.S.C. 3301, 3331-3351.
18 A “real estate-related financial transaction”
means any transaction involving the sale, lease,
purchase, investment in or exchange of real
property, including interests in property, or
financing thereof: the refinancing of real property or
interest in real property; and the use of real
property or interest in property as security for a
loan or investment, including mortgage-backed
securities.
19 The term "federally related transaction" means
any real estate-related financial transaction which a
federal financial institutions regulatory agency
(“FFIRA") or the Resolution Trust Corporation
("RTC’) engages m, contracts for, or regulates, and
which requires the services of an appraiser. The
FFIRAs are the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance
Corporation, the National Credit Union
Administration, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision. Title
XI, Section 1121(0), 12 U.S.C. 3350(0).
implementation. Consequently, while
the subcommittee will continue to
review and give comments on State
regulatory programs, its comments are
not and cannot be taken as a formal
approval or disapproval. Any State
scheme is valid unless the subcommittee
formally rejects or disapproves the State
regulatory scheme using the procedures
in title XL
In addition to establishing the
Subcommittee, major aspects of title XI
include:
—The requirement that the FFIRAs and
the RTC set real estate appraisal
standards for federally related
transactions;
—A framework in which each State may
establish a real estate appraiser
certification and licensing scheme;
—The establishment of the Uniform
Standards of Professional Appraisal
Practice (“USPAP”) by the Appraisal
Standards Board (“ASB”) of the
Appraisal Foundation as the minimum
standards for real estate appraisals
for federally related transactions; and
—The establishment of minimum
qualification requirements by the
Appraiser Qualifications Board
(“AQB”) of the Appraisal Foundation
for certified real estate appraisers as
well as the requirement that
appraisals for all federally related
transactions over $1 million be
performed by a state certified
appraiser.
Purpose
The Guidelines were originally issued
for comment in January 1990 (“Initial
Guidelines"), with subsequent
Advisories and clarifications in
February 1990, August 1990, November
1990, and January 1991. Based on public
comments and Subcommittee
interpretations, the Subcommittee has
adopted these Revised Guidelines to
assist the States further in implementing
title XI. The Subcommittee is issuing
these Revised Guidelines to assist the
States in establishing appropriate
organizational and regulatory structures
for the certification and licensing of real
estate appraisers. The Revised
Guidelines reflect the general
framework that the Subcommittee will
use in reviewing a State's program for
compliance with title XI. The Initial
Guidelines, Advisories and
clarifications are obsolete and
rescinded.
State Regulatory Structure
The Subcommittee does not intend to
impose any particular organizational
structure upon the States. It recognizes
that each State has fiscal, regulatory or
5
other valid constraints that could
influence the structure and location of a
real estate appraiser regulatory agency.
The legislative history of title XI
indicates, however, that States should
adopt an organizational structure for
implementing their appraiser licensing,
certification and supervision functions
in a manner to avoid potential conflicts
of interest. Any state choosing to locate
its appraiser regulatory function in a
department that regulates real estate
licensing, promotion, development, or
financing functions (“realty related
activities”) must ensure that adequate
safeguards exist to protect the
independence of the appraiser
regulatory function.
Real Estate Appraiser Regulatory
Agency
A State’s real estate appraiser
regulatory body ("Agency”) may be a
board, commission, or individual. The
organizational structure should provide
maximum insulation for the Agency
from the influence of any industry or
organization whose members have a
direct or indirect financial interest in the
outcome of the Agency’s decisions.
Agency Location Within State
Government
The subcommittee believes each State
should establish a totally independent
Agency. The Agency should be
answerable only to the governor or to a
cabinet level officer who has no
regulatory responsibility for realty
related activities. If, due to fiscal or
other appropriate constraints, a totally
independent Agency is not feasible, the
State may choose to locate the Agency
within an existing state regulatory body.
Adequate safeguards, however, must
exist to eliminate any possible influence
from realty related activities.
Agency Head and Member Appointment
Persons appointing the Agency head
or members of an appraiser board or
commission should not be associated or
affiliated with an affected industry.20
For example, an autonomous agency
head, appointed by the governor and
subject to confirmation by the state
legislature, most likely would be
considered an acceptable independent
appointment.
Under a board or commission
regulatory structure, the subcommittee
believes that as a matter of sound public
policy, state appraiser boards or
90 An individual would be affiliated or associated
with an affected industry if the individual has a
direct or indirect financial interest in real estate
licensing, promotion, development or financing.
commissions should adequately
represent the broad public interest. With
this in mind, an Agency should not be
dominated in any way by any industry
or profession.21 The Subcommittee,
however, recognizes that members of
the appraisal industry should be
significantly represented on the
appraiser board or commission. Indeed,
the subcommittee believes that a board
or commission may contain a majority
of appraisers. Appraisers can help
ensure that the Agency has sufficient
expertise and resources to carry out its
functions properly.
Agency Independence from Affected
Industries
If an Agency is directed by an
individual, the Agency head should not
be actively engaged in the appraisal
business or in any other realty related
activities for the individual’s term of
appointment or employment, and for a
reasonable period thereafter. If an
Agency consists of a board or
commission, its members should
represent the broad public interest.
Independence o f Agency Decision
Making
The subcommittee strongly urges that
Agency decisions, especially those
relating to license or certification
issuance, revocation, and disciplinary
actions, should not be made by state
officials who also are responsible for
realty related activities. Additionally,
such Agency decisions should be final
administrative actions subject to
appropriate judicial review.
Appraiser Qualification Criteria
Title XI requires that real estate
appraisals performed in connection with
federally related transactions be
performed by competent individuals. To
demonstrate competency, the
subcommittee believes that appraisers
subject to title XI must be qualified by
meeting appropriate education, testing,
and experience requirements.
The decision whether to engage a
certified or a licensed appraiser for a
specific federally related transaction is
prescribed by each FFIRA and the RTC
in their real estate appraisal regulations.
Title XI, however, mandates that
certified real estate appraisers perform
all appraisals in connection with
federally related transactions over $1
million and complex l-to-4 family
residential properties.
11 The subcommittee believes that domination or
majority control of the Agency by representatives of
affected industries would be considered
inappropriate and inconsistent with title XI.
The subcommittee recognizes a
minimum of two classifications of
appraisers: State licensed and state
certified. These two designations are
appropriate for most States. Some States
with a significant quantity of l-to-4
family residential transactions that are
above $1 million or of a complex nature,
however, may want to have a second
certification classification called
“certified residential appraiser.” The
AQB on March 27,1991, approved that
designation, and the subcommittee has
recognized it. If a State wants to use all
three designations, it must develop and
implement procedures to insure that
each certification type is easily
distinguished from the other. This will
avoid confusion by appraiser users,
regulators, and other interested
persons.22
State Certified General Appraiser
A state certified general appraiser is a
person who: (1) Meets at least the
minimum criteria for “Certified General
Real Property Appraiser,” which were
adopted by the AQB on March 27,1991;
and (2) passes a state administered
examination issued or endorsed by the
AQB. The AQB criteria include 165
classroom hours in courses related to
specified real estate appraisal
matters 23, 2,000 hours of appraisal
experience (with at least 50 percent in
non-residential appraising) and 10
classroom hours of continuing education
course work for each year during the
period preceding certification renewal.
Additional qualifications may be
required by any State or FFIRA and the
RTC that considers such qualifications
necessary to carry out its
responsibilities under title XI.
State Certified Residential Appraiser
A State choosing to establish this
certification classification must at a
minimum follow the “Certified
Residential Real Property Appraiser”
12 The subcommittee is concerned about the
potential for confusion and will yay particular
attention to designations when reviewing state
appraiser regulatory schemes.
22 The AQB. on March 27,1991, adopted an
Interpretation/Clarification ("IC") of the education
criteria that stated: ‘‘[Cjorrespondence courses are
not acceptable to meet the classroom requirement."
This IC applies to the AQB's certification
requirements and to its licensing recommendations.
A State may recognize credit for course work
prior to july 1.1990, where an appraiser obtains
credit for a course through a challenge examination
without actually attending the course. It has been
common practice for appraisers to obtain education
credits through the challenge examination method.
An Agency should review the quality of each
challenge examination to determine the
acceptability of the course for credit. The AQB's
certification and licensing criteria recognize this
limited acceptability of challenge examinations.
6
qualifications criteria which were
adopted by the AQB on March 27,1991,
and require individuals to pass an
examination issued or endorsed by the
AQB. The AQB criteria for this
classification also include 2,000 hours of
appraisal exerience and 10 classroom
hours of continuing education for each
year during the period preceding
certification renewal. Until January 1,
1994,105 classroom hours of real estate
appraisal education courses will be
needed. After that date, an applicant
will need 165 classroom hours of course
work, just like a state certified general
appraiser.
State Licensed Appraiser
States are free to establish
meaningful, not overly restrictive,
qualification criteria for licensed
appraisers, including education, testing,
experience, and continuing education
requirements that demonstrate
knowledge and competency. If States
choose, they may base their licensing
standards on the AQB’s “Licensed Real
Property Appraiser” classification and
related ICs, which were adopted by the
AQB on March 27,1991. All States
should require persons to pass a
meaningful written test before receiving
a license. Such a test may be one issued
or endorsed by the AQB, but, in any
event, should be independently
reviewed and validated by a qualified
source.24
The Subcommittee considers the
AQB’s two-year experience
recommendation for the "Licensed Real
Property Appraiser”, i.e., a minimum of
2,000 hours, to be reasonable. It should
help ensure that licensed individuals
have sufficient appraisal experience.25*
•
Appraisal experience includes, but is
not limited to: Fee and staff appraisals,
ad valorem tax appraisals, review
appraisals, appraisal analyses, real
estate counseling, highest and best use
analyses, feasibilty analyses/studies
and teaching of appraisal courses. A
State, consistent with title XI, may
choose to accept real estate related
experience, e.g., work as a real estate
lending officer or a real estate broker,
for some or all of its experience
requirement. That type of experience,
however, may be recognized only if it
includes the actual performance or
professional review of real estate
24 The subcommittee beleives the AQB's National
Uniform Examination Content Outline for
Residential Real Property Appraiser represents a
useful guide to the States.
*• The subcommittee notes that the time to
achieve the necessary hours of experience is treated
as cumulative and does not have to be obtained in a
set time frame.
appraisals. Each State is expected to
adopt adequate procedures to document
and verify the experience used to satisfy
the requirement.
The subcommittee, likewise,
acknowledges that the AQB’s education
criterion for a "Licensed Real Property
Appraiser" reflects meaningful
education criteria for licensed
appraisers. That standard currently is 75
classroom hours in specific subjects
listed in the published criteria. A State
may establish other appropriate
education requirements, so long as they
are consistent with title XI. The
subcommittee will review each State’s
education requirements to ensure that
they are meaningful, both as to the
breadth of subject matter and length of
required study. The subcommittee
believes it important that States include
continuing education as a licensing
requirement. Continuing education
should help to ensure that licensed
appraisers maintain and enhance their
appraisal skills and knowledge. The
subcommittee is of the view that the
AQB’s continuing education
recommendation for a licensed real
property appraiser, which is 10
classroom hours for each year of the
period preceding the renewal of the
license, is meaningful and should be
adopted by the States.
Transitional Licenses and Certifications
A State may issue transitional
licenses to an applicant who has passed
the appropriate test, but who lacks
either the educational or the experience
requirements adopted by the State.
Transitionally-licensed appraisers,
however, should satisfy the missing
requirements within no more than two
years after being tested and
provisionally licensed by the State. The
subcommittee urges each State to limit
the issuance of such transitional
licenses to the first two years after
implementation of its licensing program.
Each transitional license should indicate
clearly its transitional nature, period of
validity, and a non-extendable
termination date.
Title XI requires that the States
establish certification criteria that, at a
minimum, are consistent with the AQB’s
certification qualifications. At this time,
these qualifications compel persons to
complete all education requirements
before they can take a certification
examination.
Other Guidelines
A State should consider the following
subcommittee Guidelines when
structuring its appraiser regulatory
program.
Exemptions and Grandfathering
A State cannot exempt or
"grandfather" any individual or group
from meeting its certification or
licensing criteria. States, however, can
carry over an individual or group’s
existing certification or licensure status,
if the person or group satisfies the
State’s certification or licensing
requirements and those requirements
are consistent with title XI.
Appraisal Standards
Title XI requires, at a minimum, that
real estate appraisals for federally
related transactions be performed in
accordance with USPAP,28 as adopted
by the ASB. Moreover, each FFIRA and
the RTC have issued under title XI
additional appraisal standards as they
deem appropriate.
Written Appraisal Reports
Title XI specifically mandates that all
appraisals performed in connection with
federally related transactions be in
written form.27 The written appraisal
must adequately explain the certified or
licensed appraiser’s opinion of the
property’s value as of a specific date
with a description of the property and
presentation of the relevant market
information with supporting analysis.
Temporary Practice and Reciprocity
Title XI requires a State appraisal
regulatory agency to recognize on a
temporary basis the certification or
license of an appraiser from another
State provided: (1) The property to be
appraised is part of a federally related
transaction: (2) the appraiser’s business
is of a temporary nature; and (3) the
appraiser registers with the State
appraiser regulatory agency in the State
of temporary practice.28
The Subcommittee believes that
States should not require temporary
practitioners to obtain a certification or
license in the State of temporary
practice. Instead, the State should
recognize the certificate or license
issued by the individual's State of
permanent certification or licensure. A
State, however, may establish
meaningful and reasonable temporary
practice and registration procedures.
*• USPAP was originally released by the Ad Hoc
Committee on Uniform Standards of the Appraisal
Foundation on April 27,1987. On January 30,1989,
the ASB established and adopted USPAP as its
initial standards. On June 5 , 1990, the ASB revised
and amended USPAP’s Ethics Provision, Preamble
and Standards 1 through 5. The FFIRAs and the
RTC published these revisions in the Federal
Register as an appendix to their respective
appraisal rules. 55 FR 53810 (December 31,1990).
27 Title XI, section 1101,12 U.S.C. 3331; section
1110,12 U.S.C. 3339; and 1121(10), 12 U.S.C. 3350(10).
*• Title XI, section 1122(a); 12 U.S.C. 33 .1(a).
7
These procedures should measure
“temporary” by specific appraiser
assignments and not by a fixed time
period or number of properties to be
appraised.*
29
•
Other than the temporary practice
provisions, no federal requirements
exist regarding permanent State
reciprocity agreements. The
Subcommittee encourages the States to
consider permanent reciprocity
arrangements to address the needs of
appraisers who practice on a nontemporary, multi-state basis.
Prohibition Against Discrimination
Title XI and its legislative history
express Congressional intent that
certain discriminatory practices be
avoided. In particular, Congress was
concerned that applicants for licensing
and certification might be discriminated
against on the basis of membership or
non-membership in certain appraisal
organizations. Although the prohibition
against discrimination provision in Title
XI explicitly refers to conduct on the
part of federal regulatory agencies,30 the
Subcommittee has determined that,
under Title XI and its legislative history,
such conduct also is inappropriate in the
establishment and administration of a
State's licensing and certification
system. The Subcommittee urges States
to adopt legislation or regulations
specifically prohibiting such
discriminatory practices. The
Subcommittee will review the
implementation of each State’s system
to ensure that the system prevents such
discriminatory practices.
Codes o f Professional Conduct
States should ensure that an
appropriate code of professional
responsibility is incorporated into their
certification and licensing requirements.
The States should refer to USPAP,
which provides standards for appraiser
conduct, management, confidentiality,
and record keeping for guidance.
Registry Fees for State Certified or
Licensed Appraisers
Each State must transmit to the
Subcommittee a roster of individuals
who have received State certification or
licensure. Further instructions on the
transmittal of the State’s data on
certified and licensed appraisers will be
provided at a later time.
Each State also must collect an annual
$25.00 registry fee from each of its
29 A State may choose to charge a reasonable fee
for temporary registration.
“ See title XI, section 1122(c); 12 U.S.C. 3351(c).
certified and licensed appraisers31 who
perform or seek to perform appraisals in
federally related transactions and must
transmit this fee to the Appraisal
Subcommittee of the Federal Financial
Institutions Examination Council. If an
appraiser is licensed or certified in more
than one State, or registry fee is due
from each State in which the appraiser
is licensed or certified on a nontemporary basis.
Clarifications and Amendments to These
Guidelines
8
These Revised Guidelines will remain
the position of the Subcommittee unless
later amended by reissuance or clarified
through publication of an “Advisory.”
[FR Doc. 91-13269 Filed 6-5-91; 8:45 am]
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