Appraisal Subcommittee Enforcement Authority Regarding the Effectiveness of State Appraiser and Appraisal Management Company Regulatory Programs

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL <CFR>12 CFR Part 1102</CFR> <DEPDOC>[Docket No. AS24-22]</DEPDOC> <RIN>RIN 3139-AA01</RIN> <SUBJECT>Appraisal Subcommittee Enforcement Authority Regarding the Effectiveness of State Appraiser and Appraisal Management Company Regulatory Programs</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Appraisal Subcommittee, Federal Financial Institutions Examination Council. <HD SOURCE="HED">ACTION:</HD> Notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council invites comment on a proposed rule to implement a framework to govern the ASC's enforcement authority regarding the effectiveness of Appraiser and Appraisal Management Company (AMC) Programs overseen by State Appraiser Regulatory Agencies. The proposed rule would codify the existing compliance review process with modifications. The proposed rule would require an analysis to assess program effectiveness, outline requirements for maintaining effective programs, and authorize the ASC to bring enforcement actions against such agencies that fail to maintain effective programs. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Send comments on or before February 4, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Commenters are strongly encouraged to submit comments through the Federal eRulemaking Portal or by email, if possible. You may submit comments, identified by Docket Number AS24-22, by any of the following methods: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. • <E T="03">Email: webmaster@asc.gov.</E> Include the docket number in the subject line of the message. • <E T="03">Mail:</E> Address to Appraisal Subcommittee—FFIEC, Attn: Lori Schuster, Management and Program Analyst, 1325 G Street NW, Suite 500, Washington, DC 20005. • <E T="03">Hand Delivery/Courier:</E> Address to Appraisal Subcommittee—FFIEC, Attn: Lori Schuster, Management and Program Analyst, 1325 G Street NW, Suite 500, Washington, DC 20005. <E T="03">Instructions:</E> All submissions must include the agency name and docket number for this document. All comments and any supporting materials or attachments received will be posted without change to <E T="03">https://www.regulations.gov,</E> including any business or personal information that you provide, such as name and address information, email addresses, or phone numbers. Commenters should submit only information that the commenter wishes to make available publicly. Please do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. <E T="03">Docket:</E> To read comments regarding this proposed rulemaking, go to: <E T="03">https://www.regulations.gov,</E> insert docket number AS24-22 in the “Search” box, and follow the prompts. You may also personally inspect comments at the Appraisal Subcommittee's office, 1325 G Street NW, Suite 500, Washington, DC 20005. To make an appointment, please contact Lori Schuster at (202) 595-7578 or <E T="03">lori@asc.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Natalie Lutz, Attorney Advisor, 202-792-1217, <E T="03">natalie@asc.gov</E> or Matt Ponzar, General Counsel, 202-595-7577, <E T="03">matt@asc.gov,</E> Appraisal Subcommittee, 1325 G Street NW, Suite 500, Washington, DC 20005. The above phone numbers are not toll-free numbers. Persons with hearing or speech impairments may access these numbers by dialing 7-1-1 to access telecommunications relay services. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Introduction</HD> The following section discusses the proposed rule's objectives, the legal basis for this proposed rule, background information, the reasoning behind issuing this proposed rule, and a summary of the applicable recommendations made by the Appraisal Subcommittee Advisory Committee for the Development of Regulations (ASCAC). <HD SOURCE="HD2">A. Proposed Rule's Objectives</HD> The proposed rule (proposal or proposed rulemaking) is intended to establish an effective and consistent enforcement approach to the Appraisal Subcommittee's (ASC) oversight of State Appraiser Regulatory Agencies. <SU>1</SU> <FTREF/> The ASC believes that the proposal would significantly improve its effectiveness in monitoring and bringing enforcement actions against State Appraiser Regulatory Agencies that may not have effective Appraiser and Appraisal Management Company (AMC) Programs. The ASC also believes that the proposed rulemaking would be beneficial in clarifying requirements for State Appraiser Regulatory Agencies to promote the effectiveness of their Appraiser and AMC Programs. Finally, the proposed rule would provide additional transparency to State Appraiser Regulatory Agencies and other stakeholders regarding the ASC's procedures for monitoring Appraiser and AMC Programs and the potential for enforcement actions against State Appraiser Regulatory Agencies. In general, the proposed rule would codify the existing ASC compliance review process consistent with the ASC's current practices and processes for conducting compliance reviews, with some modifications and minor corrections. <FTNT> <SU>1</SU>  12 U.S.C. 3332(a)(5), uses the term “State Appraiser Regulatory Agencies.” As discussed further below, for purposes of the proposed rule, this term is synonymous with “State appraiser certifying and licensing agency” as defined in section 1121(1) of Title XI (12 U.S.C. 3350(1)). </FTNT> <HD SOURCE="HD2">B. Statutory Authority</HD> Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 was amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) in 2010 (Title XI). <SU>2</SU> <FTREF/> <FTNT> <SU>2</SU>  Public Law 111-203, sec. 1473, 124 Stat. 2190-2199 (2010). </FTNT> Section 1103(a)(1)(A)  <SU>3</SU> <FTREF/> of Title XI requires the ASC to monitor requirements established by State Appraiser Regulatory Agencies for the certification and licensing of individuals qualified to perform appraisals in connection with federally related transactions, <SU>4</SU> <FTREF/> including a code of professional responsibility. Section 1103(a)(1)(B) also requires the ASC to monitor the requirements established by State Appraiser Regulatory Agencies for the registration and supervision of the operations and activities of AMCs. <SU>5</SU> <FTREF/> <FTNT> <SU>3</SU>  12 U.S.C. 3332(a)(1)(A). </FTNT> <FTNT> <SU>4</SU>  Federally related transaction refers to any real estate-related financial transaction which: (a) a Federal financial institutions regulatory agency engages in, contracts for, or regulates; and (b) requires the services of an appraiser. <E T="03">See</E> 12 U.S.C. 3350(4). </FTNT> <FTNT> <SU>5</SU>  12 U.S.C. 3332(a)(1)(B). </FTNT> Additionally, section 1118(a) of Title XI requires the ASC to monitor State Appraiser Regulatory Agencies to determine whether each State Appraiser Regulatory Agency: (1) has policies, practices, funding, staffing, and procedures that are consistent with Title XI; (2) processes complaints and completes investigations in a reasonable time period; (3) appropriately disciplines sanctioned appraisers and AMCs; (4) maintains an effective regulatory program; and (5) reports complaints and disciplinary actions on a timely basis to the national registries of appraisers and AMCs maintained by the ASC. <SU>6</SU> <FTREF/> <FTNT> <SU>6</SU>  12 U.S.C. 3347(a). </FTNT> Section 1118(a) of Title XI further provides that the ASC can impose certain sanctions against a State Appraiser Regulatory Agency that fails to have an effective appraiser regulatory program. <SU>7</SU> <FTREF/> For the purposes of the proposed rule, the term “enforcement actions” would be used instead of “sanctions.” In determining whether a program is effective, the ASC must include an analysis of (1) the licensing and certification of appraisers, (2) the registration of AMCs, (3) the issuance of temporary licenses and certifications for appraisers, (4) the receiving and tracking of submitted complaints against appraisers and AMCs, (5) the investigation of complaints, and (6) enforcement actions against appraisers and AMCs. <SU>8</SU> <FTREF/> Under the proposal, the evaluation criteria are referred to as “program functions.” <FTNT> <SU>7</SU>   <E T="03">Id.</E> </FTNT> <FTNT> <SU>8</SU>   <E T="03">Id.</E> (numbering of the program functions is added for emphasis). </FTNT> Section 1118(a) of Title XI also specifically authorizes the ASC to impose interim actions and suspensions against a State Appraiser Regulatory Agency as an alternative to, or in advance of, the non-recognition of a State Appraiser Regulatory Agency. <SU>9</SU> <FTREF/> Under the proposed rule, these “interim actions and suspensions” would be known as “interim enforcement actions.” <FTNT> <SU>9</SU>   <E T="03">Id.</E> </FTNT> Consistent with section 1118 of Title XI, <SU>10</SU> <FTREF/> the proposal would outline three types of enforcement actions: interim actions, suspensions, and non-recognition. Title XI refers to non-recognition as derecognition. <SU>11</SU> <FTREF/> Under the proposed rule, the term “non-recognition” would be used instead of “derecognition” to be consistent with subpart B of 12 CFR part 1102, which sets forth the ASC rules of practice and procedure governing non-recognition proceedings for State Appraiser Regulatory Agencies. <FTNT> <SU>10</SU>  12 U.S.C. 3347. </FTNT> <FTNT> <SU>11</SU>   <E T="03">Id.</E> </FTNT> Finally, section 1106 o ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 193k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━