Appraisal Subcommittee Policy Statements Regarding State Certification and Licensing of Real Estate Appraisers
- Statement 1: State Regulatory Structure and Independence of Functions
- Statement 2: Appraiser Classifications
- Statement 3: Appraisal Standards
- Statement 4: Written Appraisal Reports
- Statement 5: Temporary Practice
- Statement 6: Reciprocity
- Statement 7: Prohibition Against Discrimination
- Statement 8: National Registry of State Certified and Licensed Appraisers
- Statement 9: Information Sharing
- Statement 10: Enforcement
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), entitled the "Real Estate Appraisal Reform Amendments," established the Appraisal Subcommittee of the Federal Financial Institutions Examination Council ("ASC"). The ASC consists of representatives appointed by the heads of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration ("Federal financial institutions regulatory agencies" or "Agencies") and the Department of Housing and Urban Development.
The ASC, among other things, is charged with monitoring the certification and licensing programs for real estate appraisers in each State to determine whether the State's policies, practices and procedures are consistent with Title XI and enforcing the State's compliance with the requirements of Title XI. This statute also requires the ASC to maintain a national registry of State licensed and certified appraisers, and to ensure that each State appraiser certifying and licensing agency ("State agency") transmits to the ASC a roster of State certified and licensed appraisers who are eligible to perform appraisals in federally related transactions, along with an annual registry fee. States may establish and maintain procedures for certifying, licensing, supervising and disciplining individuals who are qualified to perform real estate appraisals in connection with Federal financial and public policy interests, including a code of professional responsibility as evidenced by the Uniform Standards of Professional Appraisal Practice ("USPAP"), as adopted by the Appraisal Standards Board of the Appraisal Foundation ("ASB"). Title XI, as well as other Federal statutes and regulations requiring the use of State certified or licensed appraisers, necessarily relies on the States to perform their real estate appraiser related duties in a responsible manner.
In exercising its oversight responsibilities, the ASC reviews each State's overall appraiser regulatory program to determine compliance with Title XI. All of a State's requirements and policies need not be specifically set forth in statutes, but may be established by regulation, procedure or practice. Conversely, an otherwise adequate set of statutes or regulations can be undermined by inadequate implementation. In general, the ASC considers each State appraiser regulatory program to be valid unless the ASC formally rejects or disapproves the program using the procedures in 12 U.S.C. 3347 and 12 CFR part 1102, subpart B.
In general, State agencies should take appropriate steps to ensure that each person seeking to qualify as a State certified or licensed appraiser has demonstrated his or her competency. To demonstrate competency, the ASC believes that States should ensure that appraisers meet appropriate education, testing and experience requirements. Moreover, State agencies should ensure that State certified or licensed appraisers continue to perform their assignments in a competent and ethical manner.
Federal or State statutes or regulations may prescribe which transactions must have an appraisal performed by a State certified or licensed appraiser. For federally regulated financial institutions, Title XI mandates that State certified real estate appraisers perform all appraisals in connection with federally related transactions over $1 million and complex one-to-four family residential properties.
The ASC is issuing these Policy Statements to assist the States in the continuing development and maintenance of appropriate organizational and regulatory structures for certifying, licensing and supervising real estate appraisers. These Statements reflect the general framework that the ASC is using to review a State's program for compliance with Title XI. These Statements: (1) supersede the ASC's "Revised Guidelines" which were adopted on May 29, 1991, and published at 56 FR 26091 (June 6, 1991); (2) incorporate ASC advisories and opinions issued after the ASC's issuance of the Revised Guidelines; and (3) include new guidance on several issues.
The ASC does not impose any particular organizational structure upon the States. It is recognized that each State may have legal, fiscal, regulatory or other valid constraints that determine the structure and organization of its State agency. States, however, should adopt and maintain an organizational structure for appraiser certification, licensing and supervision that avoids conflicts of interest or the appearance of such conflicts. Ideally, States should maintain totally independent State agencies answerable only to the governor or a cabinet level official who has no regulatory responsibility for real estate licensing, promotion, development or financing functions ("realty related activities"). A State, however, may choose to locate its State agency within an existing regulatory body. Any State with its appraiser regulatory function in a department that regulates realty related activities must ensure that adequate safeguards exist to protect the independence of the appraiser regulatory function.
A State agency may be headed by a board, commission or individual. The organizational structure should provide maximum insulation for the State 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.
Persons appointing officials to a State agency should not be associated or affiliated with an affected industry, i.e., they should not have a direct or indirect financial interest in realty related activities. A State agency head, appointed by the governor and confirmed by the State legislature, would generally be considered independent.
The ASC believes that, as a matter of sound public policy, State appraiser boards or commissions should adequately represent the broad public interest by providing the public with a meaningful opportunity to participate in the agency's decision making process. A State agency should not be dominated in any way by any industry or profession and its board or commission should have one or more qualified public members. The ASC believes that domination of the State agency by representatives of affected industries would be inappropriate and inconsistent with Title XI. The ASC, however, recognizes that members of the appraisal industry should be significantly represented on the appraiser board or commission and believes that a board or commission may contain a majority of appraisers and still adequately represent the broad public interest. A State agency, board or commission, however, should reflect the interests of the State's entire community of appraisers and the general public and not the interests of any professional appraiser organization.
An individual heading a State agency should not be actively engaged in the appraisal business or in any realty related activity during his or her term of office or employment and for a reasonable period thereafter.
The ASC strongly urges that State agency decisions, especially those relating to license or certificate issuance, revocation and disciplinary actions, not be made by State officials who also are responsible for realty related activities. State officials should accept and implement the actions of the appraiser board unless they are inconsistent with the public interest and trust. Additionally, such State agency decisions should be final administrative actions subject only to appropriate judicial review.
Title XI established, and the ASC has recognized, two designations or titles for appraisers: "State licensed" and "State certified." The Appraiser Qualifications Board of the Appraisal Foundation ("AQB") has approved a third designation, "certified residential appraiser," which the ASC has also recognized. Most of the States have adopted the certified residential appraiser classification. The ASC strongly urges States to use the federally recognized designations or titles, i.e., State certified general appraiser, State certified residential appraiser and State licensed appraiser. The use of other designations or titles increases the likelihood of confusion among users and could result in the employment of appraisers who do not have the required designation to perform the appraisal for which they are engaged. Use of other designations may complicate and confuse State temporary practice and reciprocity arrangements. States that choose to use other designations or titles should ensure that they can be easily distinguished from the Federal designations.
States may also experience problems if their statutes or regulations specify the types of real estate transactions for which State certified and licensed appraisers may conduct appraisals. In general, for federally regulated financial institutions, these determinations rest with the Federal financial institutions regulatory agencies as set forth under 12 U.S.C. 3341. These Agencies have issued regulations prescribing the types of transactions for which certified or licensed appraisers are required. State statutes and regulations should defer to the Agencies' regulations in this area.
Some States have specifically included in their statutes or regulations restatements of the requirements set forth in the regulations issued by the Agencies relating to such matters as the value of transactions requiring certified or licensed appraisers, the specific skills of the appraisers and the complexity of appraisal assignments. These Federal requirements will probably be changed from time to time, thus creating conflicts with State requirements unless affected States act promptly to make conforming amendments to their statutes or regulations. The best way for States to avoid such problems is not to include any restatement of the requirements of the Agencies' regulations in State statutes or regulations.
Additional appraiser qualification requirements may be imposed by any State or Federal agency or other user of appraisal services if they consider such qualifications necessary to carry out their responsibilities under Federal statutes and regulations.
The ASC will continue to review each State's education requirements to ensure, for licensing, that they are meaningful both as to the breadth of subject matter and length of required study, and, for certification, that they at a minimum conform to the requirements of the AQB.
A. State Certified General Appraiser
Title XI generally requires a State certified general appraiser to be a person who: (1) meets at least the minimum AQB criteria for "Certified General Real Property Appraiser"; and (2) passes a State administered examination issued or endorsed by the AQB. The AQB criteria for initial certification include 165 classroom hours in courses related to specified real estate appraisal matters and 2,000 hours of appraisal experience (with at least 50 percent in non-residential appraising). For recertification, an appraiser needs to accumulate at least ten classroom hours of continuing education course work for each year during the period preceding certification renewal. Continuing education hours can be accumulated at any time before the certification renewal date.
B. State Certified Residential Appraiser
While Title XI does not specifically mention the State Certified Residential Appraiser designation, it was adopted by the AQB and the ASC recognized it. A State certified residential appraiser is a person who: (1) meets at least the minimum AQB criteria for "Certified Residential Real Property Appraiser"; and (2) passes a State administered examination issued or endorsed by the AQB. The current AQB criteria for this classification include 105 classroom hours of real estate appraisal education courses and 2,000 hours of appraisal experience. For recertification, an appraiser needs to accumulate at least ten classroom hours of continuing education for each year during the period preceding certification renewal. Beginning on January 4, 1994, the AQB education requirement will be 120 classroom hours.
C. State Licensed Appraiser
Title XI does not specifically set the qualifications requirements for licensing appraisers. Nor does it establish State appraiser licensing as an entry level or trainee designation. States are free to establish meaningful qualifications 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 all States should require persons to pass a meaningful, State approved written test before receiving a license. Such a test may be one issued or endorsed by the AQB, but, in any event, it should be independently reviewed and validated by a qualified source.
The ASC will not object if States adopt the AQB's two-year experience recommendation for the "Licensed Real Property Appraiser", i.e., a minimum of 2,000 hours. The ASC, however, recognizes that other meaningful ways exist for the States to ensure that persons of demonstrated competency qualify for State licensing by utilizing different combinations of education and experience requirements in conjunction with an appraiser testing program. States may consider one or more of the following approaches:
- Less than 2,000 hours of experience, if such experience was obtained under the direct supervision of a State certified or licensed appraiser;
- State agency review of a minimum number of appraisal reports prepared by the applicant;
- A practical examination consisting, for example, of the satisfactory completion of one or more appraisal reports from case studies or an actual field appraisal;
- A higher level of required education, such as a degree in real estate appraisal or similar degree; and
- A program in which the State agency grants a provisional license to an individual who has the required education and has passed an appropriate examination, but requires that the appraiser obtain the experience [and training] necessary to demonstrate his or her competence within a limited period of time.
The ASC believes that the time allowed to achieve the necessary hours of experience should not be limited to a set time frame. Appraisal experience may include, but need not be limited to, performing or assisting in fee and staff appraisals, ad valorem tax appraisals, mass appraisals, review appraisals, appraisal analyses, real estate counseling, highest and best use analyses and feasibility analyses or studies or teaching appraisal courses. A State 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 if such experience actually entailed the performance or professional review of real estate appraisals.
The ASC, likewise, acknowledges that the AQB's recommended education criterion for a "Licensed Real Property Appraiser" reflects a meaningful level of education. This standard currently is 75 classroom hours in specific subjects listed in the published criteria. As discussed above, a State may establish other appropriate education requirements, so long as they are consistent with Title XI.
The ASC believes that it is important for States to provide for the continuing education of appraisers as part of their licensing requirement. In that regard, the AQB's continuing education recommendation for a licensed real property appraiser, which is ten classroom hours for each year of the period preceding the renewal of the license, is reasonable.
During the initial period of implementing Title XI, the ASC accepted the concept of transitional licensing to allow practicing appraisers to continue in the profession even though they did not meet all of the qualifications for licensing. Transitional licensing enabled persons to become licensed when they passed the appropriate test but lacked either the educational or the experience requirements adopted by the State. States generally have required: (1) transitionally-licensed appraisers to satisfy the missing requirements within no more than two years after being tested and transitionally licensed by the State; and (2) each transitional license to indicate clearly its transitional nature, period of validity and a non-extendable termination date.
The ASC believes that transitional licensing, as it has existed, is no longer necessary because practicing appraisers should have had ample time and opportunity to meet the States' requirements for experience and education. Therefore, the ASC believes that there is no longer a need for States to award transitional licenses or to extend or renew previously issued transitional licenses.
However, as set out above, the ASC recognizes that there is a need for programs to facilitate the entry of individuals into the profession and is encouraging States to create meaningful mechanisms to help ensure the entry of competent individuals into the appraisal profession (such as provisional licensing programs). Indeed, these programs very well may incorporate some of the features of transitional licensing.
Real estate appraisals generally must be performed in accordance with generally accepted appraisal standards as evidenced by the appraisal standards promulgated by the ASB, i.e., USPAP. Each State, by statute or by regulation, has incorporated USPAP into State law. State agencies should take steps to ensure that State statutes or regulations automatically incorporate the latest version of USPAP, including related ASB Statements, Interpretations, Advisory Opinions and other ASB formal guidance on the meaning and application of USPAP. Some States have incorporated dated or limited versions of USPAP into their statutes or regulations. This can cause confusion and conflict for certified and licensed appraisers, who must comply with professional standards adopted by the ASB that are different than those adopted by their State. State agencies should apply and enforce identical provisions of USPAP. Therefore, the ASC urges all States to incorporate USPAP as the minimum appraisal standard by general reference into their laws or regulations.
Title XI specifically mandates that all appraisals performed in connection with federally related transactions be in written form. 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. This requirement has been incorporated into other Federal statutes and regulations.
Title XI requires a State 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. Thus, a certified or licensed appraiser from State A, who has an assignment concerning a federally related transaction in State B, has a statutory right to enter State B, register with the State agency in State B and perform the assignment. Title XI does not require State B to offer temporary practice to persons who are not certified or licensed appraisers, including appraiser assistants not under the direct supervision of an appraiser certified or licensed in State A. An out-of-State certified or licensed appraiser should register for temporary practice before beginning to perform an appraisal assignment in connection with a federally related transaction.
States may not require temporary practitioners to obtain a certification or license in the State of temporary practice. Instead, the State must recognize the certificate or license issued by the individual's State of permanent certification or licensing. A State agency: (1) must allow temporary practice even though the State of permanent certification or licensing has differing requirements for certification or licensing, unless the latter State's certifications or licenses are not recognized by the ASC under 12 U.S.C. 3347; (2) should not put in place time consuming or complicated temporary practice registration procedures; and (3) should not have excessive temporary practice fees. The ASC strongly urges State agencies not to impose any practices or requirements that operate as an unreasonable impediment to temporary practice.
The State agency should process temporary practice registrations in an efficient and effective manner. An acceptable model for temporary practice procedures would include: (1) a nominal per assignment fee; (2) proof of a valid license or certificate; and (3) the completion of a reasonable temporary practice registration form. The State agency should promptly process the form.
An out-of-State certified or licensed appraiser must comply with the host State's real estate appraisal statutes and regulations. Each appraiser who receives temporary practice registration is subject to the State's full regulatory jurisdiction and is governed by the State's statutes and regulations respecting appraiser certification or licensing. However, the out-of-State appraiser should be treated like any other appraiser within the State who wishes to perform an appraisal in a federally related transaction.
The State agency in the State of temporary practice needs to follow up on any complaints regarding the temporary practicing appraiser's appraisal activities within the State. If appropriate, the host State agency should commence a disciplinary proceeding against the appraiser for violations occurring in its jurisdiction and should not just forward the complaint for follow up to the State agency in the appraiser's home State. The ASC expects the home State agency to honor the findings and judgment of the State agency in the State of temporary practice and take appropriate disciplinary action against the appraiser.
The ASC believes that "temporary" is best measured by one or more specific appraisal assignments and not by a fixed time period or number of properties to be appraised. For temporary practice purposes, the ASC regards the term "assignment" as meaning one or more real estate appraisals and written appraisal reports which are covered by a contract to provide an appraisal.
A State agency may establish by statute or regulation a policy that places reasonable limits on the number of times an out-of-State certified or licensed appraiser may exercise his or her temporary practice rights in a given year. If such an overall policy is not established, a State agency may choose not to honor an out-of-State certified or licensed appraiser's temporary practice rights if it has made a determination that the appraiser is abusing his or her temporary practice rights and is regularly engaging in real estate appraisal within the State.
Finally, some State agencies have sought to require that an appraiser register for temporary practice if the appraiser is certified or licensed in another State, performs a technical review of an appraisal in that other State and changes, or is authorized to change, a value in the appraisal. The ASC, however, has concluded that for federally related transactions the review appraiser need not register for temporary practice or otherwise be subjected to the regulatory jurisdiction of the State agency in which the appraisal was performed, so long as the review appraiser does not perform the technical review in the State within which the property is located.
Many interested parties have commented that reciprocity is at least as critical as temporary practice. While temporary practice is specifically required by Title XI, reciprocity is not and involves a permanent recognition of another State's certified or licensed appraisers. Under reciprocal arrangements, an appraiser who is certified or licensed in State A and is also reciprocally certified or licensed in State B must comply with both States' appraiser laws, including those requiring the payment of certification, licensing and Federal registry fees and continuing education. Indeed, the appraiser for all intents and purposes is treated as if he or she were separately certified or licensed in each of the States.
The ASC suggests that States consider implementing, at a minimum, the following features in their reciprocity policies:
- A simple application;
- No reexamination;
- No additional review of an applicant's education or experience;
- Reciprocal licensing or certification fees similar in amount to the corresponding fees for "home" State appraisers; and
- The collection and forwarding to the ASC of the National Registry fee for each reciprocally licensed or certified appraiser.
Methods for providing reciprocity vary from State to State. Some States may implement formal agreements with other States, whereby a certified or licensed appraiser in good standing from one State applies for, and is granted, certification or licensing in the other States upon submission to the other States of a copy of his or her credentials, a statement of good standing, a consent for service of suit and the payment of appropriate fees. Other States, without a formal agreement, but with similar documentation requirements, may grant the requested certificate or license upon the payment of the second State's fee. Still other States may accept the examination of other States, but require the remainder of the application to be completed by the applicant and reviewed by the State agency. Finally, States, by agreement, may allow their certified or licensed appraisers who are in good standing to practice freely within these States without any additional State qualifications or procedures. Appraisers certified or licensed in one State would not be required to apply for reciprocal certification or licensing in the other State or States and pay related certification or licensing fees. In general, the basic requirements for appraisal practice within the "free practice" area would be showing a valid certificate or license and being competent to perform the assignment under USPAP and Federal and State statutes and regulations. In addition, as an exception to Statement 8 below, States following this "drivers license" approach to reciprocity would not need to collect and forward to the ASC National Registry information and fees concerning reciprocally certified or licensed appraisers.
Reciprocity's main benefit is that appraisers who qualify for certification or licensing in one State may freely cross into another State without needing to "register" for each appraisal assignment in the other State. Therefore, a duly certified or licensed appraiser in one State can be recognized as such in each of the other States in which he or she is licensed or certified by reciprocity.
The ASC endorses reciprocity and urges the States to establish permanent reciprocity arrangements promptly to address the needs of certified or licensed appraisers who practice on a non-temporary, multistate basis.
State agencies should be aware that Title XI and the Agencies' regulations prohibit federally regulated financial institutions from excluding appraisers from consideration for an assignment solely by virtue of their membership, or lack of membership, in any appraisal organization. Federally regulated financial institutions should review the qualifications of appraisers to ensure that they are qualified for the assignment for which they are being considered. It is unacceptable to assume that an appraiser is qualified solely due to membership in, or designation from, an appraisal organization, or the lack thereof. The Agencies have determined that financial institutions' appraisal policies should not favor appraisers from one or more organizations or exclude individuals based on their lack of such membership. If a State agency learns that a certified or licensed appraiser allegedly has been a victim of such discrimination, the State agency should inform the Agency which has regulatory authority over the involved financial institution.
The ASC has determined that such discrimination also is inappropriate in the establishment and administration of a State's certification and licensing system. The ASC urges States to adopt legislation, regulations or other procedures to prohibit such discriminatory practices.
In addition, State agencies should avoid discriminatory practices regarding appraiser educational course providers. Some State agencies inappropriately: (1) have charged a course review fee to private course providers while not charging such a fee to certain professional appraiser organizations; (2) have delayed approval of private school appraisal courses while rapidly approving those of professional appraiser organizations; and (3) have forced non-affiliated proprietary schools to maintain and use fixed school room locations, while certain professional appraisal organizations have been allowed to teach courses at non-fixed commercial sites, such as hotels, motels and office locations. State agencies should review their internal procedures and take steps to ensure that all educational providers are afforded equal treatment in all respects, including course review fees, timeliness of review and course location requirements.
A. General Roster and Registry Fee Requirements
Title XI requires the States to transmit to the ASC no less than annually: (1) a roster listing individuals who have received a State certification or license to perform appraisals, and (2) a $25 registry fee from individuals who have received certification or licensing. Fee and roster requirements apply to all individuals who receive State certifications or licenses originally or by reciprocity, whether or not the individuals in fact are performing, or plan to perform, appraisals in federally related transactions. If an appraiser is certified or licensed in more than one State, the appraiser is required to be on each State's roster of certified or licensed appraisers and a registry fee is due from each State in which the appraiser is certified or licensed. Only appraisers on the National Registry are qualified to perform appraisals in connection with federally related transactions.
B. Description of National Registry
The ASC has provided the States with detailed specifications relative to the data elements which comprise the Registry and related accounting procedures. States should use systems for data input and maintenance that recognize specifications of the ASC system to ensure system compatibility.
To assist the States in recording and submitting data efficiently and cost effectively, the ASC has developed a personal computer software package. It is contained on diskettes and is provided at no charge. The Social Security Number of individual appraisers is not a data element. The ASC creates a unique identifier for each appraiser and protects each appraiser's privacy rights.
C. Registry Fee Policies
Each State must pay the ASC a National Registry fee on an annual basis for each State certified or State licensed appraiser listed on the National Registry. The annual fee for each certified or licensed appraiser is $25. Checks should be made payable to the "Appraisal Subcommittee." Fees will not be prorated or refunds granted for partial year registrations. For example, the fee for adding a name to the Registry in February is $25, and, for adding a name in November, remains $25. Each of these appraisers then would be required to renew his or her listing on the National Registry one year later, i.e., in February and November, as the case may be. States must submit the required fee with the name of a State certified or State licensed appraiser to the ASC before the name can be entered into the Registry. Without the required fee, the name will not be entered, and the individual will not be eligible to perform appraisals in federally related transactions. If a State issues multiple-year certifications and licenses and collects multiple-year fees, the State should submit to the ASC the total amount of the multiple year National Registry fees.
The ASC will consider an appraiser to be inactive if his or her certificate or license renewal fee is not received with the State's National Registry update report for the month in which the renewal is due. When in an inactive status, appraisers may not perform appraisals in connection with federally related transactions, and the appraiser's name will be dropped from the National Registry. The ASC will change an appraiser from inactive to active status and reinstate his or her name on the Registry only upon its receipt of the renewal fee and appropriate renewal information from the State agency.
D. Public Availability of Registry Data
The releasable portions of National Registry information can be obtained through the National Technical Information Service ("NTIS"). Personal information about an individual appraiser is protected by the Privacy Act, 5 U.S.C. 552a, and the ASC does not make it available to NTIS.
Subscriptions to Registry updates are available through NTIS, as are record sorts by factors such as State and zip code. When requesting Registry data, refer to it by its NTIS catalogue name: The Real Estate Appraisers Registry. Additional information about the Registry data base can be secured by writing to the following address:
U. S. Department of Commerce
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Telephone: (703) 487-4812
Fax: (703) 321-8547
Requests for information on a particular appraiser or group of appraisers can best be handled by the State agency that issued the certificate(s) or license(s).
To ensure the accuracy and integrity of the National Registry, State agencies should designate a State agency officer or employee who will serve as the State agency's Registry contact official. The State agency should advise the ASC in writing regarding the selected designee and should ensure that the authorization is kept current. The ASC will accept inquiries and information relating to National Registry data from this authorized individual only.
Access to the data contained in the National Registry is generally limited to Registry contact officials and duly authorized officers and employees of the Agencies and the ASC. Other persons should request information primarily from NTIS and/or the particular State agency issuing the certification or license. The ASC, however, will directly provide releasable National Registry information to persons upon their filing of a written request under the Freedom of Information
Act, 5 U.S.C. 552, and the ASC's related rules in 12 CFR part 1102, subpart D (1993).
The ASC believes that the routine exchange of certain information among lenders, State agencies and the ASC is essential to meeting the goals of Title XI.
A. National Registry Data
It is critical for State agencies to report expeditiously to the ASC the name of each appraiser whose license or certification has been suspended, revoked or against whom disciplinary action in connection with appraisal work is pending. Knowledge of such action should be communicated to the ASC as quickly as possible by the Registry contact official. Additionally, the information should be included on the State agency's regular National Registry update. ASC staff will identify other States in which the affected appraiser is certified or licensed and will communicate the necessary information to the other States' Registry contact officials, as necessary.
B. Information Pertaining to Appraiser Conduct and Practices
1. State Agency/Lender Communications
Title XI requires "any federally recognized entity," e.g., a federally regulated institution, to report any action of a State certified or licensed appraiser that is contrary to the purposes of Title XI to the appropriate State agency for disposition. In turn, the State agency shall provide the ASC with a report regarding the disposition of such a matter.
The ASC believes that full implementation of this Title XI requirement is vital to the integrity of the system of State appraiser regulation. Prompt reporting by regulated institutions to the ASC should enable State agencies to investigate appraiser actions and should help to ensure that a resulting suspension or revocation of an appraiser's certificate or license will be communicated promptly to the ASC. At that point, the ASC will remove the appraiser's name from the National Registry, thereby protecting against the appraiser being available to perform appraisals for federally related transactions or for other transactions requiring the use of State certified or licensed appraisers. As part of its State agency monitoring process, the ASC will evaluate the effectiveness with which each State agency follows up complaints from financial institutions and other persons who report instances of appraiser incompetence or unethical behavior.
2. Communications Among State Agencies
Title XI contemplates the reasonably free movement of certified and licensed appraisers across State lines. This freedom of movement assumes, however, that certified and licensed appraisers are, in all cases, held accountable and responsible for their actions while performing appraisal activities. To ensure this accountability, State agencies need to establish routine ways to communicate with each other regarding matters of mutual interest, including the activities and status of persons who are certified or licensed in multiple States.
C. ASC Information "Clearing House" Operations
To facilitate the development of reciprocity among the States and the creation of State appraiser trainee/apprentice/intern programs, the ASC is developing a database of information that will be available to State agencies outlining each State's reciprocity requirements and interstate agreements as well as the features of existing appraiser trainee/apprentice/intern programs. The ASC is urging: (1) each State to maintain with the ASC a listing of all reciprocity agreements with other States (together with copies of such agreements), and (2) each State with a trainee/apprentice/intern program to maintain with the ASC a current summary of the program's requirements and features.
A. The Scope of State Agency Enforcement Programs
In the ASC's view, Title XI intends that States supervise all of the activities and practices of persons who are certified or licensed to perform real estate appraisals in connection with all real estate appraisals involving real estate related financial transactions, and not just federally related transactions. The Federal agencies and all employers of appraisers must rely on the States to effectively regulate, supervise and discipline their certified and licensed appraisers -- in other words, to assure their professional competence. Accordingly, a State agency with knowledge of inappropriate behavior by a certified or licensed appraiser committed in connection with an appraisal of a non-federally related transaction should take appropriate action to investigate that behavior and to discipline the appraiser.
As noted, Federal statutes and regulations require the use of State certified or licensed appraisers in certain real estate transactions. A few State statutes, however, do not require the use of certified and licensed appraisers in those circumstances. The ASC recommends that State statutes or regulations authorize the State agency or another appropriate State authority to take action, as necessary, against an uncertified or unlicensed person who performs an appraisal for which a State certified or licensed appraiser is required under Federal statute or regulation. The ASC believes that, to preserve the integrity of the system for regulating the appraisal process, States should have sufficient legal tools, e.g., a State law prohibiting a person from misrepresenting his or her professional status and authority, to take such actions.
B. Audit of Experience and Education Submissions
While the ASC has no preference for any specific methodology, State agencies, at a minimum, should have a reliable means of validating both education and experience credit claimed for certification or licensing. The ASC believes the lack of routine verification procedures is both an invitation to potential fraud and a threat to the integrity of a State's appraiser regulatory program.
Title XI and other Federal statutes and regulations specifically require the use of only State certified or licensed appraisers in connection with the appraisal of certain real estate-related financial transactions. A State may not exempt any individual or group of individuals from meeting the State's certification or licensing requirements if the individual or group member performs an appraisal where Federal statutes and regulations require the use of a certified or licensed appraiser. For example, an individual who has been exempted by the State from its appraiser certification or licensing requirements because he or she is an officer, director, employee or agent of a federally regulated bank, thrift or credit union would not be permitted to perform an appraisal in connection with a federally related transaction. States with exemption provisions should take steps to ensure that the provisions are not being used or interpreted to avoid the use of certified or licensed appraisers in transactions governed by Federal law.
D. Supervising Uncertified and Unlicensed Appraiser Assistants
Title XI provides that an individual who is not a State certified or licensed appraiser may assist in the preparation of an appraisal if the assistant is under the direct supervision of a licensed or certified appraiser and the final appraisal is approved and signed by that appraiser. The ASC believes that this provision should not be used to legitimize situations where one or more uncertified or unlicensed persons are not actively and directly supervised by a certified or licensed appraiser during the preparation of the significant aspects of the appraisal process, and the certified or licensed appraiser does not substantively review the appraisal in accordance with USPAP's requirements. The ASC believes that any cursory review should not qualify as direct supervision and that such activities would violate the intent and purposes of Title XI. The ASC, therefore, urges State agencies to ensure that their appraiser regulatory programs can identify situations where direct supervision is not present and to take appropriate steps to remedy them.