The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) was created on August 9, 1989, pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI). Title XI’s purpose is to “provide that Federal financial and public policy interests in real estate transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.”
In general, the ASC oversees the real estate appraisal process as it relates to federally related transactions, as defined in Section 1121(4) of Title XI(1). The ASC is an FFIEC subcommittee. The FFIEC was established pursuant to Title X of the Financial Institutions Regulatory and Interest Rate Control Act of 1978. The FFIEC is an interagency body empowered to set uniform principles for the examination of federally regulated financial institutions.
Section 1103 of Title XI sets out the ASC’s general responsibilities:
- Monitor the requirements for the certification and licensing of appraisers established by the States, Territories, and the District of Columbia (States). The ASC reviews each State’s compliance with the requirements of Title XI and is authorized to take action against non-complying States;
- Monitor the requirements established by the Federal financial institutions regulatory agencies regarding appraisal standards for federally related transactions;
- Maintain a national registry of State licensed and certified appraisers (Registry) who may perform appraisals in connection with federally related transactions; and
- Monitor and review the practices, procedures, activities, and organizational structure of the Appraisal Foundation (Foundation).
On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) which includes amendments to Title XI. These statutory amendments expanded the ASC's general responsibilities within each of the aforementioned areas. The ASC will submit a report on its activities during the preceding year annually, by June 15th.
The Dodd-Frank bill also requires the registration and supervision of the operations and activities of appraisal management companies. The ASC will eventually monitor the States' regulations of these entitles and maintain a National Registry of Appraisal Management Companies that are either registered with and subject to supervision of a State appraiser certifying and licensing agency or are operating subsidiaries of a federally regulated financial institution.
Before the enactment of Title XI, there were no universally accepted appraisal content standards, no system of licensing appraisers, no appraiser education and experience qualification standards, and no laws requiring the use of appraisals. Title XI created a regulatory framework that includes federal bank regulatory agencies, a federal agency with authority to monitor State activities, a nonprofit appraisal organization, and State agencies that license and certify appraisers. Their roles are summarized below.
Federal Financial Institutions Regulatory Agencies
The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) comprise the Federal financial institutions regulatory agencies (Agency). Title XI requires each Agency to prescribe appropriate standards for the performance of real estate appraisals in connection with “federally related transactions,” which are defined as those real estate-related financial transactions that an Agency engages in, contracts for, or regulates, and that require the services of an appraiser. These rules must require, at a minimum, that real estate appraisals be performed in accordance with generally accepted uniform standards as promulgated by the Appraisal Standards Board of the Appraisal Foundation, and that such appraisals be in writing. Such appraisals are to be performed by individuals whose competency has been demonstrated and whose professional conduct is subject to effective State supervision. An Agency may require compliance with additional appraisal standards if it makes a determination that such additional standards are required in order to properly carry out its statutory responsibilities. Each of the Agencies has adopted additional appraisal standards.
These guidelines and other guidance can be found by accessing the individual Agency websites provided in the Quick Links.
The Appraisal Subcommittee (ASC) is an independent agency that is a subcommittee of the Federal Financial Institutions Examination Council. The ASC has seven Members, each designated respectively by the heads of the:
- Office of the Comptroller of the Currency (OCC),
- Board of Governors of the Federal Reserve System (FRB),
- Federal Deposit Insurance Corporation (FDIC),
- National Credit Union Administration (NCUA), collectively, the Federal financial institutions regulatory agencies (Agencies),
- Federal Housing Finance Agency (FHFA),
- Bureau of Consumer Protection Financial Protection (CFPB), and
- the U.S. Department of Housing and Urban Development (HUD).
The ASC conducts on-site reviews of each State appraiser agency once every two years, with more frequent visits to States with weak enforcement programs. The ASC has the authority to disapprove a State appraiser regulatory program. Disapproval disqualifies the appraisers in that State from conducting appraisals for federally insured institutions. Each State certified or licensed appraiser pays $40 each year to support the ASC National Registry. This fee funds the ASC's operations and provides a grant to the Appraisal Foundation to be used for Title XI-related activities, such as updating the USPAP.
The Appraisal Foundation a not-for-profit organization dedicated to the advancement of professional valuation was established by the appraisal profession in the United States in 1987. Since its inception, the Foundation has worked to foster professionalism in appraising by:
- establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP);
- establishing educational experience and examination qualification criteria for the licensing, certification and re-certification of real property appraisers;
- establishing educational and experience qualification criteria for other valuation disciplines;
- disseminating information on USPAP and the Appraiser Qualification Criteria to the appraisal profession, state and federal government agencies, users of appraisal services, related industries and industry groups, and the general public and;
- sponsoring appropriate activities relating to standards, qualifications and issues of importance to appraisers and users of appraisal services.
The ASC is authorized by Title XI to make grants in such amounts as it deems appropriate to the Appraisal Foundation, to help defray those costs of the foundation relating to the activities of its Appraisal Standards and Appraiser Qualifications Boards.
- Appraiser Standards Board (ASB):
The ASB sets forth the rules for developing an appraisal and reporting its results through the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP contains the recognized standards of practice for real estate, personal property and business appraisal. Title XI requires that real estate appraisals used in conjunction with federally related transactions are performed in accordance with USPAP. State certified and licensed real property appraisers are currently required to adhere to USPAP by their respective State appraiser regulatory agencies. Many appraisers are also bound to comply with USPAP through affiliations with professional appraisal organizations.
- Appraiser Qualifications Board (AQB):
The AQB establishes the qualification criteria for state licensing, certification and re-certification of real property appraisers. Title XI mandates that all state certified appraisers must meet the minimum education, experience and examination requirements promulgated by the AQB. In addition, examinations used by States for the certification of appraisers must be reviewed and approved by the AQB.
See the Appraisal Foundation website (www.appraisalfoundation.org) for information on the following:
• how to obtain a copy of the USPAP, as well as questions and answers related to the USPAP;
• appraiser qualification criteria (AQB Criteria);
• periodic electronic publication for State regulators
• descriptions of current Foundation initiatives
To view and/or comment on current and past AQB and ASB exposure drafts please go to:
State Appraiser Agencies
State appraiser agencies license and certify appraisers and establish appraiser education and experience requirements that, at a minimum, must satisfy AQB criteria. State agencies review appraiser referrals and discipline appraisers who do not comply with State law or the USPAP.
(1) The term “federally related transaction” means any real estate-related financial transaction which a federal financial institutions regulatory agency engages in, contracts for, or regulates, and also requires the services of an appraiser.