[58 F.R. 11235 (February 24, 1993)]
FR CNMI Final Waiver Order:
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
[Docket No. AS93-1]
FINAL ORDER GRANTING COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS TEMPORARY WAIVER RELIEF
AGENCY: Appraisal Subcommittee, Federal Financial Institutions Examination Council.
ACTION: Final Order granting Commonwealth of the Northern Mariana Islands ("CNMI") temporary waiver relief from State appraiser certification and licensure requirements.
SUMMARY: The Appraisal Subcommittee ("ASC") of the Federal Financial Institutions Examination Council ("FFIEC"), with the FFIEC's approval, is issuing a final order granting CNMI temporary waiver relief under ' 1119(b) of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), as amended. This relief will run from February 22, 1993, through February 28, 1994, unless the scarcity of certified or licensed appraisers is alleviated before this order's termination date.
DATES: Effective date of this order is February 22, 1993.
FOR FURTHER INFORMATION CONTACT: Edwin W. Baker, Executive Director, or Marc L. Weinberg, General Counsel, at (202) 634-6520, Appraisal Subcommittee, 2100 Pennsylvania Avenue, N. W., Suite 200, Washington, D.C. 20037.
A. Relevant statutory provisions and regulations.
After December 31, 1992, Title XI requires all federally regulated financial institutions to use State licensed or certified appraisers, as appropriate, in federally related transactions. Thus, each State, territory and the District of Columbia ("State") should have had in place at that time its entire regulatory scheme for certifying, licensing and supervising real estate appraisers.
Section 1119(b) of Title XI provides the ASC and the States with a degree of flexibility in dealing with extraordinary circumstances that may occur at any time after December 31st. This Section enables the ASC to waive, on a temporary basis and with the FFIEC's concurrence, any State certification or licensing requirement on a written finding that: (1) "there is a scarcity of certified or licensed appraisers to perform appraisals in connection with federally related transactions"; and (2) that the scarcity is "leading to significant delays in the performance of such appraisals." Either a State in compliance with Title XI or the ASC can make a written "scarcity/delay" finding. A State, however, cannot grant or deny a waiver under ' 1119(b); that authority belongs only to the ASC. Congress intended that the ASC exercise this waiver authority "cautiously." Temporary waivers terminate when the ASC "determines that such . . . delays have been eliminated."
In April 1992, the ASC adopted rules governing the handling of Section 1119(b) temporary waiver requests. For a waiver request to be received by the ASC for processing, ASC Rule 1102.2 requires a State appraiser regulatory agency ("State agency") to include in its request:
(a) . . . a written, duly authorized determination by the . . . Agency that there is a scarcity of State licensed or State certified appraisers leading to significant delays in obtaining appraisals in federally related transactions;
(b) The requirement or requirements of State law from which relief is being sought;
(c) A description of all significant problems currently being encountered in efforts to comply with Title XI;
(d) The nature of the scarcity of certified or licensed appraisers (including supporting documentation);
(e) The extent of the delays anticipated or experienced in obtaining the services of certified or licensed appraisers (including supporting documentation);
(f) The reasons why the requester believes that the requirement or requirements are causing the scarcity of certified or licensed appraisers and the service delays; and
(g) A specific plan for expeditiously alleviating the scarcity and the service delays.
Rule 1102.4 requires the ASC to publish a notice promptly in the Federal Register respecting the received request. The notice which must "contain a concise general statement of the nature and basis for the action and [must] give interested persons 30 calendar days from its publication in which to submit written data, views and arguments." The ASC then, under Rule 1102.5, must "either grant or deny a waiver in whole, in part, and upon specified terms and conditions" within "45 calendar days of the date of publication of the notice . . . in the Federal Register." The ASC retains significant flexibility in the case of an emergency. If the ASC determines that an emergency exists, "the ASC may issue an interim approval Order simultaneously with its action" publishing the Rule 1102.4 notice in the Federal Register.
Rule 1102.7 relates to the termination of temporary waiver orders. The ASC at any time may terminate such an order on a finding that: (1) the "significant delays in obtaining" certified or licensed appraiser services "no longer exist"; or (2) the "terms and conditions of the waiver order are not being satisfied." The ASC is required under the Rule to publish its waiver termination finding promptly in the Federal Register and to solicit public comments on the finding for a 30 calendar day period. Absent further ASC action, the finding becomes final automatically 21 calendar days after the end of the comment period.
B. Procedural Status.
On December 21, 1992, the ASC received a letter dated December 16, 1992, from Lorenzo I. De Leon Guerrero, the Governor of CNMI. The letter requested a one-year waiver, i.e., from January 1 through December 31, 1993, from the requirement to use certified or licensed real estate appraisers within CNMI. The letter effectively initiated a temporary waiver proceeding under 12 CFR part 1102, subpart A. In view of the immediacy of the January 1, 1993 full implementation date of Title XI and the facts represented in the Governor's letter, the ASC, on December 31, 1992, issued an order both granting CNMI emergency interim temporary waiver relief and soliciting public comment on the request. The interim order was published in the Federal Register on January 6, 1993. The formal comment period closed on February 5, 1993, and no comments were received. The ASC had until the close of business on Monday, February 22, 1993, to take final action on CNMI's request. The ASC called a special meeting to consider this matter on February 17, 1993, and voted to approve the issuance of this final order. On February 18, 1993, the Chairman of the FFIEC concurred in the ASC's determination pursuant to delegated authority from the FFIEC.
II. CNMI's request and plan to alleviate the scarcity and service delays.
Governor Guerrero of the CNMI stated in his temporary waiver request that, while CNMI had made "substantial, documented progress," it continued "to encounter significant problems in [its] efforts to comply with Title XI" and has had "a serious shortage of [certified or licensed] appraisers."
More specifically, CNMI stated that only four appraisers in CNMI "theoretically qualify for appraisal work" and that, "[d]espite good faith efforts . . . , we still can't qualify the people we have available. In practice, we have only one person who might be able to meet Title XI requirements. This person must complete required courses." However, no appraisal education providers are situated on CNMI, and the closest educational provider is on the island of Guam, 120 miles south by air. CNMI concluded that "[e]ducation is our dilemma. It relates directly to our present scarcity of appraisers."
CNMI further represented that this scarcity of appraisers causes "inordinate delays in connection with federally related transactions. Six retail banks operate in CNMI . . . . Many people seek federally guaranteed home loans. Business loan applications are brisk. We have significant appraiser business and presently no local qualified appraisers to serve it." CNMI concedes that appraisers who are licensed or certified in Guam are willing to come to CNMI to perform appraisals. The use of such appraisers, however, "means delay" and "significant and burdensome costs to loan applicants."
CNMI noted in its request that it has a specific plan for resolving the scarcity and delays. A one-year waiver will "allow our local appraisers time to finish the required appraisal courses. At least one of our local appraisers has started the course work, presently only available on Guam." CNMI also is "working on getting the qualified Guam instructors to come to the CNMI to teach appraisal courses." CNMI subsequently related to the ASC its intentions to:
! Contact its appraisers to determine their educational needs and will assist them in making arrangements with course providers;
! Contact State or Appraiser Qualifications Board ("AQB") approved correspondence course providers to coordinate the providing of appraisal education to CNMI appraisers;
! Ensure that examinations in connection with correspondence courses will be properly proctored; and
! Send to the ASC any information that the ASC desires to enable the ASC to monitor CNMI's progress toward alleviating the scarcity and service delays.
In sum, CNMI promised to "work hard to make the plan a success."
III. ASC discussion.
On the basis of the foregoing representations of CNMI's Governor and other information received from CNMI, the ASC believes that a scarcity of State certified and licensed appraisers exists on CNMI and that the scarcity is leading to significant delays in obtaining the services of State certified or licensed appraisers on CNMI. Absent temporary waiver relief, CNMI's appraisers who have not been licensed or certified would be unable to perform appraisals in connection with federally related transactions for federally regulated lenders after February 22, 1993, the expiration date of the emergency interim temporary waiver relief order under Rule 1102.5. Those lenders then would be forced to fly into CNMI State certified or licensed appraisers from elsewhere, e.g., Guam, Hawaii or the United States mainland. In the worst case, such appraisers would not be available and real estate loans in federally related transactions could not be made in compliance with federal law. And, in the best case, significant delays and additional costs would likely result. These facts, we conclude, create a situation for which the relief provided by Section 1119(b) of Title XI was intended.
Therefore, the ASC finds that a scarcity of State certified and licensed appraisers exists on CNMI and that significant delays in obtaining the services of such appraisers are being experienced. Accordingly, under Section 1119(b) of Title XI and 12 CFR part 1102, subpart A, thereunder, the ASC orders temporary waiver relief for CNMI for the period beginning on February 22, 1993, through February 28, 1994, subject to the following conditions:
(1) CNMI must take appropriate steps during the temporary waiver period to alleviate the scarcity of State certified and licensed appraisers on CNMI and the significant delays in obtaining the services of those appraisers;
(2) CNMI must provide the ASC, within 14 days after May 3, 1993, September 6, 1993, and January 3, 1994, monitoring reports tracing CNMI's efforts toward alleviating the scarcity and the service delays; and,
(3) CNMI must notify the ASC promptly of any circumstances that might adversely affect CNMI's compliance with the terms of this order.
During the time that this order is effective within CNMI, the federally regulated lenders specified in Section 1120 of Title XI may use appraisers who are not licensed or certified so long as appraisals are performed in a manner that is consistent with the appraisal
regulations, requirements, guidelines and standards of the appropriate federal financial institutions regulatory agency.
By the Appraisal Subcommittee of the Federal Financial Institutions Examination Council,
Date Fred D. Finke, Chairman