[58 F.R. 551 (January 6, 1993)]

FR CNMI Interim Waiver Order:

[Docket No. AS92-5]
Appraisal Subcommittee, Federal Financial Institutions Examination Council.
ACTION: Interim Order granting Commonwealth of the Northern Mariana Islands ("CNMI") emergency temporary waiver relief from State appraiser certification and licensure requirements and request for comments.
SUMMARY: The Appraisal Subcommittee ("ASC") of the Federal Financial Institutions Examination Council ("FFIEC"), with the FFIEC's approval, is issuing an interim Order granting CNMI emergency temporary waiver relief under
' 1119(b) of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), as amended. This interim relief will run from January 1, 1993, until the effective date of the ASC's final Order on this matter. The ASC also is soliciting comments from interested members of the public regarding CNMI's temporary waiver request.
DATES: Effective date of interim Order is January 1, 1993. Written comments on this Notice must be submitted on or before the close of business on [Insert date 30 days after date of publication in the Federal Register].
ADDRESSES: Copies of the request for temporary waiver relief and supporting documentation are available for public inspection at: Appraisal Subcommittee, 2100 Pennsylvania Avenue, N. W., Suite 200, Washington, D.C. 20037. Written comments may be mailed to the Appraisal Subcommittee at this location, and those comments also will be made available for public inspection.
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.
I. Background.

After December 31, 1992, all federally regulated financial institutions must use State licensed or certified appraisers, as appropriate, in federally related transactions. Thus, each State should have 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 approval, 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 temporary waiver requests. In order for a waiver request to be received by the ASC for processing, ASC Rule 1102.2 requires a State appraiser regulatory 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 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.
II. CNMI's Request.
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. CNMI stated that, while it has made "substantial, documented progress," it continues "to encounter significant problems in [its] efforts to comply with Title XI" and has "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 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." In sum, CNMI promised to "work hard to make the plan a success."

III. Finding of an emergency under Rule 1102.5.
On the basis of the foregoing representations of CNMI's Governor, the ASC finds that an emergency exists in CNMI. Absent emergency interim 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 during the period of January 1, 1993, until the time that the ASC makes a final determination respecting CNMI's temporary waiver request under Rule 1102.5. Those lenders 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.
VI. Order
On the basis of the foregoing and with the concurrence of the FFIEC, the ASC finds that an emergency exists in CNMI under
' 1119(b) of Title XI and 12 CFR part 1102, subpart A, thereunder, and orders temporary interim waiver relief under those provisions for CNMI for the period beginning on January 1, 1993, through the date on which the ASC will make a final determination respecting CNMI's temporary waiver request, not to exceed [Insert date 45 days after date of publication in the Federal Register]. Thus, during the time that this Order is effective within CNMI, the federally regulated lenders specified in ' 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 institution regulatory agency.

By the Appraisal Subcommittee of the Federal Financial Institutions Examination Council,

Date Fred D. Finke, Chairman