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Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (Title XI), created the Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC), and among other things, made it responsible for monitoring a State's appraiser regulatory program.
Title XI § 1101. PURPOSE
[12 U.S.C. 3331]
The purpose of this Title is to provide that Federal financial and public policy interests in real estate related 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. 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 the Federal financial institutions regulatory agencies and the ASC as the Federal agency with authority to monitor State activities, a nonprofit appraisal organization (the Appraisal Foundation) and State agencies that license and certify appraisers. The roles of each of these entities is 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,” (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, that such appraisals be in writing and that such appraisals be subject to review for compliance with the Uniform Standards of Professional Appraisal Practice. 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.
Appraisal Subcommittee (ASC)
The ASC was created on August 9, 1989, pursuant to Title XI. In general, the ASC oversees the real estate appraisal process as it relates to federally related transactions is defined in § 1121(4) of Title XI. The ASC is a subcommittee of the Federal Financial Institutions Examination Council (FFIEC). The FFIEC was established pursuant to Title X of the Financial Institutions Regulatory and Interest Rate Control Act of 1978, and is an interagency body empowered to set uniform principles for the examination of federally regulated financial institutions.
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. As amended, Title XI directs the ASC to:
- monitor the requirements established by States:
(A) for the certification and licensing of individuals who are qualified to perform appraisals in connection with federally related transactions, including a code of professional responsibility; and
(B) for the registration and supervision of the operations and activities of an appraisal management company;
- monitor the requirements established by the Federal financial institutions regulatory agencies with respect to:
(A) appraisal standards for federally related transactions under their jurisdiction; and
(B) determinations as to which federally related transactions under their jurisdiction require the services of a State certified appraiser.
- maintain a National Registry of State certified and licensed appraisers who are eligible to perform appraisals in federally related transactions;
- transmit an annual report to the Congress not later than June 15th of each year that describes the manner in which each function assigned to the Appraisal Subcommittee has been carried out during the preceding year;
- maintain a National Registry of appraisal management companies that either are registered with and subject to supervision of a State appraiser certifying and licensing agency or are operating subsidiaries of a Federally regulated financial institution; and;
- monitor and review the practices, procedures, activities and organizational structure of the Appraisal Foundation.
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)
- Federal Housing Finance Agency (FHFA)
- Bureau of Consumer Financial Protection (CFPB); and
- U.S. Department of Housing and Urban Development (HUD)
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.
- Appraisal Standards Board (ASB)
The ASB sets forth the rules for developing and 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.
- Appraisal 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.
• how to obtain a copy of USPAP, as well as questions and answers related to USPAP;
• appraiser qualification criteria (AQB Criteria);
• periodic electronic publications for State regulators;
• descriptions of current Foundation initiatives.
To view and/or comment on current and past AQB and ASB exposure drafts please to go:
State Appraiser Regulatory Agencies
Title XI authorized States to establish State appraiser regulatory agencies to assure the availability of State certified and licensed appraisers for the performance of appraisals in federally related transactions, and to assure effective supervision of the activities of certified and licensed appraisers, State appraiser regulatory agencies license and certify appraisers and establish appraiser education and experience requirements that, at a minimum, satisfy AQB Criteria.
*There are three federally recognized appraiser classifications: (1) State Licensed; (2) State Certified Residential; and (3) State Certified General. The difference in the classification is determined by the examination and the number of hours of education and experience required to obtain the credentials, in addition to the scope of practice permitted for each once the credential is obtained. The basic outline for these classifications is detailed in the AQB Criteria.
Each State has laws and regulations that, further define requirements for the various categories and permitted practices. In general, the ASC monitors each State appraiser regulatory agency for the purposes of determining whether such agency:
- has policies, practices, funding, staffing and procedures that are consistent with Title XI;
- processes complaints and completes investigations in a reasonable time period;
- appropriately disciplines sanctioned appraisers;
- maintains an effective regulatory program; and
- reports complaints and disciplinary actions on a timely basis to the National Registry.