FIRREA
Federal Institutions Reform, Recovery, Enforcement Act of 1989
TITLE XI-REAL ESTATE APPRAISAL REFORM AMENDMENTS
SEC 1101. PURPOSE.
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.
SEC. 1102. ESTABLISHMENT OF APPRAISAL SUBCOMMITTEE OF THE FEDERAL
FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
The Federal Financial Institutions Examination Council Act of 1978 (12 US.C. 3301 et seq.) is amended by adding at the end there of the following new section:
SEC. 1011. ESTABLISHMENT OF
APPRAISAL SUBCOMMITTEE.
"There shall be within the Council a subcommittee to be known as the 'Appraisal Subcommittee',
which shall consist of the designees
of the heads of the Federal financial institutions regulatory agencies. Each such designee
shall be a person who has demonstrated knowledge and competence concerning the
appraisal profession."
SEC. 1103. FUNCTIONS OF
APPRAISAL SUBCOMMITTEE
(a) IN GENERAL.-The Appraisal Subcommittee shall-
(1) monitor the requirements established by States 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;
(2) monitor the requirements established by the Federal financial
institutions regulatory
agencies and the Resolution Trust Corporation 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 and which require the services of a
State licensed appraiser;
(3) maintain a national registry of State certified and licensed appraisers
who are
eligible to perform appraisals in federally related transactions; and
(4) transmit an annual report to the Congress not later than January 31of each year which
describes the manner in which each function assigned to the Appraisal Subcommittee has been
carried out during the preceding year.
(b) MONITORING AND REVIEWING FOUNDATION.-The Appraisal Subcommittee shall
monitor and
review the practices, procedures, activities, and organizational structure of the Appraisal
Foundation.
SEC. 1104. CHAIRPERSON OF
APPRAISAL SUBCOMMITTEE; TERM OF CHAIRPERSON; MEETINGS.
(a) CHAIRPERSON. -The Council shall select
the Chairperson
of the subcommittee. The term of the Chairperson shall be 2 years.
(b) MEETING QUORUM; VOTING.-The Appraisal Subcommittee shall meet at the
call of the
Chairperson or a majority of its members when there is business to be conducted. A majority
of members of the Appraisal Subcommittee shall constitute a quorum but 2 or more members
may hold hearings. Decisions of the Appraisal Subcommittee shall be made by the vote of a
majority of its members.
SEC. 1105. OFFICERS AND STAFF
The Chairperson of the Appraisal
Subcommittee shall
appoint such officers and staff as may be necessary to carry out the functions of this
title consistent with the appointment and compensation practices of the Council.
SEC. 1106. POWERS OF APPRAISAL
SUBCOMMITTEE
The Appraisal Subcommittee may, for the
purpose of
carrying out this title, establish advisory committees, hold hearings, sit and act at times
and places, take testimony, receive evidence, provide information, and perform research, as
the Appraisal Subcommittee considers appropriate.
SEC. 1107. PROCEDURES FOR
ESTABLISHING APPRAISAL STANDARDS AND REQUIRING THE USE OF CERTIFIED AND LICENSED
APPRAISERS.
Appraisal standards and requirements for
using State
certified and licensed appraisers in federally related transactions pursuant to this title
shall be prescribed in accordance with procedures set forth in section 553 of title 5,
United States Code, including the publication of notice and receipt of written comments or
the holding of public hearings with respect to any standards or requirements
proposed to be
established.
SEC. 1108. STARTUP FUNDING.
(a) IN GENERAL.-For purposes of this title,
the Secretary
of the Treasury shall pay to the Appraisal Subcommittee a one-time payment of $5,000,000 on
the date of the enactment of this Act. Thereafter, expenses of the subcommittee shall be
funded through the collection of registry fees from certain certified and licensed
appraisers pursuant to section 1109 or, if required, pursuant to section 1122(b) of this
title.
(b) ADDITIONAL FUNDS. -
Except as provided in section 1122(b) of this title, funds in addition to the funds
provided under subsection (a) may be made available to the Appraisal Subcommittee only if
authorized and appropriated by law.
SEC. 1109. ROSTER OF STATE
CERTIFIED OR
LICENSED APPRAISERS;
AUTHORITY TO COLLECT AND TRANSMIT FEES.
(a) IN GENERAL. -Each State with an
appraiser certifying
and licensing agency whose certifications and licenses comply with this title, shall-
(1) transmit to the Appraisal Subcommittee, no less than annually, a roster
listing
individuals who have received a State certification or license in accordance with this
title; and
(2) collect from such individuals who perform or seek to perform
appraisals in
federally related transactions, an annual registry fee of not more than $25, such fees to
be transmitted by the State agencies to the Council on an annual basis. Subject to the
approval of the Council, the Appraisal Subcommittee may adjust the dollar amount of
registry fees, up to a maximum of $50 per annum, as necessary to carry out its
functions under this title.
(5) USE OF AMOUNTS APPROPRIATED OR COLLECTED. -Amounts appropriated for or collected by the
Appraisal Subcommittee under this section shall be used-
(1) to maintain a registry of individuals who are qualified and eligible to perform
appraisals it connection with federally related transactions;
(2) to support its activities under this title;
(3) to reimburse the general fund of the Treasury for amounts appropriated
to and expended
by the Appraisal Subcommittee during the 24-month startup period following the date of the
enactment of this title; and
(4) 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 Qualification Boards.
SEC 1110. FUNCTIONS OF THE
FEDERAL FINANCIAL
INSTITUTIONS REGULATORY AGENCIES RELATING TO APPRAISAL STANDARDS.
Each Federal financial institutions regulatory agency and the
Resolution Trust
Corporation shall prescribe appropriate standards for the performance of real estate
appraisals in connection with federally related transactions under the jurisdiction of
each such agency or instrumentality. These rules shall require, at a mint-mum-
1) that real estate appraisals be performed in accordance with generally
accepted appraisal
standards as evidenced by the appraisal standards promulgated by the Appraisal Standards
Board of the Appraisal Foundation; and
(2) that such appraisals shall be written appraisals. Each such agency or instrumentality
may require compliance with additional standards if it makes a determination in writing
that such additional standards are required in order to properly carry out its statutory
responsibilities.
SEC. 1111. TIME FOR PROPOSAL AND ADOPTION OF
STANDARDS.
Appraisal standards established under this title shall be
proposed not later
than 6 months and shall be adopted in final form and become effective not later than 12
months after the date of the enactment of this Act.
SEC. 1112. FUNCTIONS OF THE
FEDERAL FINANCIAL
INSTITUTIONS REGULATORY AGENCIES RELATING TO APPRAISER QUALIFICATIONS
Each Federal financial institutions regulatory agency and the
Resolution Trust
Corporation shall prescribe, in accordance with sections1113 and 1114 of this title, which
categories of federally related transactions should be appraised by a State certified
appraiser and which by a State licensed appraiser under this title.
SEC 1113. TRANSACTIONS REQUIRING
THE SERVICES
OF A STATE CERTIFIED APPRAISER.
In determining whether an appraisal in
connection with a
federally related transaction shall be performed by a State certified appraiser, an agency
or instrumentality under this title shall consider whether transactions, either
individually or collectively, are of sufficient financial or public policy importance to
the United States that an individual who performs an appraisal in connection with such
transactions should be a State certified appraiser, except that
(1) a State certified appraiser shall be required for all federally related
transactions
having a value of $1,000,000 or more; and
(2) 1-to-4 unit, single family residential appraisals may be performed by State licensed
appraisers unless the size and complexity requires a State certified appraiser.
SEC 1114. TRANSACTIONS REQUIRING
THE SERVICES
OF A STATE LICENSED APPRAISER.
All federally related transactions not
requiring the
services of a State certified appraiser shall be performed by either a State certified or
licensed appraiser
SEC 1115. TIME FOR PROPOSAL AND
ADOPTION OF
RULES.
As appropriate, rules issued under sections1113 and 1114
shall be proposed not later than 6 months and shall be effective upon adoption in final
form not later than 12 months after the date of the enactment of this Act
SEC. 1116. CERTIFICATION AND
LICENSING
REQUIREMENTS.
(a) IN GENERAL.-For purposes of this title,
the term "State
certified real estate appraiser" means any individual who has satisfied the
requirements or State certification in a State or territory whose criteria for
certification as a real estate appraiser currently meets the minimum criteria for
certification issued by the Appraiser Qualification Board of the Appraisal Foundation.
(b) RESTRICTION. -No individual shall be a Slate certified real estate
appraiser under this
section unless such individual has achieved a passing grade upon a suitable examination
administered by a State or territory that is consistent with and equivalent to the Uniform
State Certification Examination issued or endorsed by the Appraiser Qualification Board
of the Appraisal Foundation.
(c) DEFINITION.-As used in this section, the term "State licensed
appraiser"
means an individual who has satisfied the requirements for State licensing in a State or
territory.
(d) ADDITIONAL QUALIFICATION CRITERIA. -Nothing in this title shall be
construed to prevent
any Federal agency or instrumentality under this title from establishing such additional
qualification criteria as may be necessary or appropriate to carry out the statutory
responsibilities of such department, agency, or instrumentality.
SEC. 1117. ESTABLISHMENT OF
STATE APPRAISER
CERTIFYING AND LICENSING AGENCIES.
To assure the availability of State
certified and licensed
appraisers for the performance in a State of appraisals in federally related transactions
and to assure effective supervision of the activities of certified and licensed appraisers,
a State may establish a State appraiser certifying and licensing agency.
SEC. 1118. MONITORING OF STATE
APPRAISER
CERTIFYING AND LICENSING AGENCIES.
(a) IN GENERAL-The Appraisal Subcommittee
shall monitor
State appraiser certifying and licensing agencies for the purpose of determining whether a
State agency's policies, practices, and procedures are consistent with this title. The
Appraisal Subcommittee and all agencies, instrumentalities, and federally recognized
entities under this title shall not recognize appraiser certifications and licenses
from States whose appraisal policies, practices, or procedures are found to
be inconsistent
with this title.
(b) DISAPPROVAL BY APPRAISAL SUBCOMMITTEE. -The Federal financial
institutions, regulatory
agencies, the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation, and the Resolution Trust Corporation shall accept certifications and licenses
awarded by a State appraiser certifying the licensing agency unless the Appraisal
Subcommittee issues a written finding that-
(1) the State agency fails to recognize and enforce the standards,
requirements, and
procedures prescribed pursuant to this title;
(2) the State agency is not granted authority by the State which is adequate
to permit the
agency to carry out its functions under this title; or
(3) decisions concerning appraisal standards, appraiser qualifications and supervision of
appraiser practices are not made in a manner that carries out the purposes of this title.
(c) REJECTION OF STATE CERTIFICATIONS AND LICENSES.-
(1) OPPORTUNITY TO BE HEARD OR CORRECT CONDITIONS.-Before refusing to
recognize a State's
appraiser certifications or licenses, the Appraisal Subcommittee shall provide that State's
certifying and licensing agency a written notice of its intention not to recognize the
State's certified or licensed appraisers and ample opportunity to provide rebuttal
information or to correct the conditions causing the refusal.
(2) ADOPTION OF PROCEDURES.-The Appraisal Subcommittee shall adopt written
procedures for
taking actions described in this section.
(3) JUDICIAL REVIEW.-A decision of the subcommittee under this section shall be subject to
judicial review.
SEC. 1119. RECOGNITION OF STATE
CERTIFIED AND
LICENSED APPRAISERS FOR PURPOSES OF THIS TITLE
(a) EFFECTIVE DATE FOR USE OF CERTIFIED OR
LICENSED APPRAISERS ONLY.-
(1) IN GENERAL-Not later than July 1, 1991, all appraisals performed in
connection with
federally related transactions shall be performed only by individuals certified or licensed
in accordance with the requirements of this title.
(2) EXTENSlON OF EFFECTiVE DATE. -Subject to the approval of the council,
the Appraisal
Subcommittee may extend, until December 31, 1991, the effective date for the use of
certified or licensed appraisers if it makes a written finding that a State has made
substantial progress in establishing a State certification and licensing system that
appears to conform to the provisions of this title.
(b) TEMPORARY WAIVER OF APPRAISER CERTIFICATION or
LICENSING REQUIREMENTS FOR STATE HAVING SCARCITY OF QUALIFIED APPRAISERS. -Subject to the
approval of the Council, the Appraisal Subcommittee may waive any requirement relating to
certification or licensing of a person to perform appraisals under this title if the
Appraisal Subcommittee or a State agency whose certifications and licenses are in
compliance with this title, makes a written determination that there is a scarcity of
certified or licensed appraisers to perform appraisals in connection with
federally related
transactions in a State leading to inordinate delays in the performance of such appraisals.
The waiver terminates when the Appraisal Subcommittee determines that such inordinate
delays have been eliminated.
(c) REPORTS TO STATE CERTIFYING AND LICENSING AGENCIES.-The Appraisal Subcommittee,
any
other Federal agency or instrumentality, or any federally recognized entity shall report
any action of a State certified or licensed appraiser that is contrary to the purposes of
this title, to the appropriate State agency for a disposition of the subject of the
referral. The State agency halt provide the Appraisal Subcommittee or the other Federal
agency or instrumentality with a report on its disposition of the matter referred. Subsequent
to such disposition, the subcommittee or the agency or instrumentality may take such further action, pursuant to written procedures, it
deems necessary to carry out the purposes of this title.
SEC 1120 VIOLATIONS IN OBTAINING AND
PERFORMING
APPRAISALS IN FEDERALLY RELATED TRANSACTIONS.
(a) VIOLATIONS. -Except as authorized by the Appraisal
Subcommittee in exercising its waiver authority pursuant to section 1119(b), it shall be a
violation of this section-
( l ) for a financial institution to seek, obtain, or give money or another thing of
value in exchange for the performance of an appraisal by a person who the institution knows
is not a State certified or licensed appraiser in connection with a federally related
transaction; and
(2) for the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation, or the Resolution Trust Corporation to knowingly contract for the performance
of any appraisal by a person who is not a State certified or licensed appraiser in
connection with a real estate related financial transaction defined in section 1121(5) to
which such association or corporation is a party.
(b) PENALTIES. -A financial institution that violates subsection (a)(1)shall be subject to
civil penalties under section 8(i)(2) of the Federal Deposit Insurance Act or section
206(k)(2) of the Federal Credit Union Act, as appropriate.
(c) PROCEEDING. -A proceeding with respect to a violation of this section shall
be an
administrative proceeding which may be conducted by a Federal financial institutions
regulatory agency in accordance with the procedures set forth in subchapter II of chapter 5
of title 5, United States Code.
SEC. 1121. DEFINITIONS. For
purposes of this title:
(1) STATE APPRAISER CERTIFYING AND LICENSING AGENCY.-The term "State appraiser
certifying and licensing agency" means a State agency established in compliance
with this title.
(2) APPRAISAL SUBCOMMITTEE; SUBCOMMITTEE,-The terms "Appraisal Subcommittee" and
"subcommittee" mean the Appraisal Subcommittee of the Federal Financial
Institutions Examination Council.
(3) COUNCIL. -The term "Council" means the Federal Financial Institutions
Examinations Council
(4) FEDERALLY RELATED TRANSACTION.-The term "federally related transaction" means
any real estate-related financial transaction which-
(A) a federal financial institutions regulatory agency or the Resolution Trust
Corporation
engages in, contracts for or regulates; and
(B) requires the services of an appraiser.
(5) REAL ESTATE RELATED FINANCIAL TRANSACTION.-The term "real estate-related financial
transaction" means any transaction involving-
(A) the sale, lease, purchase, investment in or exchange of real property, including
interests in property, or the financing thereof ;
(B) the refinancing of real property or interests in real property; and
(C) the use of real property or interests in property as security for a loan
or investment,
including mortgage-backed securities.
(6) FEDERAL FINANCIAL INSTITUTIONS REGULATORY AGENCIES.-The term "Federal financial
institutions regulatory agencies" means the Board of Governors of the Federal Reserve
System, the Federal Deposit insurance Corporations, the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, and the National Credit Union Administration,
(7) FINANCIAL INSTITUTION.-The term: "'financial institution" means an insured
depository institution as defined in section 3 of the Federal Deposit Insurance Act or an
insured credit union as defined inspection 101 of the Federal Credit Union Act.
(8) CHAIRPERSON,-The term "Chairperson" means the Chairperson of the Appraisal
Subcommittee selected by the council
(9) FOUNDATION,-The term "Appraisal Foundation" and "Foundation" means
the Appraisal Foundation established on November 30, 1987, as a not for profit corporation
under the laws of Illinois.
(10) WRITTEN APPRAISAL.-The term "written appraisal" means written
statement
used in connection with a federally related transaction that is independently and
impartially prepared by a licensed or certified appraiser setting forth an opinion of
defined value of an adequately described property as of a specific date, supported by
presentation and analysis of relevant market information.
SEC. 1122, MISCELLANEOUS PROVISIONS
(a) TEMPORARY PRACTICE. A State appraiser certifying or licensing agency
shall
recognize on a temporary basis the certification or license of an appraiser issued by
another State if-
(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 appraiser certifying or licensing agency
in the State
of temporary practice.
(b) SUPPLEMENTAL FUNDING. -Funds available to the Federal financial institutions regulatory
agencies may be made available to the Federal Financial Institutions Examination
Council to
support the council's functions under this title.
(c) PROHIBITION AGAINST DISCRIMINATION. -Criteria established by the Federal financial
institutions regulatory agencies, the Federal National MortageAssociation, the Federal
Home Loan Mortgage Corporation, and the Resolution Trust Corporation for appraiser
qualifications in addition to State certification or licensing shall not exclude a
certified or licensed appraiser for consideration for an assignment solely by virtue of
membership or lack of membership in any particular appraisal organization.
(d) OTHER REQUIREMENTS.-A corporation, partnership, or other business entity may
provide
appraisal services in connection with federally related transaction if such appraisal is
prepared by individuals certified or licensed in accordance with the requirements
of this
title. An individual who is not a State certified or licensed appraiser may assist in the
preparation of an appraisal if-
(1) the assistant is under the direct supervision of a licensed or certified individual;
and
(2) the final appraisal document is approved and signed by an individual who
is certified
or licensed.
(e) STUDIES. -
(1) STUDY. -The Appraisal Subcommittee shall-
(A) conduct a study to determine whether real estate sales and financing information
and
data that is available to real estate appraisers in the States is sufficient to permit
appraisers to properly estimate the values of properties in connection with federally
related transactions; and
(B) study the feasibility and desirability of extending the provisions of this title to the
function of personal property appraising and to personal property appraisers in connection
with Federal financial and public policy interests.
(2) REPORT-The Appraisal Subcommittee shall-
(A) report its findings to the Congress with respect to the study described in
paragraph
(1)(A) no later than 12 months after the date of the enactment of this title, and
(B) report its findings with respect to the study described in paragraph(1)(B) to Congress
not later than 18 months after the date of the enactment of this title.