Compliance Blog

Last week, NCUA joined an Interagency Advisory on the Availability of Appraisers. While the Advisory does not provide any additional guidance, it does seek to alert credit unions to existing potential solutions to problems with appraiser availability.

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) requires NCUA to establish appraisal standards for all federally related transactions. Part 722 of NCUA's regulations provides these standards. Generally, the rules require the appraisal to be performed by a state-certified or state-licensed appraiser. Whether the appraiser needs to be certified or licensed depends on the type of transaction involved. The Interagency Appraisal and Evaluation Guidelines provide an overview of the applicable rules and guidance on developing an appraisal program, choosing an appraiser, and obtaining and reviewing appraisals.

As part of the Economic Growth and Regulatory Paperwork Reduction Act review, commenters raised concerns with the timeliness of obtaining an appraisal. The commenters attributed the issue to problems with the availability of state-certified and state-licensed appraisers. This seemed to be of particular concern in rural areas. The recent Advisory explains a credit union's options in the event a certified or licensed appraiser is not available. In certain situations, the FIRREA permits credit unions to use appraisers who have obtained a temporary practice permit or a temporary waiver instead of a state certificate or license. The Advisory explains both the permit and the waiver.

Temporary Practice Permits

Temporary practice permits can allow an appraiser who is certified or licensed in State A to practice in State B without having to become certified or licensed in State B. Under 12 U.S.C. § 3351, each state appraiser certifying or licensing agency must temporarily recognize the certificate or license of another state in certain circumstances. The rule states that an agency in State B must temporarily recognize the certificate or license of State A if the property involved is part of a federally related transaction, the appraiser's activity in State B is temporary, and the appraiser registers with State B's certifying or licensing agency. Generally, appraisers are able to apply for a temporary practice permit through State B's agency. Each state's agency will determine the requirements for obtaining a temporary practice permit and any fees associated with doing so, but the rule prohibits the agency from imposing "excessive fees or burdensome requirements."

The rule also requires each state certifying or licensing agency to have a reciprocity policy in place. Under this policy, State B's agency will issue a certificate or license to an appraiser from State A if the licensing and certification program of State A complies with the rules of the FFIEC Appraisal Subcommittee, State A's certifying or licensing requirements meet or exceed the requirements of State B, and the appraiser holds a valid certification from State A.

Temporary Waivers

Under 12 U.S.C. 3348(b), the Appraisal Subcommittee (ASC) may waive any certification or licensing requirement if a written determination is made that appraisals are being significantly delayed because of a shortage of state certified or licensed appraisers. The Advisory explains that a temporary waiver request can be made by a state appraiser certifying or licensing agency, a regulated credit union, or any other persons with a demonstrable interest in appraiser regulation. The FFIEC's regulations govern the process for requesting and obtaining a temporary waiver.

Section 1102.2 provides the following requirements for a temporary waiver request:

• The written determination described under 12 U.S.C. 3348(b) or a request that the ASC provide such a determination;
• The requirements of state law the ASC should waive;
• A description of all significant problems currently being encountered;
• Documentation of the nature of the scarcity of certified or licensed appraisers and the extent of the delays anticipated or experienced;
• The reasons why the requester believes that the requirements are causing the scarcity and delays; and
• If the requester is a state agency, a specific plan for expeditiously alleviating the scarcity and delays.

The request can be to waive the requirements across the entire state or for a geographical political subdivision. The ASC will review the request and make a determination within forty-five days. The FFIEC must approve any determination to grant the waiver. If the waiver is granted, it will apply to all federally related transactions within the state or subdivision. The waiver will be effective only for the period specified by the ASC, however, the regulations permit the ASC to extend the period if needed. The ASC may also terminate the waiver before the end of the period if the delays cease to exist or the terms and conditions of the waiver are not being met.

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