# FDIC FIL-19-2015: Minimum Requirements for Appraisal Management Companies

> Federal · Agency guidance · Superseded

URL: https://www.frixlaw.com/law-library/statutes/FDIC_FIL15019

## Section

- **Citation:** FDIC FIL-19-2015
- **Heading:** Minimum Requirements for Appraisal Management Companies
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** Superseded
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** FDIC Financial Institution Letters / Minimum Requirements for Appraisal Management Companies

## Text

Vol. 80
Tuesday,
No. 110
June 9, 2015
Part II
Department of the Treasury
Office of the Comptroller of the Currency
12 CFR Part 34
Federal Reserve System
12 CFR Parts 208 and 225
Federal Deposit Insurance Corporation
12 CFR Parts 323 and 390
Bureau of Consumer Financial Protection
12 CFR Part 1026
Federal Housing Finance Agency
12 CFR Part 1222
Minimum Requirements for Appraisal Management Companies; Final Rule
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Federal Register / Vol. 80, No. 110 / Tuesday, June 9, 2015 / Rules and Regulations
1 Public Law 111–203, 124 Stat. 1376.
2 Public Law 101–73, 103 Stat. 183.
3 The term ‘‘appraisal management company’’ is
defined in more detail in section 1121(11) of Title
XI of FIRREA, 12 U.S.C. 3350(11), and in § 34.211(c)
of this final rule.
4 12 U.S.C. 3346.
5 Hereafter, section references are to Title XI of
FIRREA, unless otherwise noted.
6 12 U.S.C. 3332(a)(6).
7 12 U.S.C. 3353(e). See also FIRREA section
1109(a)(3), 12 U.S.C. 3338(a)(3) (requiring States to
submit reports to the ASC concerning supervisory
activities involving AMCs). This final rule does not
implement section 1109(a)(3); this section of
FIRREA is implemented by the ASC.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 34
[Docket No. OCC–2014–0002]
RIN 1557–AD64
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Docket No
(requiring States to
submit reports to the ASC concerning supervisory
activities involving AMCs). This final rule does not
implement section 1109(a)(3); this section of
FIRREA is implemented by the ASC.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 34
[Docket No. OCC–2014–0002]
RIN 1557–AD64
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Docket No. R–1486]
RIN 7100–AE15
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Parts 323 and 390
RIN 3064–AE10
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
RIN 3170–AA44
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1222
RIN 2590–AA61
Minimum Requirements for Appraisal
Management Companies
AGENCIES: Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); National
Credit Union Administration (NCUA);
Bureau of Consumer Financial
Protection (Bureau); and Federal
Housing Finance Agency (FHFA).
ACTION: Final rule.
SUMMARY: The OCC, Board, FDIC,
NCUA, Bureau, and FHFA (collectively,
the Agencies) are adopting a final rule
to implement the minimum
requirements in the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (the Dodd-Frank Act) to be applied
by participating States in the
registration and supervision of appraisal
management companies (AMCs). The
final rule also implements the minimum
requirements in the Dodd-Frank Act for
AMCs that are subsidiaries owned and
controlled by an insured depository
institution and regulated by a Federal
financial institutions regulatory agency
(Federally regulated AMCs). Under the
final rule, these Federally regulated
AMCs do not need to register with a
State, but are subject to the same
minimum requirements as State-
regulated AMCs
imum
requirements in the Dodd-Frank Act for
AMCs that are subsidiaries owned and
controlled by an insured depository
institution and regulated by a Federal
financial institutions regulatory agency
(Federally regulated AMCs). Under the
final rule, these Federally regulated
AMCs do not need to register with a
State, but are subject to the same
minimum requirements as State-
regulated AMCs. The final rule also
implements the requirement for States
to report to the Appraisal Subcommittee
(ASC) of the Federal Financial
Institutions Examination Council
(FFIEC) the information required by the
ASC to administer the new national
registry of AMCs (AMC National
Registry). In conjunction with this
implementation, the FDIC is integrating
its appraisal regulations for State
nonmember banks and State savings
associations.
DATES: Effective date. This final rule
will become effective on August 10,
2015.
Compliance date: Federally regulated
AMCs must comply with the minimum
requirements for providing appraisal
management services under 12 CFR
34.215(a) no later than 12 months from
the effective date of this final rule. The
participating State or States in which a
State-regulated AMC operates will
establish the compliance deadline for
State-regulated AMCs.
FOR FURTHER INFORMATION CONTACT:
OCC: Robert L. Parson, Appraisal
Policy Specialist, (202) 649–6423, G.
Kevin Lawton, Appraiser (Real Estate
Specialist), (202) 649–7152, Mitchell E.
Plave, Special Counsel, Legislative and
Regulatory Activities Division, (202)
649–5490, for persons who are deaf or
hard of hearing, TTY, (202) 649–5597,
or Christopher Manthey, Special
Counsel, Bank Activities and Structure
Division, (202) 649–5500.
Board: Carmen Holly, Supervisory
Financial Analyst, Division of Banking
Supervision and Regulation, at (202)
973–6122, or Walter McEwen, Senior
Counsel, Legal Division, at (202) 452–
3321, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
FDIC: Beverlea S
202) 649–5597,
or Christopher Manthey, Special
Counsel, Bank Activities and Structure
Division, (202) 649–5500.
Board: Carmen Holly, Supervisory
Financial Analyst, Division of Banking
Supervision and Regulation, at (202)
973–6122, or Walter McEwen, Senior
Counsel, Legal Division, at (202) 452–
3321, Board of Governors of the Federal
Reserve System, Washington, DC 20551.
FDIC: Beverlea S. Gardner, Senior
Examination Specialist, Division of Risk
Management and Supervision, at (202)
898–3640, Sandra S. Barker, Senior
Policy Analyst, Division of Depository
and Consumer Protection, at (202) 898–
3915, Mark Mellon, Counsel, Legal
Division, at (202) 898–3884, or
Benjamin K. Gibbs, Senior Regional
Attorney, at (678) 916–2458, Federal
Deposit Insurance Corporation, 550 17th
Street NW., Washington, DC 20429.
NCUA: John Brolin or Pamela Yu,
Staff Attorneys, Office of General
Counsel, at (703) 518–6540, or Vincent
Vieten, Program Officer, Office of
Examination and Insurance, at (703)
518–6360, or 1775 Duke Street,
Alexandria, Virginia, 22314.
Bureau: Owen Bonheimer, Counsel,
Office of Regulations, and David Friend,
Counsel, Office of Regulations, 1700 G
Street NW., Washington, DC 20552, at
(202) 435–7000.
FHFA: Robert Witt, Senior Policy
Analyst, Office of Housing and
Regulatory Policy, (202) 649–3128, or
Ming-Yuen Meyer-Fong, Assistant
General Counsel, Office of General
Counsel, (202) 649–3078, Federal
Housing Finance Agency, 400 Seventh
Street SW., Washington, DC 20024.
SUPPLEMENTARY INFORMATION:
I. Background
AMC Minimum Requirements
Section 1473 of the Dodd-Frank Act 1
added a new section 1124 to Title XI of
the Financial Institutions Reform,
Recovery, and Enforcement Act of
1989 2 (FIRREA) that established
minimum requirements to be applied by
States in the registration and
supervision of AMCs
e Agency, 400 Seventh
Street SW., Washington, DC 20024.
SUPPLEMENTARY INFORMATION:
I. Background
AMC Minimum Requirements
Section 1473 of the Dodd-Frank Act 1
added a new section 1124 to Title XI of
the Financial Institutions Reform,
Recovery, and Enforcement Act of
1989 2 (FIRREA) that established
minimum requirements to be applied by
States in the registration and
supervision of AMCs. An AMC is an
entity that serves as an intermediary for,
and provides certain services to,
creditors.3 These minimum
requirements apply to States that have
elected to establish, pursuant to section
1117 of FIRREA,4 an appraiser certifying
and licensing agency with authority to
register and supervise AMCs
(participating States). Section 1473 of
the Dodd-Frank Act 5 also requires the
ASC to maintain an AMC National
Registry, which will include AMCs that
are either registered with, and subject to
supervision by, a State appraiser
certifying and licensing agency or are
subsidiaries owned and controlled by a
Federally regulated insured depository
institution and regulated by a Federal
financial institutions regulatory
agency.6 Section 1124(e) further
requires the Agencies to promulgate
regulations for the reporting of the
activities of AMCs to the ASC in
determining the payment of the annual
fee for the AMC National Registry.7
Pursuant to FIRREA section 1124, the
Agencies must establish, by rule,
minimum requirements to be imposed
by a participating State appraiser
certifying and licensing agency on
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g the payment of the annual
fee for the AMC National Registry.7
Pursuant to FIRREA section 1124, the
Agencies must establish, by rule,
minimum requirements to be imposed
by a participating State appraiser
certifying and licensing agency on
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8 12 U.S.C. 3353(a).
9 Under FIRREA, a Federally related transaction
is a real estate related financial transaction that
involves an insured depository institution regulated
by the OCC, Board, FDIC, or NCUA and that
requires the services of an appraiser under the
interagency appraisal rules. See 12 U.S.C. 3350(4),
implemented by the OCC: 12 CFR 34.42(f) and
34.43(a); Board: 12 CFR 225.62(f) and 225.63(a);
FDIC: 12 CFR 323.2(f) and 323.3(a); and NCUA: 12
CFR 722.2(f) and 722.3(a).
10 12 U.S.C. 3353(a). For regulations
implementing TILA section 129E, 15 U.S.C. 1639e,
see 12 CFR 226.42 (Board) and 12 CFR 1026.42
(Bureau).
11 12 U.S.C. 3353(c).
12 12 U.S.C. 3353(b).
13 12 U.S.C. 3353(f)(1).
14 12 U.S.C. 3353(f)(2).
15 12 U.S.C. 3353.
16 See FIRREA section 1124(f)(1), 12 U.S.C.
3353(f)(1). Under section 1124(c), this restriction
will not apply to AMCs that are subsidiaries owned
and controlled by an insured depository institution
and regulated by a Federal financial institutions
regulatory agency. 12 U.S.C. 3353(c). Such AMCs
are subject to all the requirements of section 1124,
with the exception of the requirement to register
with a State. See id.
17 See FIRREA section 1121(11), 12 U.S.C.
3350(11).
18 79 FR 19521 (Apr. 9, 2014).
19 12 U.S.C. 3353(e). See also 12 U.S.C. 3338(a)(4)
(setting out the fee structure for the AMC National
Registry).
20 See OCC: 12 CFR 34.45(b)(1); Board: 12 CFR
225.65(b)(1); FDIC: 12 CFR 323.5(b)(1); and NCUA:
12 CFR 722.5(b)(1)
124,
with the exception of the requirement to register
with a State. See id.
17 See FIRREA section 1121(11), 12 U.S.C.
3350(11).
18 79 FR 19521 (Apr. 9, 2014).
19 12 U.S.C. 3353(e). See also 12 U.S.C. 3338(a)(4)
(setting out the fee structure for the AMC National
Registry).
20 See OCC: 12 CFR 34.45(b)(1); Board: 12 CFR
225.65(b)(1); FDIC: 12 CFR 323.5(b)(1); and NCUA:
12 CFR 722.5(b)(1).
21 The OTS was abolished on October 19, 2011,
pursuant to the Dodd-Frank Act.
22 Title III of the Dodd-Frank Act transferred
supervision of Federal savings associations to the
OCC. The OCC recently integrated the OTS and
OCC rules on appraisals. See 79 FR 28393 (May 16,
2014) (integrating certain interagency rules for
national banks and Federal savings associations).
23 See 12 U.S.C. 3353(a), (c), and (e).
AMCs doing business in the State.8
Specifically, pursuant to section
1124(a), participating States must
require that AMCs: (1) Register with,
and be subject to supervision by, the
State appraiser certifying and licensing
agency in the State or States in which
the company operates; (2) verify that
only State-certified or State-licensed
appraisers are used for Federally related
transactions; 9 (3) require that appraisals
comply with the Uniform Standards of
Professional Appraisal Practice
(USPAP); and (4) require that appraisals
are conducted in accordance with the
statutory valuation independence
standards pursuant to the Truth in
Lending Act (TILA) (15 U.S.C
ates; (2) verify that
only State-certified or State-licensed
appraisers are used for Federally related
transactions; 9 (3) require that appraisals
comply with the Uniform Standards of
Professional Appraisal Practice
(USPAP); and (4) require that appraisals
are conducted in accordance with the
statutory valuation independence
standards pursuant to the Truth in
Lending Act (TILA) (15 U.S.C. 1639e)
and its implementing regulations.10 An
AMC that is a subsidiary owned and
controlled by an insured depository
institution and regulated by a Federal
financial institutions regulatory agency
is subject to all of the minimum
requirements, except the requirement to
register with a State.11
In participating States, the minimum
requirements apply to any AMC that
provides appraisal management
services, as defined in the final rule, and
meets the statutory panel size threshold,
which is that the AMC oversees an
appraiser panel of more than 15 State-
certified or State-licensed appraisers in
a State or 25 or more appraisers in two
or more States in a calendar year or 12-
month period under State law. States
may establish requirements for AMC
registration and supervision that are in
addition to these minimum
requirements.12
Pursuant to section 1124(f), beginning
36 months from the effective date of this
final rule, an AMC that meets the
statutory size threshold may not provide
services for a Federally related
transaction in a State unless the AMC is
registered with the State or is subject to
oversight by a Federal financial
institutions regulatory agency.13 This
provision effectively allows each State
up to three years to establish registration
and supervision systems that meet the
requirements of the final rule before
AMCs in the State will be subject to the
aforementioned restriction in the
absence of such a regime
less the AMC is
registered with the State or is subject to
oversight by a Federal financial
institutions regulatory agency.13 This
provision effectively allows each State
up to three years to establish registration
and supervision systems that meet the
requirements of the final rule before
AMCs in the State will be subject to the
aforementioned restriction in the
absence of such a regime. The ASC,
with the approval of the FFIEC, may
delay the restriction for an additional
year if the ASC makes a written finding
that a State has made substantial
progress toward implementation of a
system that meets the criteria in Title XI
of FIRREA.14 Even after the three-year
implementation period has passed, a
State may still elect to establish a
regime, at which point AMCs operating
in the State would be able to provide
appraisal management services for
Federally related transactions.
Section 1124 does not compel a State
to establish an AMC registration and
supervision program, nor is a penalty
imposed on a State that does not
establish a regulatory structure for
AMCs within 36 months of issuance of
this final rule.15 However, in a State that
has not adopted the AMC minimum
requirements established by this rule,
AMCs are barred by section 1124 from
providing appraisal management
services for Federally related
transactions, unless they are owned and
controlled by a Federally regulated
depository institution.16 Thus, appraisal
management services may still be
provided for Federally related
transactions in non-participating States
by individual appraisers, by AMCs that
are below the minimum statutory panel
size threshold, and as noted previously,
by Federally regulated AMCs.17
On April 9, 2014, the Agencies
published a proposed rule to implement
the minimum requirements under
FIRREA section 1124 for registration
and supervision of AMCs, with a 60-day
public comment period.18 With certain
changes to the proposed rule, this final
rule implements the statutory
requirements discus
utory panel
size threshold, and as noted previously,
by Federally regulated AMCs.17
On April 9, 2014, the Agencies
published a proposed rule to implement
the minimum requirements under
FIRREA section 1124 for registration
and supervision of AMCs, with a 60-day
public comment period.18 With certain
changes to the proposed rule, this final
rule implements the statutory
requirements discussed above, as well
as section 1124’s requirements for the
reporting of the activities of AMCs in
determining the payment of the annual
registry fee.19 The final rule is being
published in the Code of Federal
Regulations separately by the OCC, the
Board, the FDIC, and the FHFA. The
Bureau is publishing a cross-reference to
the OCC rule text in the valuation
independence provisions of Regulation
Z, 12 CFR 1026.42, to highlight that the
final rule specifically reinforces the
valuation independence standards. The
rules are not different substantively. The
implementation of the AMC minimum
requirements does not affect the
responsibility of banks, Federal savings
associations, State savings associations,
bank holding companies, and credit
unions to ensure that appraisals for their
institutions comply with applicable
laws and regulations and are consistent
with supervisory guidance. If these
regulated financial institutions use an
AMC to engage appraisers on their
behalf, the AMC must be acting as an
agent for these institutions.20
Consolidation of FDIC and OTS Rules
on Appraisals
Title III of the Dodd-Frank Act
transferred the powers, duties, and
functions formerly performed by the
Office of Thrift Supervision (OTS), the
Federal entity formerly responsible for
the supervision of Federally insured
savings associations and their holding
companies, to the FDIC for State savings
associations and authorized the FDIC to
consolidate OTS and FDIC rules.21 The
final rule implements this authority by
rescinding the OTS regulatory
provisions on appraisals pertaining to
State savings associations
ervision (OTS), the
Federal entity formerly responsible for
the supervision of Federally insured
savings associations and their holding
companies, to the FDIC for State savings
associations and authorized the FDIC to
consolidate OTS and FDIC rules.21 The
final rule implements this authority by
rescinding the OTS regulatory
provisions on appraisals pertaining to
State savings associations, as these
entities are now covered by the FDIC’s
appraisal rules.22
II. The Final Rule
The final rule: (1) Establishes the
minimum requirements in section 1124
of FIRREA for State registration and
supervision of AMCs in participating
States; (2) requires Federally regulated
AMCs to meet the minimum
requirements of section 1124 (other than
registering with the State); and (3)
requires States to report certain AMC
information to the ASC.23 The final rule
also integrates FDIC appraisal
regulations for State nonmember banks
and State savings associations.
For the reasons discussed in section
III of this SUPPLEMENTARY INFORMATION,
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24 See proposed §§ 34.211(m) and 34.211(j)(2).
25 These changes also should avoid any
inadvertent confusion created by referring to
Regulation Z, which includes additional
exemptions that are not included in these
regulations, such as for transactions meeting the
Regulation Z definition of consumer credit
transaction secured by a principal dwelling, but
used to purchase a 3–4 unit owner-occupied rental
property.
26 See 12 U.S.C. 3350(11).
27 See id.
28 12 U.S.C. 3350(11)
inadvertent confusion created by referring to
Regulation Z, which includes additional
exemptions that are not included in these
regulations, such as for transactions meeting the
Regulation Z definition of consumer credit
transaction secured by a principal dwelling, but
used to purchase a 3–4 unit owner-occupied rental
property.
26 See 12 U.S.C. 3350(11).
27 See id.
28 12 U.S.C. 3350(11).
the final rule adopts the rule
substantially as proposed, with
modifications to: (1) Provide that the
standard for determining whether an
appraiser is an independent contractor
will be based on how the appraiser is
treated for Federal income taxes, as
determined under Internal Revenue
Service (IRS) guidance; (2) clarify that
an AMC credit union service
organization (CUSO) is not considered
to be a Federally regulated AMC, and
therefore would be regulated by the
State or States in which the AMC CUSO
operates; (3) clarify that the rule does
not bar the use of trainee appraisers; (4)
provide that the registration limitations
on individuals who have had their
licenses refused, denied, cancelled,
surrendered in lieu of revocation, or
revoked, should not be construed to
apply to appraisers whose licenses have
been revoked for nonsubstantive
reasons, as determined by the
appropriate State appraiser certifying
and licensing agency and whose
licenses have been subsequently
reinstated; (5) revise the provision on
reporting of information by Federally
regulated AMCs to clarify that Federally
regulated AMCs will report information
required for the AMC National Registry
directly to the States; and (6) remove
cross-references to provisions of
Regulation Z, 12 CFR part 1026 (Truth
in Lending), in the proposed definitions.
The Agencies are generally adopting the
relevant text of the cross-referenced
Regulation Z provisions, in lieu of the
cross-references. The final rule also
contains technical, nonsubstantive
changes.
III
ed for the AMC National Registry
directly to the States; and (6) remove
cross-references to provisions of
Regulation Z, 12 CFR part 1026 (Truth
in Lending), in the proposed definitions.
The Agencies are generally adopting the
relevant text of the cross-referenced
Regulation Z provisions, in lieu of the
cross-references. The final rule also
contains technical, nonsubstantive
changes.
III. The Final Rule and Public
Comments on the Proposed Rule
The following is a section-by-section
review of the proposed rule and a
discussion of the public comments
received by the Agencies concerning the
proposal. The Agencies received 256
comment letters containing 89 unique
comments in response to the published
proposal. These comment letters were
received from State appraiser certifying
and licensing agencies, AMCs, appraiser
trade and professional associations,
appraisal firms, appraisers, financial
institutions, consumer/community
groups and individual commenters. For
ease of reference, unless otherwise
noted, the SUPPLEMENTARY INFORMATION
refers to section numbers in the
proposed and final rule texts for the
OCC, 12 CFR 34.210 et seq. Rule text for
the other Agencies is published
separately in this Federal Register
notice at 12 CFR 208.50 and 225.190 et
seq. (Board); 12 CFR 323.8 et seq.
(FDIC); and 12 CFR 1222.20 et seq.
(FHFA).
A. Section 34.211. Definitions
The Agencies requested comment on
the key definitions in the proposed rule.
The following is a discussion of these
key definitions, related public
comments, and issues relating to those
definitions. Definitions on which the
Agencies did not receive comment are
not discussed below and are adopted
without change in the final rule.
1. Cross-References to Other Regulations
The Agencies are adopting changes to
definitions for which cross-references to
Regulation Z, 12 CFR part 1026, were
used in the proposed rule
nitions, related public
comments, and issues relating to those
definitions. Definitions on which the
Agencies did not receive comment are
not discussed below and are adopted
without change in the final rule.
1. Cross-References to Other Regulations
The Agencies are adopting changes to
definitions for which cross-references to
Regulation Z, 12 CFR part 1026, were
used in the proposed rule. Specifically,
the Agencies are removing most cross-
references and adopting the relevant
text of the cross-referenced provisions
directly (see § 34.211(g) (defining
‘‘consumer credit’’), § 34.211(i) (defining
‘‘creditor’’), and § 34.211(m) (defining
‘‘person’’). In addition, the Agencies are
defining the term ‘‘dwelling’’ in
§ 34.211(j) by adopting the text of the
definition of ‘‘dwelling’’ in 12 CFR
1026.2(a)(19), which was included in
the proposed definition of ‘‘principal
dwelling’’ (see proposed § 34.211(m)). In
new § 34.211(j)(2), the Agencies are
retaining the explanation of ‘‘principal
dwelling’’ that was provided in the
proposed rule.24 (See proposed
§ 34.211(m)). This explanation is based
on Official Interpretation 12 CFR
1026.2(a)(24)–3. The Agencies are
adopting these changes in the final rule
to simplify the rule and relieve
regulatory burden on States.
Substituting the text of these definitions
for cross-references mitigates the
potential obligations of States to update,
clarify, or amend State law or its
interpretations as Regulation Z is
amended over time, or if the numbering
of definitions in Regulation Z changes.25
2. Section 34.211(c): Appraisal
Management Company; Section
34.211(d): Appraisal Management
Services
Proposed § 34.211(c) defined an AMC
as a person that: (1) Provides appraisal
management services to creditors or
secondary mortgage market participants;
d State law or its
interpretations as Regulation Z is
amended over time, or if the numbering
of definitions in Regulation Z changes.25
2. Section 34.211(c): Appraisal
Management Company; Section
34.211(d): Appraisal Management
Services
Proposed § 34.211(c) defined an AMC
as a person that: (1) Provides appraisal
management services to creditors or
secondary mortgage market participants;
(2) provides these services in
connection with valuing the consumer’s
principal dwelling as security for a
consumer credit transaction (including
consumer credit transactions
incorporated into securitizations); and
(3) within a given year, oversees an
appraiser panel of more than 15 State-
certified or State-licensed appraisers in
a State or 25 or more State-certified or
State-licensed appraisers in two or more
States. The proposed definition cross-
referenced proposed § 34.212 for the
rules on how to calculate the numeric
threshold for the appraiser panel.
Proposed § 34.211(d) defined
‘‘appraisal management services,’’
which is a key component of the
definition of ‘‘appraisal management
company,’’ to mean one or more of the
following: (1) Recruiting, selecting, and
retaining appraisers; (2) contracting
with State-certified or State-licensed
appraisers to perform appraisal
assignments; (3) managing the process
of having an appraisal performed,
including providing administrative
duties such as receiving appraisal orders
and appraisal reports, submitting
completed appraisal reports to creditors
and secondary mortgage market
participants, collecting fees from
creditors and secondary mortgage
market participants for services
provided, and paying appraisers for
services performed; and (4) reviewing
and verifying the work of appraisers
luding providing administrative
duties such as receiving appraisal orders
and appraisal reports, submitting
completed appraisal reports to creditors
and secondary mortgage market
participants, collecting fees from
creditors and secondary mortgage
market participants for services
provided, and paying appraisers for
services performed; and (4) reviewing
and verifying the work of appraisers.
This definition is consistent with the
appraisal management services outlined
in the definition of AMC in section
1121.26 As in section 1121, the proposed
definition of appraisal management
services did not include performing
appraisals, nor does the definition of
appraisal management services adopted
in this final rule.27
a. Commercial Transactions and the
Definition of AMC
Consistent with the statutory
definition of AMC, the proposed
definition of AMC applied to appraisal
management services provided in
connection with residential mortgage
transactions secured by the consumer’s
principal dwelling and securitizations
involving those mortgages. The
proposed rule did not extend to
appraisal management services
provided in connection with
commercial real estate transactions or
securitizations involving commercial
real estate mortgages.28
In drafting the definition of AMC for
the proposal, the Agencies considered
whether the statutory definition of AMC
in section 1121 should be construed to
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estate transactions or
securitizations involving commercial
real estate mortgages.28
In drafting the definition of AMC for
the proposal, the Agencies considered
whether the statutory definition of AMC
in section 1121 should be construed to
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29 While it is clear that the definition of AMC
encompasses only residential mortgage loans, there
is some question as to whether the definition
includes securitizations of commercial mortgages.
30 12 U.S.C. 3353.
31 12 U.S.C. 3350(11).
32 12 U.S.C. 3353(c).
33 12 U.S.C. 3353.
34 12 U.S.C. 3350(11). This rule establishes
‘‘minimum’’ requirements for a State to apply in
registering AMCs. Thus, the Agencies interpret the
rule of construction in FIRREA section 1124(b) to
recognize that States may adopt requirements that
exceed those in the rule, for example, defining AMC
to cover more entities than would be covered under
the minimum requirements of this rule. 15 U.S.C.
3353(b).
35 12 U.S.C. 3350(11).
36 12 U.S.C. 3353(b).
encompass not only appraisal
management services provided for
securitizations of consumer purpose
residential mortgages, but also appraisal
services in connection with
securitizations of commercial
mortgages.29 The Agencies proposed the
former. The Agencies’ reading of the
statute—that it extends only to
consumer purpose residential mortgage
transactions and securitizations of those
mortgages—is consistent with the text of
section 1124 and with the Dodd-Frank
Act as a whole.30 Non-residential or
commercial mortgages are not
mentioned in any AMC provisions in
section 1473 of the Dodd Frank Act (or
elsewhere in Title XIV of the Dodd-
Frank Act)
ading of the
statute—that it extends only to
consumer purpose residential mortgage
transactions and securitizations of those
mortgages—is consistent with the text of
section 1124 and with the Dodd-Frank
Act as a whole.30 Non-residential or
commercial mortgages are not
mentioned in any AMC provisions in
section 1473 of the Dodd Frank Act (or
elsewhere in Title XIV of the Dodd-
Frank Act). The lack of a reference to
commercial mortgage lending in the
relevant Dodd-Frank Act provisions
suggests that AMCs were not intended
to be covered by the AMC minimum
requirements when they are providing
appraisal management services for
underwriters or other principals in
commercial mortgage securitizations.
Moreover, the Agencies understand that
individual appraisers, as opposed to
AMCs, are more typically retained to
provide an appraisal of properties
securing commercial mortgage loans
(and securitizations of such loans)
because of the size and complexity of
those properties. This understanding is
based on the supervisory experience of
the Agencies as well as outreach during
the proposed rule process to a trade
association for AMCs and an individual
AMC, which confirmed that, under the
current business model, AMCs do not
generally provide services in connection
with commercial mortgages.
The Agencies received a small
number of comments concerning
whether an AMC’s services for
commercial mortgage transactions
should be covered by the final rule.
Several commenters supported the
proposal to exclude commercial real
estate transactions from the definition of
AMC. One commenter disagreed, stating
that both commercial and consumer
transactions should be covered by the
rule, but did not elaborate.
The Agencies continue to believe that
commercial real estate transactions
should be excluded from the definition
of AMC based on the reasons outlined
above
s supported the
proposal to exclude commercial real
estate transactions from the definition of
AMC. One commenter disagreed, stating
that both commercial and consumer
transactions should be covered by the
rule, but did not elaborate.
The Agencies continue to believe that
commercial real estate transactions
should be excluded from the definition
of AMC based on the reasons outlined
above. As such, the definition of AMC
in the final rule includes entities only
when they are providing appraisal
management services for consumer
mortgage transactions secured by the
consumer’s principal dwelling and
securitizations of those loans.
b. ‘‘External Third Party’’ Within the
Definition of AMC
Section 1121 defines an AMC as any
‘‘external third party’’ authorized to take
certain actions by a creditor of a
consumer credit transaction secured by
the consumer’s principal dwelling or by
an underwriter of or other principal in
the secondary mortgage markets.31
Consistent with the statutory definition,
the proposal defined the term ‘‘appraisal
management company’’ to exclude a
department or division of an entity if
the department or division provides
appraisal management services only to
that entity. This reflects the Agencies’
interpretation that a department or a
division of an entity is not an ‘‘external
third party’’ as required by the statute.
Under the proposed rule, an AMC that
is an affiliate (rather than a department
or division) of a creditor or secondary
market principal would, however, be
treated as an AMC, even if the AMC
provides appraisal management services
only to the entity with which it is
affiliated, because the affiliate is a
separate legal entity
y is not an ‘‘external
third party’’ as required by the statute.
Under the proposed rule, an AMC that
is an affiliate (rather than a department
or division) of a creditor or secondary
market principal would, however, be
treated as an AMC, even if the AMC
provides appraisal management services
only to the entity with which it is
affiliated, because the affiliate is a
separate legal entity.
The Agencies believe that this
interpretation of the term ‘‘external
third party’’ is consistent with the plain
meaning of ‘‘external’’ and ‘‘third
party,’’ as well as with section 1124(c),
which provides that the requirements of
section 1124 would apply to AMCs that
are owned and controlled by financial
institutions.32 In the Agencies’ view,
this interpretation is also consistent
with section 1124 as a whole, which is
directed at regulating parties that
provide appraisal management services
on behalf of creditors and secondary
market principals, but does not regulate
creditors or secondary market principals
directly.33
The Agencies received one comment
on this topic, which supported the
exclusion of departments and divisions
from the definition of AMC. The
Agencies are adopting in the final rule
the proposed approach to ‘‘external
third party.’’
c. Uniformity and the Definition of AMC
The Agencies received a number of
comments suggesting that the Agencies
require all participating States to adopt
the definition of AMC in the proposed
rule. Several commenters also stated
that reducing burden for AMCs would
reduce costs for consumers. As a legal
basis for this position, one commenter
noted that the definition of AMC is
statutory, and therefore should be
binding on all the participating States
number of
comments suggesting that the Agencies
require all participating States to adopt
the definition of AMC in the proposed
rule. Several commenters also stated
that reducing burden for AMCs would
reduce costs for consumers. As a legal
basis for this position, one commenter
noted that the definition of AMC is
statutory, and therefore should be
binding on all the participating States.
The Agencies agree that the definition
of AMC in section 1121 sets the uniform
minimum standards for assessing
whether an entity is an AMC under this
rule.34 Under the proposed rule, a
participating State would be required to
treat an entity as an AMC if the entity
provides services described in the
definition and meets the statutory panel
size threshold. As such, pursuant to
section 1121 and the proposed rule, a
participating State could not revise the
definition of AMC to eliminate or limit
the range of services that would classify
an entity as an AMC with respect to the
minimum requirements in the rule.
Similarly, a State could not void the
statutory panel size threshold that
triggers the minimum requirements by,
for example, adopting an AMC law that
provides that an entity is an AMC only
if it has 50 or more appraisers on its
nationwide panel.35 Thus, all States
electing to establish an AMC regulatory
program under the rule would have a
uniform minimum scope as to coverage
of their program.
While the Agencies understand the
commenters’ desire for uniformity,
FIRREA section 1124(b) recognizes
expressly the authority of States to
adopt requirements in addition to those
in the final rule: ‘‘Nothing in this
section [1124] shall be construed to
prevent States from establishing
requirements in addition to any rules
promulgated under subsection(a)[by the
Agencies].’’ 36 Therefore, the Agencies
decline to require all participating
States to adopt a uniform definition of
AMC.
d
zes
expressly the authority of States to
adopt requirements in addition to those
in the final rule: ‘‘Nothing in this
section [1124] shall be construed to
prevent States from establishing
requirements in addition to any rules
promulgated under subsection(a)[by the
Agencies].’’ 36 Therefore, the Agencies
decline to require all participating
States to adopt a uniform definition of
AMC.
d. ‘‘Portals’’ Within the Definition of
AMC
The Agencies received one comment
from an entity that provides appraisal
related services through electronic
mechanisms, described as a ‘‘portal’’
business model. The commenter
requested that the Agencies address the
question of whether a portal is an AMC.
The Agencies do not support a
categorical rule in this regard. The
business model an entity uses to
provide services should not be
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37 12 U.S.C. 3353 and 3350(11).
38 12 U.S.C. 3353.
39 See TILA section 129F, 15 U.S.C. 1639e.
40 15 U.S.C. 1639e(i)(2) (emphasis added); see
also 12 U.S.C. 3353. A ‘‘fee appraiser’’ is defined
in TILA section 129E, 15 U.S.C. 1639(e)(i), as a
person who: (1) Is not an employee of a loan
originator or AMC engaging the appraiser; (2)
performs an appraisal in compliance with USPAP;
and (3) is a company [an appraisal firm] not subject
to the requirements of section 1124 (minimum
requirements for AMCs, 12 U.S.C. 3353) and that
receives a fee for performing appraisals.
41 Id.
42 12 U.S.C. 3350(11).
43 12 U.S.C. 3350(11).
determinative of whether the entity is
an AMC; rather, if a portal is providing
appraisal management services, and
meets the other elements of the
definition, then it should be considered
an AMC under the final rule
ments of section 1124 (minimum
requirements for AMCs, 12 U.S.C. 3353) and that
receives a fee for performing appraisals.
41 Id.
42 12 U.S.C. 3350(11).
43 12 U.S.C. 3350(11).
determinative of whether the entity is
an AMC; rather, if a portal is providing
appraisal management services, and
meets the other elements of the
definition, then it should be considered
an AMC under the final rule. Thus, the
final rule does not limit or affect the
discretion of States to treat a portal as
an AMC if a State finds that a portal
provides appraisal management
services.
e. Distinction Between AMCs and
Appraisal Firms
In the proposal, the Agencies
addressed whether appraisal firms
should be considered AMCs pursuant to
sections 1124 and 1121(11) 37 and
requested comment on whether the
distinction between employees and
independent contractors served as a
basis for excluding appraisal firms from
the definition of an AMC. (See Question
3 in the proposal.) The technical
distinction between independent
contractors and employees, for purposes
of determining whether an entity meets
the statutory panel size thresholds, is
addressed in the section-by-section
analysis of § 34.212 (Appraiser Panel),
which discusses how to calculate the
number of appraisers on a panel. The
following is a discussion of the
comments on the broader issue of
whether the proposal appropriately
excluded appraisal firms from the scope
of the rule.
A number of commenters supported
the proposal to construe section 1124 as
applying only to AMCs or hybrid
entities (discussed in detail below) and
not to appraisal firms. These
commenters stated that the business
models of AMCs and appraisal firms are
different. Under the different business
models, according to these commenters,
employees of appraisal firms perform
appraisals, while AMCs contract for
appraisal services, but do not perform
appraisals. Another set of commenters
argued that appraisal firms should be
covered by the rule
ot to appraisal firms. These
commenters stated that the business
models of AMCs and appraisal firms are
different. Under the different business
models, according to these commenters,
employees of appraisal firms perform
appraisals, while AMCs contract for
appraisal services, but do not perform
appraisals. Another set of commenters
argued that appraisal firms should be
covered by the rule. The basis for this
argument was the commenters’ assertion
that there is no substantive distinction
between AMCs, which hire others to
perform appraisals, and appraisal firms,
which generally hire appraisers as
employees.
As discussed in the preamble to the
proposed rule, the Agencies interpret
section 1124 to distinguish between
AMCs and appraisal firms for three key
reasons.38 First, the distinction between
appraisal firms and AMCs is reflected in
section 1472 of the Dodd-Frank Act,
which added provisions concerning
valuation independence to TILA.39
These provisions contemplate expressly
that certain entities would not be
covered by the AMC minimum
requirements in FIRREA section 1124
and describe this type of entity, in
pertinent part, as one that ‘‘utilizes the
services of State licensed or certified
appraisers and receives a fee for
performing appraisals in accordance
with the Uniform Standards of
Professional Appraisal Practice.’’ 40 The
Agencies understand that the type of
entity described here as excluded from
the AMC minimum requirements is an
appraisal firm, which receives fees for
directly performing appraisals
as one that ‘‘utilizes the
services of State licensed or certified
appraisers and receives a fee for
performing appraisals in accordance
with the Uniform Standards of
Professional Appraisal Practice.’’ 40 The
Agencies understand that the type of
entity described here as excluded from
the AMC minimum requirements is an
appraisal firm, which receives fees for
directly performing appraisals. Second,
FIRREA section 1124 uses the term
‘‘appraisal management company,’’ and
not appraisal firm.41 Third, section
1121(11) describes the activities of
AMCs as including ‘‘contracting with
State-certified or State-licensed
appraisers to perform appraisal
assignments,’’ but not directly
performing appraisals.42 Section
1121(11) also defines an AMC as an
entity that ‘‘oversees a network or panel
of more than 15 certified or licensed
appraisers in a State or 25 or more
nationally (meaning two or more States)
within a given year . . .’’ 43 By contrast,
the Agencies understand that appraisal
firms perform appraisals as a primary
function directly through employees
and do not oversee a ‘‘network or panel’’
of non-employee appraisers.
As stated in the proposal, the
Agencies believe that the fundamental
reasons to distinguish between AMCs
and appraisal firms are that the business
models of AMCs and appraisal firms are
different and that Congress expressed an
intention to exclude entities operating
on an appraisal firm model from
coverage by the AMC minimum
requirements. This conclusion is
consistent with the fact that AMCs
provide appraisal management services
to third parties, including retaining
appraisers to perform appraisals, but
AMCs do not perform appraisals. By
contrast, appraisal firms perform
appraisals using one or more of the
firm’s employees or partners. In
addition, appraisal firms typically hire a
limited number of appraisers, based on
identified need, and hire inexperienced
trainees and train them to become
qualified appraisers
to third parties, including retaining
appraisers to perform appraisals, but
AMCs do not perform appraisals. By
contrast, appraisal firms perform
appraisals using one or more of the
firm’s employees or partners. In
addition, appraisal firms typically hire a
limited number of appraisers, based on
identified need, and hire inexperienced
trainees and train them to become
qualified appraisers. AMCs, on the other
hand, generally have a large number of
pre-approved appraisers in their
network or panel who are available, as
independent contractors, for potential
assignments and do not conduct
training for inexperienced appraisers.
f. Hybrid Entities
In the proposal, the Agencies
discussed the possibility that there are,
or may be in the future, ‘‘hybrid’’
entities, meaning entities that both hire
appraisers as employees to perform
appraisals and engage independent
contractors to perform appraisals. In this
situation, the entity could be considered
both an AMC and an appraisal firm. As
such, under the proposed rule, the
hybrid entity would be treated as an
AMC for purposes of State registration
if it meets the statutory panel size
threshold (of overseeing more than 15
State-certified or State-licensed
appraisers in a State or 25 or more State-
certified or State-licensed appraisers in
two or more States within a given year).
Under the proposal, the numerical
calculation of panel size for hybrid
entities would only include appraisers
engaged as independent contractors.
Some commenters supported the
proposed treatment of firms that have
both employee appraisers and
independent contractor appraisers. One
commenter suggested that the Agencies
should not recognize a hybrid firm as a
valid business model, but did not
elaborate. The Agencies adopt in the
final rule the proposed definition of
AMC and the proposed treatment of
hybrid firms
endent contractors.
Some commenters supported the
proposed treatment of firms that have
both employee appraisers and
independent contractor appraisers. One
commenter suggested that the Agencies
should not recognize a hybrid firm as a
valid business model, but did not
elaborate. The Agencies adopt in the
final rule the proposed definition of
AMC and the proposed treatment of
hybrid firms. The Agencies continue to
believe that sections 1124 and 1121(11)
are best interpreted to apply only to
AMCs, as defined in the proposed and
final rules, and not to appraisal firms
(with the exception of hybrid firms). In
addition to the statutory distinction
between appraisal firms and AMCs, the
Agencies believe this interpretation is
consistent with, and supported by, the
key distinction between AMCs and
appraisal firms—that the former
contracts with appraisers to perform
appraisals, while the latter performs
appraisals directly through employees.
Even if some services provided by
AMCs and appraisal firms overlap,
which some commenters assert, this key
difference between the two entities (that
AMCs contract with appraisers to
perform appraisals and appraisal firms
perform appraisals directly through
their own employees) remains. The final
rule also reflects the definition of
‘‘appraisal management company’’ in
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two entities (that
AMCs contract with appraisers to
perform appraisals and appraisal firms
perform appraisals directly through
their own employees) remains. The final
rule also reflects the definition of
‘‘appraisal management company’’ in
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44 12 U.S.C. 3350(11).
45 12 U.S.C. 3350(11).
46 A majority of States with AMC laws define
‘‘appraiser panel’’ as being comprised of
independent contractors. See, e.g., N.C. Gen. Stat.
section 93E–2–2 (defining an appraiser panel as a
network or panel of appraisers who are
independent contractors to the AMC); Vernon’s
Tex. Code Ann. Occupations Code section
1104.003(b)(3) (same); Louisiana La. Rev. Stat. Ann.
section 37:3415.2(a) (same); see also Ohio (draft
code) (same). A minority of States use a broader
definition for ‘‘appraiser panel’’ that encompasses
a combination of independent contractors and
employees. See, e.g., Cal. Bus. & Prof. Code section
11302 (defining AMC to include both independent
contractors and employees); Ark. Code Ann. section
17–14–402(2) (same); Ky. Rev. Stat. section
324A.150(2)(same). The majority approach is
consistent with the model AMC code offered by a
trade association for appraisers and the minority
approach is consistent with a model code offered
by a trade association for AMCs.
47 As discussed in the proposal, this
understanding is based on outreach conducted by
the Agencies with associations that represent AMCs
and appraisers, as well as outreach with State
appraiser certifying and licensing agencies.
48 12 U.S.C. 3350(11).
49 The Agencies will monitor AMCs to assess
whether they are hiring appraisers as part-time
employees to avoid State registration requirements
As discussed in the proposal, this
understanding is based on outreach conducted by
the Agencies with associations that represent AMCs
and appraisers, as well as outreach with State
appraiser certifying and licensing agencies.
48 12 U.S.C. 3350(11).
49 The Agencies will monitor AMCs to assess
whether they are hiring appraisers as part-time
employees to avoid State registration requirements.
Outreach with State officials before the issuance of
the proposed rule did not indicate this is currently
occurring or at significant risk of occurring.
50 12 U.S.C. 3353.
section 1121(11), which provides that
an AMC is an entity that ‘‘oversees a
network or panel’’ of appraisers.44
Appraisal firms do not oversee networks
or panels of non-employee appraisers.
The Agencies also continue to believe
that recognition of hybrid firms as
AMCs is appropriate when the entity
maintains a panel of appraisers that
includes independent contractors
meeting the threshold minimum
numbers pursuant to § 34.212. The
Agencies believe that this interpretation
of the definition of AMC is consistent
with the statutory language and
purpose, appropriately reflects the
business models of AMCs, and
accommodates the possibility that
appraisal firms may evolve over time.
For these reasons, the Agencies adopt in
the final rule the proposed definition of
AMC and the proposed treatment of
hybrid firms.
3. Section 34.211(e) Appraiser Panel
The Agencies are adopting the
proposed definition of ‘‘appraiser
panel’’ with minor clarifications.
Specifically, proposed § 34.211(e)
defined an appraiser network or panel
as a network of State-licensed or State-
certified appraisers who are
independent contractors to an AMC. In
the final rule, ‘‘appraiser panel’’ is
defined as a network, list or roster of
licensed or certified appraisers
approved by the AMC to perform
appraisals as independent contractors
for the AMC
clarifications.
Specifically, proposed § 34.211(e)
defined an appraiser network or panel
as a network of State-licensed or State-
certified appraisers who are
independent contractors to an AMC. In
the final rule, ‘‘appraiser panel’’ is
defined as a network, list or roster of
licensed or certified appraisers
approved by the AMC to perform
appraisals as independent contractors
for the AMC. Appraisers on an AMC’s
‘‘appraiser panel’’ under this part
include both appraisers accepted by the
AMC for consideration for future
appraisal assignments and appraisers
engaged by the AMC to perform one or
more appraisals. The final rule also
clarifies in the definition of ‘‘appraiser
panel’’ that an appraiser is an
independent contractor for purposes of
this rule if the appraiser is treated as an
independent contractor by the AMC for
purposes of Federal income taxation.
a. Distinction Between Employees and
Independent Contractors in Determining
Panel Membership
The definition of ‘‘appraisal
management company’’ in section
1121(11) provides that an entity will be
treated as an AMC subject to State
registration if it has an ‘‘appraiser
network or panel’’ of more than 15
State-certified or State-licensed
appraisers in a State or 25 or more
appraisers nationally (meaning two or
more States) within a given year.45
Section 1121(11) does not specify
whether a ‘‘network or panel’’ consists
of employees of an AMC or independent
contractors retained by the AMC (or
both)
C subject to State
registration if it has an ‘‘appraiser
network or panel’’ of more than 15
State-certified or State-licensed
appraisers in a State or 25 or more
appraisers nationally (meaning two or
more States) within a given year.45
Section 1121(11) does not specify
whether a ‘‘network or panel’’ consists
of employees of an AMC or independent
contractors retained by the AMC (or
both). However, by including only
independent contractors with the AMC,
the proposed and adopted definition of
‘‘appraiser panel’’ reflects the approach
taken by the majority of States that have
adopted AMC registration laws or have
proposed AMC laws 46 and reflects the
Agencies’ understanding that AMCs
typically engage appraisers as
independent contractors under the
current AMC business model.47 Section
34.211(e) also reflects the definition of
AMC in section 1121(11), which
outlines typical tasks carried out by
AMCs, including as ‘‘contract[ing] with
licensed and certified appraisers.’’ 48 As
discussed above in the section-by-
section analysis of § 34.211(c), the
definition of AMC and its description of
appraisal management services does not
include directly performing appraisals
through the AMC’s own employees—
rather, AMCs contract with external
third parties to perform appraisals.49
The method for calculating whether
an entity has an ‘‘appraiser network or
panel’’ of more than 15 State-certified or
State-licensed appraisers in a State or 25
or more appraisers nationally (meaning
two or more States) within a calendar
year or 12-month period under State law
is discussed further under the section-
by-section analysis of § 34.212, below.
The Agencies requested comment on
the proposed definition of ‘‘appraiser
panel’’ and on the alternative of
defining this term to include employees
as well as independent contractors
State or 25
or more appraisers nationally (meaning
two or more States) within a calendar
year or 12-month period under State law
is discussed further under the section-
by-section analysis of § 34.212, below.
The Agencies requested comment on
the proposed definition of ‘‘appraiser
panel’’ and on the alternative of
defining this term to include employees
as well as independent contractors. (See
Question 2 in the proposal.) Some
commenters argued that employees as
well as independent contractor
appraisers should be counted as part of
an appraiser network or panel. These
commenters did not disagree with the
Agencies’ understanding that AMCs
generally use independent contractors
rather than employee appraisers. Nor
did the commenters address the key
distinction between AMCs and
appraisal firms, which is that AMCs
primarily engage third parties to
perform appraisals, whereas appraisal
firms perform appraisals directly
through employees.
As discussed above in the section-by-
section analysis of § 34.211(c), the
commenters argued that appraisal firms
should be regulated as AMCs as a matter
of policy. As such, these commenters
suggested that the distinction between
employee and independent contractor
appraisers be removed from the rule. In
support of this position, the commenters
stated that appraisal firms and AMCs
provide substantially the same services,
and therefore should both be covered by
the AMC registration and supervision
programs.
Other commenters agreed with the
employee-independent contractor
distinction, stating that defining
‘‘appraiser panel’’ to be comprised only
of independent contractor appraisers
reflects the difference between the AMC
and appraisal firm business models.
Specifically, these commenters stated
that appraisal firms’ employees perform
appraisals directly, while AMCs provide
appraisal management services and
engage third-party appraisers to perform
appraisals
stinction, stating that defining
‘‘appraiser panel’’ to be comprised only
of independent contractor appraisers
reflects the difference between the AMC
and appraisal firm business models.
Specifically, these commenters stated
that appraisal firms’ employees perform
appraisals directly, while AMCs provide
appraisal management services and
engage third-party appraisers to perform
appraisals.
The Agencies adopt in the final rule
the proposed definition of ‘‘appraiser
panel,’’ which includes only appraisers
who are independent contractors to an
AMC. The Agencies note the
predominance of comments in favor of
retaining the employee-independent
contractor distinction. The final rule
also reflects that the commenters who
opposed the proposed employee-
independent contractor distinction
effectively conceded that the distinction
is accurate, arguing instead that AMCs
and appraisal firms should both be
regulated as AMCs under section 1124
and implementing State laws, regardless
of the way these entities structure their
operations.50 This larger policy question
is addressed above in the discussion of
the distinction between employees and
independent contractors as a basis for
exclusion of an appraisal firm from the
definition of an AMC. See the section-
by-section analysis of § 34.211(c)
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is addressed above in the discussion of
the distinction between employees and
independent contractors as a basis for
exclusion of an appraisal firm from the
definition of an AMC. See the section-
by-section analysis of § 34.211(c)
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51 12 CFR 1008.23 (‘‘Independent contractor
means an individual who performs his or her duties
other than at the direction of and subject to the
supervision and instruction of an individual . . .’’)
(emphasis added). The SAFE Act was enacted as
part of the Housing and Economic Recovery Act of
2008, Pub. L. 110–289, Division A, Title V, sections
1501–1517, 122 Stat. 2654, 2810–2824 (July 30,
2008), codified at 12 U.S.C. 5101–5116.
52 For guidance on how to determine whether an
appraiser is an employee or independent contractor,
see IRS Publication 1779, ‘‘Independent Contractor
or Employee,’’ available at http://www.irs.gov/pub/
irs-pdf/p1779.pdf and IRS Publication 15–A,
‘‘Employer’s Supplemental Tax Guide,’’ at p. 7 et
seq. (discussing factors for distinguishing
employees from independent contractors), available
at http://www.irs.gov/pub/irs-pdf/p15a.pdf.
53 12 U.S.C. 3350(11).
54 See 12 U.S.C. 3353(a)(2) (3) and (4).
55 12 U.S.C. 3353(a)(4).
56 See 15 U.S.C. 1639e(a) (defining scope); 12 CFR
1026.42(b)(1)–(2) (implementing regulations
defining scope).
57 The term ‘‘Federal financial institutions
regulatory agencies’’ means the Board, the FDIC, the
OCC, the former OTS, and the NCUA. 12 U.S.C.
3350(6). Title III of the Dodd-Frank Act provides
that the OCC is now the Federal financial
institutions regulatory agency for Federal savings
associations. Title III of the Dodd-Frank Act also
provides that the FDIC is the Federal financial
institutions regulatory agency for State savings
associations
y agencies’’ means the Board, the FDIC, the
OCC, the former OTS, and the NCUA. 12 U.S.C.
3350(6). Title III of the Dodd-Frank Act provides
that the OCC is now the Federal financial
institutions regulatory agency for Federal savings
associations. Title III of the Dodd-Frank Act also
provides that the FDIC is the Federal financial
institutions regulatory agency for State savings
associations. Finally, the Dodd-Frank Act provides
that the Board is responsible for regulation of
savings and loan holding companies.
58 12 U.S.C. 3353(c).
(definition of AMC), above. Moreover,
the treatment of hybrid firms will help
address the potential that a firm may try
to avoid the requirements of the rule by
using a combination of appraisers who
are employees and appraisers who are
independent contractors.
b. Definition of Independent Contractor
The Agencies requested comment on
whether the term ‘‘independent
contractor’’ should be defined, and if so
why and how, including whether it
should be defined based on Federal law
by using the standards or guidance
issued by the IRS or standards adopted
in other Federal regulations, such as
those issued under the Secure and Fair
Enforcement for Mortgage Licensing Act
of 2008 (SAFE Act),51 or left to State
law. (See Question 2 in the proposal.) A
number of commenters requested that
the final rule include a definition of
independent contractor, or that the rule
incorporate an external definition, for
example, IRS guidance on the
employee-independent contractor
distinction or the definition of
independent contractor in the SAFE
Act. In addition, these commenters
stated that it would be desirable to have
a standard for independent contractor
that applies in all participating States.
The commenters stated a preference for
using IRS guidance for this purpose.
One commenter disagreed, suggesting
that a single definition of the term
independent contractor is not needed
efinition of
independent contractor in the SAFE
Act. In addition, these commenters
stated that it would be desirable to have
a standard for independent contractor
that applies in all participating States.
The commenters stated a preference for
using IRS guidance for this purpose.
One commenter disagreed, suggesting
that a single definition of the term
independent contractor is not needed.
The Agencies believe that additional
guidance on the meaning of
‘‘independent contractor’’ under the
final rule facilitates compliance and,
therefore, are amending the proposed
definition of appraiser panel
accordingly. As noted, the definition of
appraiser panel in § 34.211(e) provides
that that an appraiser is deemed an
‘‘independent contractor’’ for purposes
of this rule if the appraiser is treated as
such by the AMC for purposes of
Federal income taxation.52
4. Section 34.211(h): Covered
Transaction
Proposed § 34.211(h) defined a
covered transaction as any consumer
credit transaction secured by the
consumer’s principal dwelling. The
proposed definition did not limit the
definition of ‘‘covered transaction’’ to
Federally related transactions
(generally, credit transactions involving
a Federally regulated depository
institution, see 12 U.S.C. 3350(4)), even
though Title XI of FIRREA and its
implementing regulations have applied
historically only to appraisals for
Federally related transactions
principal dwelling. The
proposed definition did not limit the
definition of ‘‘covered transaction’’ to
Federally related transactions
(generally, credit transactions involving
a Federally regulated depository
institution, see 12 U.S.C. 3350(4)), even
though Title XI of FIRREA and its
implementing regulations have applied
historically only to appraisals for
Federally related transactions.
As stated in the proposed rule,
defining ‘‘covered transaction’’ to
include all consumer credit transactions
secured by the consumer’s principal
dwelling reflects the statutory text of
section 1121(11), which defines the
term ‘‘appraisal management company,’’
as in pertinent part, ‘‘any external third
party authorized either by a creditor of
a consumer credit transaction secured
by the consumer’s principal dwelling or
by an underwriter of or other principal
in the secondary mortgage markets.’’ 53
Applying coverage of the AMC rule
beyond Federally related transactions is
consistent with the structure and text of
other parts of section 1124, most of
which address appraisals generally
rather than appraisals only for Federally
related transactions. For example,
section 1124(a)(2) specifies that only
licensed or certified appraisers are to be
used for ‘‘federally related
transactions,’’ but sections 1124(a)(3)
and (a)(4) apply to ‘‘appraisals’’
generally.54 In particular, the text of
section 1124(a)(4) indicates that one of
the chief purposes of the minimum
requirements for AMCs is to ensure
compliance with the valuation
independence standards established
pursuant to section 129E of TILA.55
Those standards apply to AMCs
whenever they engage in a consumer
credit transaction secured by the
consumer’s principal dwelling,
regardless of whether the transaction is
a Federally related transaction.56
For these reasons, the proposed rule
provided that the minimum
requirements in participating States
would apply to all entities that meet the
definition of AMC in providing
appraisal manageme
andards apply to AMCs
whenever they engage in a consumer
credit transaction secured by the
consumer’s principal dwelling,
regardless of whether the transaction is
a Federally related transaction.56
For these reasons, the proposed rule
provided that the minimum
requirements in participating States
would apply to all entities that meet the
definition of AMC in providing
appraisal management services related
to consumer credit transactions secured
by the consumer’s principal dwelling
for both Federally related transactions
and non-Federally related transactions.
The Agencies received one comment
that supported the proposed definition
of ‘‘covered transaction.’’ The Agencies
are adopting it in the final rule as
proposed. As such, a covered
transaction is defined to mean any
consumer credit transaction secured by
the consumer’s principal dwelling. For
the reasons discussed above in
describing the proposed definition, the
Agencies have determined the final rule
should not limit the definition of
‘‘covered transaction’’ to consumer
credit transactions secured by the
consumer’s principal dwelling that are
Federally related transactions.
5. Section 34.211(k): Federally
Regulated AMCs
Section § 34.211(k) defines a
‘‘Federally regulated AMC’’ as an AMC
that is owned and controlled by an
insured depository institution, as
defined in 12 U.S.C. 1813, or an insured
credit union, as defined in 12 U.S.C.
1752, and regulated by the OCC, the
Board, the NCUA, or the FDIC. This
definition differs from the proposed
definition only in that the reference to
the NCUA is removed, for reasons
discussed below
es a
‘‘Federally regulated AMC’’ as an AMC
that is owned and controlled by an
insured depository institution, as
defined in 12 U.S.C. 1813, or an insured
credit union, as defined in 12 U.S.C.
1752, and regulated by the OCC, the
Board, the NCUA, or the FDIC. This
definition differs from the proposed
definition only in that the reference to
the NCUA is removed, for reasons
discussed below.
Under section 1124(c), an AMC that is
a subsidiary owned and controlled by
an insured depository institution or an
insured credit union and regulated by a
Federal financial institutions regulatory
agency 57 is not required to register with
a State.58 Proposed § 34.211(j) defined
an entity of this type as a ‘‘Federally
regulated AMC,’’ meaning an AMC that
is owned and controlled by an insured
depository institution, as defined in 12
U.S.C. 1813, or an insured credit union,
as defined in 12 U.S.C. 1752, and
regulated by the OCC, the Board, the
NCUA, or the FDIC. Under section
1124(c), a Federally regulated AMC
must follow the minimum requirements
that are applicable to a State-registered
AMC (other than the requirement to
register with a State) and is subject to
supervision for compliance with these
requirements by the appropriate Federal
financial institutions regulatory agency.
In addition, under section 1124(e), as
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AMC (other than the requirement to
register with a State) and is subject to
supervision for compliance with these
requirements by the appropriate Federal
financial institutions regulatory agency.
In addition, under section 1124(e), as
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59 See 12 CFR part 712 (outlining requirements
relating to credit union investments in CUSOs).
60 As noted in the preamble to the proposed rule,
the NCUA has not, historically, asserted that CUSOs
or their employees are exempt from applicable State
registration and licensing regimes. See 75 FR 44656,
44659 (applying similar reasoning to the licensing
of mortgage loan originators who were employees
of CUSOs under the SAFE Act.
61 12 U.S.C. 3350(11).
62 12 U.S.C. 3350(11).
implemented by the proposed rule,
AMCs, including Federally regulated
AMCs, must report to the participating
State or States in which they operate the
information required to be submitted by
the State to the ASC for administration
of the AMC National Registry. These
requirements are discussed further in
the section-by-section analysis of
§ 34.215, below.
In the proposal, the Agencies
discussed whether an AMC that is a
subsidiary owned and controlled by a
credit union (credit union service
organization or ‘‘CUSO’’) would be
considered a Federally regulated AMC,
and thus exempt from State registration
and supervision. The Agencies
indicated that an AMC, even if owned
and controlled by a credit union, would
not be a Federally regulated AMC
because the NCUA, unlike the other
banking agencies involved in this
rulemaking, does not directly oversee or
regulate CUSOs
ion service
organization or ‘‘CUSO’’) would be
considered a Federally regulated AMC,
and thus exempt from State registration
and supervision. The Agencies
indicated that an AMC, even if owned
and controlled by a credit union, would
not be a Federally regulated AMC
because the NCUA, unlike the other
banking agencies involved in this
rulemaking, does not directly oversee or
regulate CUSOs. Instead, the authority
that the NCUA exercises over CUSOs is
through its regulations that permit
Federal credit unions to invest in, or
lend to, CUSOs.59 For these reasons,
under the proposed rule, if an AMC
were owned and controlled by a credit
union (whether owned by a State or
Federally chartered credit union) it
would not be considered to be regulated
by a Federal financial institutions
regulatory agency. As such, the AMC
CUSO would be required to be
registered in accordance with applicable
State requirements in participating
States.60
The Agencies requested comment on
whether references to the NCUA and
insured credit unions should be
removed from the definition of
‘‘Federally regulated AMC’’ and other
parts of the final rule to clarify that an
AMC CUSO would be subject to State
registration and supervision. (See
Question 4 in the proposal.) Some
commenters expressed concern that the
references to the NCUA and credit
unions in the proposed regulatory text
were confusing and suggested that
removing these references in the final
rule would clarify that AMC CUSOs are
subject to State registration and
supervision.
To provide clarification in the final
rule, the Agencies removed references to
NCUA and credit unions from pertinent
portions of the regulatory text defining
‘‘Federally regulated AMC.’’ An AMC
owned and controlled by a credit union
(whether owned by a State or Federally
chartered credit union) is not
considered to be regulated by a Federal
financial institutions regulatory agency
under the final rule
rification in the final
rule, the Agencies removed references to
NCUA and credit unions from pertinent
portions of the regulatory text defining
‘‘Federally regulated AMC.’’ An AMC
owned and controlled by a credit union
(whether owned by a State or Federally
chartered credit union) is not
considered to be regulated by a Federal
financial institutions regulatory agency
under the final rule. As such, AMC
CUSOs are required to register in
accordance with applicable State
requirements.
6. Section 34.211(n): Secondary
Mortgage Market Participant
In the proposed rule, the Agencies
defined ‘‘secondary mortgage market
participant’’ to implement the statutory
definition of AMC, which refers to an
entity that performs services authorized
by ‘‘an underwriter of or other principal
in the secondary mortgage markets.’’ 61
Proposed § 34.211(n) defined
‘‘secondary mortgage market
participant’’ to mean a guarantor or
insurer of mortgage-backed securities, or
an underwriter or issuer of mortgage-
backed securities. The definition
included individual investors in a
mortgage-backed security only if they
also serve in the capacity of a guarantor,
insurer, underwriter, or issuer for the
mortgage-backed security.
Most commenters supported the
proposed definition of ‘‘secondary
mortgage market participant.’’ Some
commenters indicated that the
definition is clear and needs no further
additions or clarifications at this time,
but could at some future date to reflect
evolving conditions. One commenter
believed that the definition is
sufficiently understandable for States to
be able to write statutes and rules to
enforce the intent of the rule. Another
commenter suggested that the definition
of ‘‘secondary market participant’’ is too
narrow, and that any bank or creditor
involved in lending Federally insured
funds in a transaction secured by real
estate (commercial or residential)
should be considered a secondary
market participant
derstandable for States to
be able to write statutes and rules to
enforce the intent of the rule. Another
commenter suggested that the definition
of ‘‘secondary market participant’’ is too
narrow, and that any bank or creditor
involved in lending Federally insured
funds in a transaction secured by real
estate (commercial or residential)
should be considered a secondary
market participant.
Commenters did not provide any
specific suggestions for revising the
proposed definition of secondary
mortgage market participant. As with
other aspects of the proposed rule, the
Agencies understand that changes in the
marketplace may, at some point, require
the Agencies to amend the final rule, or
may require States to amend or re-
interpret State laws. The Agencies
continue to believe, however, that the
definition of secondary mortgage market
participant is accurate at present.
Regarding the comment that banks or
creditors lending Federally insured
funds should be included, the Agencies
note that the statutory definition of
AMC distinguishes between ‘‘creditors’’
and ‘‘secondary mortgage market
participants,’’ 62 and therefore believe
that including originating banks or
creditors in the definition of ‘‘secondary
mortgage market participants’’ would be
inconsistent with this distinction in the
statutory definition. The Agencies in the
final rule adopt the proposed definition
of secondary mortgage market
participant.
B. Section 34.212: Appraiser Panel—
Annual Size Calculation
1. Determining Appraiser Panel
Section 34.212 finalizes proposed
§ 34.212 without change, other than
revising the title from ‘‘Appraiser
Panel’’ to ‘‘Appraiser Panel—Annual
Size Calculation,’’ for clarity
statutory definition. The Agencies in the
final rule adopt the proposed definition
of secondary mortgage market
participant.
B. Section 34.212: Appraiser Panel—
Annual Size Calculation
1. Determining Appraiser Panel
Section 34.212 finalizes proposed
§ 34.212 without change, other than
revising the title from ‘‘Appraiser
Panel’’ to ‘‘Appraiser Panel—Annual
Size Calculation,’’ for clarity. Section
34.212 sets out criteria for determining
whether, within a calendar year or 12-
month period specified by State law, an
AMC oversees an appraiser panel of
more than 15 State-certified or State-
licensed appraisers in a State or 25 or
more State-certified or State-licensed
appraisers in two or more States.
Consistent with the proposal, pursuant
to § 34.212(a), an appraiser is deemed
part of the AMC’s appraiser panel as of
the earliest date the AMC accepts the
appraiser for consideration for future
appraisal assignments in covered
transactions or engages the appraiser to
perform one or more appraisal
assignments on behalf of a creditor or
secondary mortgage market participant
in a covered transaction, including an
affiliate of such a creditor or participant.
Also consistent with the proposal,
pursuant to § 34.212(b), an appraiser
who is considered to be part of the
AMC’s appraiser panel is deemed to
remain on the panel until: (1) The date
on which the AMC sends written notice
to the appraiser removing the appraiser
from the appraiser panel; (2) the date
the AMC receives written notice from
the appraiser asking to be removed from
the appraiser panel; or (3) the date the
AMC receives notice of the death or
incapacity of the appraiser
o be part of the
AMC’s appraiser panel is deemed to
remain on the panel until: (1) The date
on which the AMC sends written notice
to the appraiser removing the appraiser
from the appraiser panel; (2) the date
the AMC receives written notice from
the appraiser asking to be removed from
the appraiser panel; or (3) the date the
AMC receives notice of the death or
incapacity of the appraiser. If an
appraiser is removed from an AMC’s
appraiser panel, but the AMC
subsequently accepts the appraiser for
consideration for future assignments or
engages the appraiser at any time during
the twelve months after the appraiser’s
removal, the removal would be deemed
not to have occurred, and the appraiser
would be deemed to have been part of
the AMC’s appraiser panel without
interruption. The Agencies included
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63 One commenter, a coalition of three AMCs,
stated the process of approving an appraiser for a
panel typically requires from one week at a
minimum to a month.
64 12 U.S.C. 3350(11) (defining an AMC subject to
the minimum requirements as, in pertinent part, an
entity with a ‘‘network or panel of more than 15
certified or licensed appraisers in a State or 25 or
more nationally (meaning two or more States)
within a given year.’’ 12 U.S.C. 3350(11). The
provision of the statute relevant to determining the
registry fee is in section 1109(a)(4)(B), which
provides that the fee is based on the number of
appraisers ‘‘working for or contracting with [an
AMC] in [a] state during the previous year.’’
FIRREA section 1109(a)(4)(B), 12 U.S.C.
3338(a)(4)(B).
65 12 U.S.C. 3350(11).
66 12 U.S.C. 3338(a), 3353.
67 FIRREA section 1121(11), 12 U.S.C. 3350(11)
(defining AMC)
ute relevant to determining the
registry fee is in section 1109(a)(4)(B), which
provides that the fee is based on the number of
appraisers ‘‘working for or contracting with [an
AMC] in [a] state during the previous year.’’
FIRREA section 1109(a)(4)(B), 12 U.S.C.
3338(a)(4)(B).
65 12 U.S.C. 3350(11).
66 12 U.S.C. 3338(a), 3353.
67 FIRREA section 1121(11), 12 U.S.C. 3350(11)
(defining AMC).
these procedural provisions to give
States clarity and prevent
circumvention of the registration
requirement.
The Agencies received a wide variety
of comments relating to the calculation
of appraiser panel membership under
Question 2 of the proposal. Some
commenters suggested that the approach
in the proposal, which would count
appraisers either engaged to perform
appraisals or pre-approved to do so,
would result in the unintended
consequence of limiting the number of
appraisers in AMC networks or panels.
These commenters argued that pre-
approved appraisers who have not yet
been engaged by the AMC for an
assignment should not be counted. They
argued that the proposed method of
counting appraisers would provide a
strong incentive for AMCs to limit
significantly the size of networks or
panels, given that the AMC National
Registry fee will be determined based on
the number of appraisers on an AMC’s
network or panel of appraisers. The
commenters stated that, to reduce costs,
AMCs would likely reduce the size of
appraiser panels if the proposed method
of counting appraisers were adopted as
final.
As background, the commenters
explained that AMCs maintain large
panels of pre-approved appraisers in
order to offer timely appraisal services
in a wide variety of areas, including
smaller communities and rural areas
where appraisers are engaged less often
than in more populated communities
the size of
appraiser panels if the proposed method
of counting appraisers were adopted as
final.
As background, the commenters
explained that AMCs maintain large
panels of pre-approved appraisers in
order to offer timely appraisal services
in a wide variety of areas, including
smaller communities and rural areas
where appraisers are engaged less often
than in more populated communities.
The commenters noted that, if the AMCs
reduce panels to actively engaged
appraisers, then real estate transactions
in small communities and rural areas
will take more time because AMCs
would not typically have pre-approved
appraisers readily available for this type
of assignment.63 For these reasons, the
commenters requested that the Agencies
modify the proposed method of
counting appraisers in an AMC’s
network or panel to include only
appraisers who are actually engaged to
perform an appraisal during a 12-month
period.
The Agencies understand the
commenters’ concerns relating to the
panel membership and the potential for
AMCs to reduce their appraiser
networks or panels to reduce ASC fees.
The Agencies are also cognizant of, and
concerned about, the potential adverse
effects this may have on small
communities and rural areas. However,
for several reasons, the Agencies decline
to amend the rule such that only
appraisers actually given assignments in
a particular year will be counted as
being on the panel. First, the Agencies
interpret sections 1124 and 1121(11) to
mean that the counting of appraisers in
determining whether an entity is subject
to the AMC minimum requirements
does not control or affect the counting
of appraisers for purposes of payment of
the AMC National Registry fee.64
Therefore, this final rule does not
address or require the collection or
calculation of these fees
nel. First, the Agencies
interpret sections 1124 and 1121(11) to
mean that the counting of appraisers in
determining whether an entity is subject
to the AMC minimum requirements
does not control or affect the counting
of appraisers for purposes of payment of
the AMC National Registry fee.64
Therefore, this final rule does not
address or require the collection or
calculation of these fees. Section 34.212
of the rule implements FIRREA section
1121(11) and governs how to count the
number of appraisers on a panel only for
purposes of whether an entity is an
AMC subject to the AMC minimum
requirements of this final rule, either as
an AMC registered with a State that
adopts these requirements or as a
Federally regulated AMC.65 The rule
requires AMCs to provide information
to the State or States in which they
operate, to be used in determining the
payment of the annual AMC National
Registry fee, but does not address or
control how to calculate the number of
appraisers on a network or panel for
purposes of determining the fee. The
AMC National Registry fee provisions
pertaining to the calculation,
assessment, and collection of the fee are
addressed in FIRREA section 1109(a),
which is enforced and administered by
the ASC, not by the Agencies pursuant
to section 1124.66 As such, it is the ASC,
and not the Agencies in this rulemaking,
that will determine how to calculate and
pay the AMC National Registry fee
fee. The
AMC National Registry fee provisions
pertaining to the calculation,
assessment, and collection of the fee are
addressed in FIRREA section 1109(a),
which is enforced and administered by
the ASC, not by the Agencies pursuant
to section 1124.66 As such, it is the ASC,
and not the Agencies in this rulemaking,
that will determine how to calculate and
pay the AMC National Registry fee.
Second, the statute that the Agencies
are charged with implementing
expressly defines an AMC with
reference to the number of appraisers
that the AMC ‘‘oversees’’ on a ‘‘network
or panel’’ in a given year, not only on
the number of appraisers to which it
actually gives assignments.67 While
commenters speculate that this
approach to defining the number of
appraisers that an AMC oversees on a
network or panel may lead to efforts to
evade the definition, the alternative
approach suggested by commenters of
relying only on the number of
appraisers actually used during a 12-
month period will also encourage
evasion attempts. This alternative
would allow AMCs to accumulate
relationships with large numbers of
independent contractors, advertise this
breadth of coverage, and evade the rule
by managing the actual use of appraisers
through the year.
The Agencies will monitor the effect
of the rule and the definition of AMC for
evasion and revisit the rule to the extent
appropriate and permitted by statute in
light of future developments.
2. Section 34.212(d): Annual Period for
Counting Appraisers on AMC Panel
Proposed § 34.212(d) provided two
options to States for calculating the
number of appraisers on an entity’s
panel for determining whether the
entity meets the minimum thresholds
for designation as an AMC. The first was
the 12-month calendar year and the
second was any other 12-month period
set by a State
elopments.
2. Section 34.212(d): Annual Period for
Counting Appraisers on AMC Panel
Proposed § 34.212(d) provided two
options to States for calculating the
number of appraisers on an entity’s
panel for determining whether the
entity meets the minimum thresholds
for designation as an AMC. The first was
the 12-month calendar year and the
second was any other 12-month period
set by a State. One commenter suggested
that, to promote uniformity, all States
should be required to use the calendar
year for determining whether an entity
has the requisite number of appraisers
on its panel to qualify as an AMC.
Under the proposed rule, States
would have the flexibility to align the
12-month period for determining AMC
status with their AMC registration
calendars, which may, or may not, be
based on the calendar year. In this
regard, the Agencies are aware that
many States already do not use a
calendar year for their existing appraiser
registration process. The Agencies
believe that allowing states to set the 12-
month period provides appropriate
flexibility and will help States comply
with the minimum requirements and
reduce regulatory burden for State
governments. Thus, the Agencies adopt
§ 34.212(d) in the final rule without
change.
C. Section 34.213: Appraisal
Management Company Registration
1. Section 34.213(a): Minimum
Requirements for Participating States
Under proposed § 34.213(a), adopted
without change in this final rule,
participating States must have a
licensing program in place within the
State appraiser certifying and licensing
agency that has the authority to: (1)
Review and approve or deny an AMC’s
application for initial registration; (2)
review and renew or refuse to renew an
AMC’s registration periodically; (3)
examine the books and records of an
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d licensing
agency that has the authority to: (1)
Review and approve or deny an AMC’s
application for initial registration; (2)
review and renew or refuse to renew an
AMC’s registration periodically; (3)
examine the books and records of an
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68 12 U.S.C. 3353(a). As stated in the proposal, the
Agencies view section 1124 as allowing the
Agencies to establish more specific requirements for
supervision and registration of AMCs that
implement the general requirements enumerated in
section 1124(a). Id. In addition, by providing that
the regulation shall ‘‘include’’ the requirements
enumerated in section 1124, the statute implies that
the Agencies have the discretion to establish
additional supervisory standards for State oversight
of AMCs consistent with the general requirements
specifically enumerated in section 1124(a). Id.
69 See 12 U.S.C. 3332(a)(1)(B) (requiring the ASC
to monitor requirements established by the States
for supervision of AMCs); 12 U.S.C. 3338(a)
(requiring each participating State to transmit
reports to the ASC on supervisory activities
involving AMCs and disciplinary actions taken);
and 12 U.S.C. 3347(a) (requiring the ASC to monitor
States to assess whether a State has an effective
regulatory program).
70 See FIRREA section 1103(a)(1)(B), 12 U.S.C.
3332(a)(1)(B).
71 See FIRREA sections 1109(a)(3) and 1118(a)(4),
12 U.S.C. 3338(a)(3) and 3347(a)(4).
72 12 U.S.C. 3350(11), 3353.
73 12 U.S.C. 3353(a)(2)
visory activities
involving AMCs and disciplinary actions taken);
and 12 U.S.C. 3347(a) (requiring the ASC to monitor
States to assess whether a State has an effective
regulatory program).
70 See FIRREA section 1103(a)(1)(B), 12 U.S.C.
3332(a)(1)(B).
71 See FIRREA sections 1109(a)(3) and 1118(a)(4),
12 U.S.C. 3338(a)(3) and 3347(a)(4).
72 12 U.S.C. 3350(11), 3353.
73 12 U.S.C. 3353(a)(2).
74 See 12 CFR 34.46(b) (OCC); see also
Interagency Appraisal and Evaluation Guidelines,
75 FR 77450, 77458 (December 10, 2010); Appraisal
Standards Board, Uniform Standards of Professional
Appraisal Practice, Appraiser Competency Rule
(2014–2015), available at The Appraisal
Foundation, https://netforum.avectra.com/eWeb/
DynamicPage.aspx?Site=TAF&WebCode=USPAP
(requiring that an appraiser have specific
competency for the appraisal assignment).
75 See 12 CFR 226.42 (Board); 12 CFR 1026.42
(Bureau).
76 12 CFR 34.45 and 164.5 (OCC); 12 CFR 225.65
(Board); 12 CFR 323.5 (FDIC); 12 CFR 722.5(NCUA).
77 See Interagency Appraisal and Evaluation
Guidelines, 75 FR 77450, 77463 (discussing third-
party arrangements).
78 The Agencies received many comments on
Question 6 concerning the proposed minimum
requirements for State registration and supervision
of AMCs. Commenters were generally supportive of
the proposed requirements. However, the
commenters made several observations and
expressed concerns with the proposed
requirements.
Continued
AMC operating in the State and require
the AMC to submit reports, information,
and documents to the State; (4) verify
that the appraisers on the AMC’s
appraiser panel hold valid State
certifications or licenses, as applicable;
rally supportive of
the proposed requirements. However, the
commenters made several observations and
expressed concerns with the proposed
requirements.
Continued
AMC operating in the State and require
the AMC to submit reports, information,
and documents to the State; (4) verify
that the appraisers on the AMC’s
appraiser panel hold valid State
certifications or licenses, as applicable;
(5) conduct investigations of AMCs to
assess potential violations of applicable
appraisal-related laws, regulations, or
orders; (6) discipline, suspend,
terminate, and refuse to renew the
registration of an AMC that violates
applicable appraisal-related laws,
regulations, or orders; and (7) report to
the ASC an AMC’s violation of
applicable appraisal-related laws,
regulations, or orders, as well as
disciplinary and enforcement actions
and other relevant information about an
AMC’s operations.
These authorities and mechanisms
reflected the Agencies’ interpretation of
the provisions of section 1124(a),
including the minimum requirement in
section 1124(a)(1) that AMCs be
‘‘subject to supervision’’ by the State
appraiser certifying and licensing
agency.68 The Agencies interpret section
1124(a) as being consistent with the
criteria outlined in FIRREA sections
1103, 1109, and 1118(a), which describe
the elements of State regulation of
AMCs that will be monitored by the
ASC.69 For example, the ASC is
responsible for monitoring whether
States have supervision systems in place
that would allow a State to process
complaints against an AMC and conduct
investigations in connection with those
complaints.70 The ASC is also
responsible for monitoring whether a
State takes appropriate enforcement
actions against an AMC that is found to
have violated applicable laws and
regulations.71 Consistent with the
interpretation stated in the proposal, the
Agencies continue to believe that these
requirements are consistent with the
enforcement and supervision authorities
underlying an effective regulatory
e ASC is also
responsible for monitoring whether a
State takes appropriate enforcement
actions against an AMC that is found to
have violated applicable laws and
regulations.71 Consistent with the
interpretation stated in the proposal, the
Agencies continue to believe that these
requirements are consistent with the
enforcement and supervision authorities
underlying an effective regulatory
program and will ensure that State
appraiser certifying and licensing
agencies have the required structures for
the registration and supervision of
AMCs.
2. Section 34.213(b): Minimum
Requirements for State-Registered AMCs
The Agencies are adopting proposed
§ 34.213(b) without change. Section
34.213(b) implements FIRREA sections
1121(11) and 1124 and provides that
participating States must require State-
registered AMCs to follow certain
minimum requirements when AMCs
provide appraisal management services
for a creditor or ‘‘underwriter of or other
principal in the secondary mortgage
markets’’ that are related to a covered
transaction.72 Pursuant to the minimum
requirements in § 34.213(b), an AMC
(other than a Federally regulated AMC)
is required to register with, and be
subject to supervision by, a State
appraiser certifying and licensing
agency in each State in which the AMC
operates. In addition, States must
require AMCs to verify that only State-
certified or State-licensed appraisers are
used when a creditor or secondary
mortgage market participant engages in
a transaction that requires the services
of a State-certified or State-licensed
appraiser under the Federally related
transaction regulations. A State also
must require registered AMCs to have
processes and controls reasonably
designed to ensure that the AMC, in
engaging an appraiser, selects an
appraiser who has the requisite
education, expertise, and experience to
complete competently the assignment
for the particular market and property
type
ed or State-licensed
appraiser under the Federally related
transaction regulations. A State also
must require registered AMCs to have
processes and controls reasonably
designed to ensure that the AMC, in
engaging an appraiser, selects an
appraiser who has the requisite
education, expertise, and experience to
complete competently the assignment
for the particular market and property
type. This minimum requirement
implements the requirement of section
1124(a)(2) 73 and emphasizes a core
principle of the Agencies’ FIRREA
appraisal regulation and the Interagency
Appraisal and Evaluation Guidelines,
which is that an appraiser must not only
be State credentialed and competent
generally, but also have specific
competency to perform a particular
appraisal assignment.74
In addition, States must require an
AMC to establish and comply with
processes and controls reasonably
designed to ensure that the AMC
conducts its appraisal management
services in accordance with: (1) The
AMC’s obligations as a covered person
with respect to mandatory reporting,
conflicts of interest, and other acts or
practices that would violate valuation
independence pursuant to section
129E(a) through (i) of TILA; and (2) the
AMC’s obligations as a creditor’s agent
with respect to appraiser compensation
pursuant to section 129E(i) of TILA, 15
U.S.C. 1639e(i).75
As noted in the proposed rule, the
AMC minimum standards do not affect
the responsibility of banks, Federal
savings associations, State savings
associations, bank holding companies,
and credit unions for compliance with
applicable regulations and guidance
concerning appraisals
ditor’s agent
with respect to appraiser compensation
pursuant to section 129E(i) of TILA, 15
U.S.C. 1639e(i).75
As noted in the proposed rule, the
AMC minimum standards do not affect
the responsibility of banks, Federal
savings associations, State savings
associations, bank holding companies,
and credit unions for compliance with
applicable regulations and guidance
concerning appraisals. Under the
interagency appraisal rules, for example,
if an appraisal is prepared by a fee
appraiser (as opposed to in-house, by
the institution), the appraiser must be
engaged directly by the regulated
institution or its agent, and have no
direct or indirect interest, financial or
otherwise, in the property or the
transaction.76 As stated in the
Interagency Appraisal and Evaluation
Guidelines, an institution that engages a
third party, such as an AMC, to
administer any part of the institution’s
appraisal program remains responsible
for compliance with applicable laws
concerning appraisers and appraisals.77
The Agencies requested comment on
the proposed minimum requirements
for State registration and supervision of
AMCs. (See Question 6 in the proposal.)
The Agencies also asked related
questions concerning appraisal review
standards and potential challenges
States may encounter under the
proposed minimum requirements for
State registration and supervision of
AMCs. (See Questions 7 through 11 in
the proposal.) The following is a
summary of these comments, followed
by the response from the Agencies.78
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may encounter under the
proposed minimum requirements for
State registration and supervision of
AMCs. (See Questions 7 through 11 in
the proposal.) The following is a
summary of these comments, followed
by the response from the Agencies.78
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32668
Federal Register / Vol. 80, No. 110 / Tuesday, June 9, 2015 / Rules and Regulations
These comments overlap with comments made
concerning other questions in the proposal. As
such, Question 6 is not addressed separately.
79 12 U.S.C. 3350(11).
80 FIRREA section 1110(3), 12 U.S.C. 3339(3).
81 12 U.S.C. 3339(3).
82 12 U.S.C. 3339(3).
83 This approach is consistent with the States’
approach to registering appraisers. The Agencies
understand that State appraiser certifying and
licensing agencies have collected fees from
appraisers for administering national appraiser
registration for many years.
84 12 U.S.C. 3346.
85 12 U.S.C. 3350(11).
86 FIRREA section 1109(a)(4), 12 U.S.C. 3338(a)(4)
(requiring States to submit AMC fees for the
National Registry to the ASC annually).
87 12 U.S.C. 3338(a)(4).
88 12 U.S.C. 3338(a)(4).
For the reasons explained below, the
Agencies adopt proposed § 34.213 on
AMC registration without change in the
final rule.
a. Appraisal Review
The Agencies requested comment on
the proposal to defer consideration of
appraisal review standards to a separate
rulemaking. (See Question 7 in the
proposal). Some commenters agreed
with the Agencies that appraisal review
standards should be addressed in a
separate rulemaking. Other commenters
suggested that there are many pressing
questions concerning appraisal review
standards and that this rulemaking
should therefore incorporate such
standards
eration of
appraisal review standards to a separate
rulemaking. (See Question 7 in the
proposal). Some commenters agreed
with the Agencies that appraisal review
standards should be addressed in a
separate rulemaking. Other commenters
suggested that there are many pressing
questions concerning appraisal review
standards and that this rulemaking
should therefore incorporate such
standards.
In drafting the minimum
requirements for State registration and
supervision of AMCs, and the definition
of appraisal management services
discussed previously, the Agencies
considered whether to require AMCs to
follow minimum standards when
performing appraisal reviews. This
question was presented by section
1121(11), which includes appraisal
review as one of the types of appraisal
management services performed by
AMCs.79 In considering this question,
the Agencies noted that FIRREA section
1110 requires a separate rulemaking
regarding the requirement that, for
Federally related transactions,
appraisals shall be subject to
‘‘appropriate’’ review for compliance
with USPAP.80 As stated in the
proposal, the Agencies believe that a
rulemaking to implement section 1110
provides the appropriate opportunity to
address the requirement for appraisal
reviews.81 For this reason, the proposed
minimum standards for AMCs did not
include appraisal review standards.
Commenters identified issues that
may be appropriate for consideration in
a rulemaking pursuant to FIRREA
section 1110(3), but did not address
why those standards are more
appropriately addressed in the context
of this rulemaking rather than in a
separate rulemaking to implement
section 1110(3).82 The Agencies
continue to believe that addressing
appraisal review issues more
comprehensively in a separate
rulemaking is appropriate, rather than
doing so in a limited way as part of the
AMC rule
section 1110(3), but did not address
why those standards are more
appropriately addressed in the context
of this rulemaking rather than in a
separate rulemaking to implement
section 1110(3).82 The Agencies
continue to believe that addressing
appraisal review issues more
comprehensively in a separate
rulemaking is appropriate, rather than
doing so in a limited way as part of the
AMC rule. The appraisal review
standard of section 1110(3) applies to all
regulated financial institutions subject
to the appraisal rules of the Federal
financial institution regulatory agencies,
not just appraisals for which one of
those firms uses an AMC to engage an
appraiser. In addition, most commenters
supported a separate rulemaking on
appraisal review standards. For these
reasons, consistent with the proposal,
the final rule does not contain appraisal
review standards.
b. Barriers to Implementation of AMC
Minimum Requirements
The Agencies also asked about
whether any barriers existed for States
in implementing the proposed AMC
minimum requirements. (See Question 8
in the proposal). In response, the
Agencies received several comments
indicating concern that States might not
have adequate funding or resources to
implement or enforce the proposed rule.
Other commenters expressed the view
that the requirement to establish
authorities and mechanisms to examine
the books and records of an AMC could
be subject to different interpretations by
each State, and that the Agencies’
expectations should be clarified. A third
set of commenters indicated additional
guidance is needed on the expectations
for States engaging in examinations of
AMCs. One commenter believed that
States should be given the option to
register AMCs for longer than a period
of one year. See proposed § 34.212
(requiring an annual count of appraisers
on an entity’s panel to determine
whether the entity is subject to State
registration requirements pursuant to
the proposed rule)
dance is needed on the expectations
for States engaging in examinations of
AMCs. One commenter believed that
States should be given the option to
register AMCs for longer than a period
of one year. See proposed § 34.212
(requiring an annual count of appraisers
on an entity’s panel to determine
whether the entity is subject to State
registration requirements pursuant to
the proposed rule). The commenter
indicated that many States allow
appraiser registration for longer periods
and that doing so for AMCs might
facilitate implementation of the rule by
States.
The Agencies are aware of, and
sensitive to, the adequacy of
participating States’ resources to
supervise AMCs in the manner
contemplated by FIRREA section 1124.
It is the Agencies’ understanding,
however, that many States that have
already established AMC laws and
registration programs have collected
fees from AMCs, in part to offset the
costs of the registration and supervision
programs, using authority under State
law. Nothing in this rule would prevent
these States, or States that choose to
become participating States, from
continuing to charge fees to AMCs in
the future.83 The Agencies also note that
the registration and supervision of
AMCs is voluntary, and that a State may
elect not to establish such a program for
any reason, including if its resources do
not support such a program.
With respect to the request that the
Agencies set standards for State
supervision of AMCs, the Dodd-Frank
Act section 1473 amended FIRREA to
confirm clearly the States’ ability to
exercise registration and supervisory
capacities over AMCs, which the State
can exercise using its own discretion,
based on the individual State’s
enforcement priorities.84 As such, the
Agencies leave supervisory standards to
the discretion of the States and to the
ASC, which is charged under Title XI of
FIRREA with evaluating the efficacy of
State registration and supervision of
AMCs
o
exercise registration and supervisory
capacities over AMCs, which the State
can exercise using its own discretion,
based on the individual State’s
enforcement priorities.84 As such, the
Agencies leave supervisory standards to
the discretion of the States and to the
ASC, which is charged under Title XI of
FIRREA with evaluating the efficacy of
State registration and supervision of
AMCs.
Regarding the request that States be
able to register AMCs for longer than a
year, the Agencies defer to individual
States, but note that the requirement for
an annual count of appraisers on an
entity’s panel is statutory. Specifically,
the definition of AMC in FIRREA
section 1121(11) bases whether an entity
is an AMC on the number of appraisers
on an entity’s panel ‘‘within a given
year.’’ 85 Regarding whether a two-year
AMC National Registry fee collection
program is permissible or feasible, the
Agencies defer to the ASC, which
administers the relevant portion of
FIRREA.86 Specifically, FIRREA section
1109(a)(4) requires States to submit
AMC fees for the AMC National Registry
to the ASC annually.87
While the registration fee cycle is
dictated by section 1109(a)(4), any
additional licensing fees or any other
associated fees charged by the State can
be charged based on the State’s
determination of an appropriate cycle.88
The Agencies do not see a need to make
any changes from the proposed version
of the rule to clarify the annual
registration cycle requirement in the
final rule.
c. Trainee Appraisers
The Agencies received one comment
on the requirement that States must
verify that the appraisers on an AMC’s
panel hold valid States licenses and
certifications (see proposed
§ 34.213(a)(4)). This commenter
expressed concern that the requirement
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encies received one comment
on the requirement that States must
verify that the appraisers on an AMC’s
panel hold valid States licenses and
certifications (see proposed
§ 34.213(a)(4)). This commenter
expressed concern that the requirement
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89 12 U.S.C. 3353(a)(2).
90 12 U.S.C. 3351(e).
91 12 U.S.C. 3351(e), 3353(a)(2).
92 15 U.S.C. 1639e.
93 12 U.S.C. 3353(a)(4), 15 U.S.C. 1639e.
94 15 U.S.C. 1639e.
95 FIRREA sections 1124(f)(1) and (2), 12 U.S.C.
3353(f)(1) and (2).
could be interpreted by some States to
prohibit appraisers from using trainees
to assist with assignments.
The Agencies are adopting proposed
§ 34.213(a)(4) with a minor non-
substantive change. New § 34.213(a)(4)
requires States to verify that the
appraisers on an AMC’s appraiser
panel—as defined in § 34.211(e)—hold
valid State certifications or licenses, as
applicable. The Agencies are removing
references to a ‘‘list,’’ ‘‘network,’’ or
‘‘roster’’ because these terms are
incorporated into the definition of
‘‘appraiser panel’’ in § 34.211(e).
Regarding the concerns about whether
trainee appraisers may be used in light
of this requirement, § 34.213(a)(4) is not
intended to imply any changes in the
current requirements for their use. The
requirement in § 34.213(a)(4)
complements the requirement in
proposed § 34.213(b)(2) (adopted as
final without change) that AMCs must
use only State-licensed or State-certified
appraisers for Federally related
transactions
hether
trainee appraisers may be used in light
of this requirement, § 34.213(a)(4) is not
intended to imply any changes in the
current requirements for their use. The
requirement in § 34.213(a)(4)
complements the requirement in
proposed § 34.213(b)(2) (adopted as
final without change) that AMCs must
use only State-licensed or State-certified
appraisers for Federally related
transactions. Both are intended to
implement FIRREA section 1124(a)(2),
under which the Agencies must require
States to require AMCs to use only
State-licensed or certified appraisers for
Federally related transactions.89
The trainee appraiser designation
established by the Appraiser
Qualifications Board (AQB) of the
Appraisal Foundation requires trainees
to work under the supervision of a
qualified supervisory appraiser, as
authorized by section 1122(e).90 The
Agencies continue to support the use of
trainee appraisers as long as they work
under the supervision of a State-
certified and or State-licensed appraiser
and have met the qualifications
established by the appropriate State and
the AQB. As such, the requirement in
section 1124(a)(2) and the proposed and
final rules should not be interpreted to
bar trainee appraisers from working
with State-certified or State-licensed
appraisers who perform appraisals for
AMCs, which is authorized by section
1122(e).91 The final rule amends
proposed § 34.213(b)(2), by substituting
the term ‘‘engage’’ for the term ‘‘use’’ to
clarify that an appraiser may work with
a trainee appraiser on an appraisal, but
only the appraiser may be ‘‘engaged’’ by
the AMC to perform appraisals. In a
Federally related transaction, an AMC
may engage only a State-certified or
State-licensed appraiser.
d
by section
1122(e).91 The final rule amends
proposed § 34.213(b)(2), by substituting
the term ‘‘engage’’ for the term ‘‘use’’ to
clarify that an appraiser may work with
a trainee appraiser on an appraisal, but
only the appraiser may be ‘‘engaged’’ by
the AMC to perform appraisals. In a
Federally related transaction, an AMC
may engage only a State-certified or
State-licensed appraiser.
d. Valuation Independence
The Agencies received comments on
proposed § 34.213(b)(5), which requires
participating States to require AMCs to
establish and comply with processes
and controls reasonably designed to
ensure that the AMC conducts its
appraisal management services in
accordance with the requirements of the
valuation independence requirements of
TILA section 129E.92 These commenters
requested that the final rule clarify the
extent to which States are expected to
investigate and enforce TILA section
129E and its implementing regulations,
which includes the requirements to pay
appraisers customary and reasonable
fees. These commenters also expressed
concern that States might interpret these
rules differently, potentially in ways
that may conflict with Federal
interpretations.
In response to the comments, the
Agencies note that, pursuant to section
1124(a)(4), States must require AMCs to
require that appraisals are conducted in
accordance with the valuation
independence requirements of section
129E(a) through (i) of TILA.93 The
Agencies proposed to implement this
requirement by mandating that
participating States require AMCs to:
• Establish and comply with
processes and controls reasonably
designed to ensure that the AMC, in
engaging an appraiser, selects an
appraiser who is independent of the
transaction and who has the requisite
education, expertise, and experience
necessary to competently complete the
appraisal assignment for the particular
market and property type; and
• Establish and comply with
processes and controls reasonably
designed to ensure that the AMC
condu
designed to ensure that the AMC, in
engaging an appraiser, selects an
appraiser who is independent of the
transaction and who has the requisite
education, expertise, and experience
necessary to competently complete the
appraisal assignment for the particular
market and property type; and
• Establish and comply with
processes and controls reasonably
designed to ensure that the AMC
conducts its appraisal management
services in accordance with the
requirements of section 129E(a)–(i) of
the Truth in Lending Act, 15 U.S.C.
1639e(a)–(i), and regulations
thereunder.
See proposed § 34.213(b)(3) and (4).
Questions about what mechanisms a
State agency may use to assess a party’s
compliance in connection with any
authority the State has to commence a
civil action to enforce section 129E of
TILA are outside the scope of this
rulemaking.94 This final rule sets
minimum standards for States to adopt
in establishing a State program for
registering and supervising AMCs. Once
adopted by a State, these minimum
standards become part of the State’s
legal framework for licensing and
registering AMCs. Questions concerning
what authority a State may confer on its
own agency to supervise for and enforce
compliance with the State’s licensing
and registration program are also
outside the scope of this rulemaking.
3. Other Issues
a. The 36-Month Implementation Period
The Agencies asked for comment on
whether aspects of the proposed rule
would be challenging for States to
implement within 36 months. (See
Question 9 in the proposal.) The
Agencies also asked States to identify
alternative approaches that would make
implementation easier. Seven
commenters stated that 36 months does
not give States enough time for
implementation and that the 36-month
implementation period should begin
after the ASC establishes the AMC
National Registry and has issued its
clarifying regulations
months. (See
Question 9 in the proposal.) The
Agencies also asked States to identify
alternative approaches that would make
implementation easier. Seven
commenters stated that 36 months does
not give States enough time for
implementation and that the 36-month
implementation period should begin
after the ASC establishes the AMC
National Registry and has issued its
clarifying regulations. One commenter
asserted that States would have
difficulty beginning the implementation
process until the ASC issued its
regulations. Other commenters
expressed concerns that the ASC would
be unable to set up a functioning AMC
National Registry and issue its clarifying
regulations within 36 months after this
final rule is issued.
The Agencies note that Congress
specifically provided for a 36- to 48-
month implementation period before
restrictions are imposed on AMCs in
States that have not yet participated.
This 36-month implementation period
is set pursuant to section 1124(f), which
also provides for a potential 12-month
extension if the ASC finds that a State
has made substantial progress towards
implementing an AMC registration and
supervision program.95 Thus, only the
ASC, and not the Agencies, may extend
the implementation period beyond 36
months. The Agencies anticipate that
concerns about the 36-month period and
the need for registry regulations will be
addressed by the ASC. In response to
the concern expressed by the
commenters, however, the Agencies are
adopting changes to the proposed
definitions that relied on cross-
references to Regulation Z, 12 CFR part
1026 rule, by substituting the text of
these definitions for the cross
references
anticipate that
concerns about the 36-month period and
the need for registry regulations will be
addressed by the ASC. In response to
the concern expressed by the
commenters, however, the Agencies are
adopting changes to the proposed
definitions that relied on cross-
references to Regulation Z, 12 CFR part
1026 rule, by substituting the text of
these definitions for the cross
references. As noted in the section-by-
section analysis of § 34.211, above, the
Agencies believe that these changes
mitigate the potential obligations of
States to update, clarify, or amend State
law or its interpretations as Regulation
Z is amended over time, or if the
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Federal Register / Vol. 80, No. 110 / Tuesday, June 9, 2015 / Rules and Regulations
96 12 U.S.C. 3353.
97 12 U.S.C. 3353.
98 12 U.S.C. 3353(a).
99 12 U.S.C. 3353(f).
100 One commenter, an AMC, highlighted a report
by a Hawaii State auditor regarding a proposed bill
in the Hawaii legislature that concerns the
registration of AMCs. The commenter argued that
this report provided evidence that Hawaii would
not adopt an AMC law. The auditor’s report,
however, does not indicate that it would be
inappropriate for a State to participate in the AMC
regulatory system established under section 1124.
Rather, the report opined that the particular
proposed bill would not be the appropriate method
of participation for various reasons, including that
the regulation of AMCs should not be managed by
the State real estate commission. See Auditor of the
State of Hawaii Report 10–07 (Sept. 2010) at 4,
Sunrise Analysis: Real Estate Appraisal
Management Companies, (Sept. 2010) at 4, available
at http://files.hawaii.gov/auditor/Reports/2010/10-
07.pdf.
101 The valuation independence provisions of
TILA section 129E and its implementing regulations
do not require use of AMCs. 15 U.S.C
ged by
the State real estate commission. See Auditor of the
State of Hawaii Report 10–07 (Sept. 2010) at 4,
Sunrise Analysis: Real Estate Appraisal
Management Companies, (Sept. 2010) at 4, available
at http://files.hawaii.gov/auditor/Report

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FDIC_FIL15019. Check the current official text before relying on it. Not legal advice.