On May 31, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the National Credit Union Administration jointly issued an advisory addressing concerns from the financial industry regarding its perceived shortage of state certified and licensed appraisers, particularly in rural areas. The advisory addresses the appraiser shortage and the subsequent delays in obtaining an appraisal by highlighting two existing options: temporary practice permits and temporary waivers.
Pursuant to Section 1122(a) of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI), a state appraiser certifying or licensing agency is required to recognize the certification or license of an appraiser issued by another state on a temporary basis for federally related transactions (FRT). Subject to state law limitations, temporary practice permits could allow state certified or licensed appraisers to provide their services in states where they are not certified or licensed, including those experiencing a shortage of appraisers. Appraisers must apply to the relevant state appraiser regulatory agency for a temporary practice permit.
In addition, many states allow reciprocity and recognize the appraiser certification and licensing of another state, which allows state certified and licensed appraisers to perform appraisals across state lines.
Moreover, Section 1119 of Title XI authorizes the Federal Financial Institutions Examination Council’s (FFIEC) Appraisal Subcommittee, with the approval of the broader FFIEC, to grant temporary waivers of any requirement relating to certification or licensing of individuals to perform appraisals under Title XI in states or geographic political subdivisions where there is a shortage of appraisers leading to significant delays in obtaining appraisals when certain conditions are met.
Waiver requests may be submitted by any of the following: (1) a state appraiser certifying or licensing agency; (2) a federal bank regulatory agency; (3) a regulated financial institution or credit union; or (4) other persons or institutions with demonstrable interest in appraiser regulation. Regardless of who initially requests a waiver, if granted, the requirement to use a certified or licensed appraiser on FRTs would be waived for all regulated institutions engaging in FRTs in the affected geographic area.
The Interagency Advisory is available here.