FR Temporary Waiver Rules Proposal

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
APPRAISAL SUBCOMMITTEE
12 CFR Part 1102
[Docket No. AS91-4]
RULES OF PRACTICE FOR TEMPORARY WAIVER PROCEEDINGS
AGENCY: Appraisal Subcommittee, Federal Financial Institutions Examination Council.
ACTION: Proposed rulemaking.
SUMMARY: The Appraisal Subcommittee ("ASC") of the Federal Financial Institutions Examination Council ("FFIEC") is publishing for comment proposed Rule 1102, which would set out the ASC's procedures relating to proceedings granting and terminating temporary waivers under ' 1119(b) of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA").
DATES: Comments must be received on or before [Insert date 30 days after date of publication in the FEDERAL REGISTER].
ADDRESSES: Persons wishing to submit written comments should file them with Edwin W. Baker, Executive Director, Appraisal Subcommittee, 1776 G Street, N. W., Suite 850B, Washington, D.C. 20006. All comment letters should refer to Docket No. AS91-4. All comments received will be available for public inspection and copying at the above location.
FOR FURTHER INFORMATION CONTACT: Edwin W. Baker, Executive Director, or Marc L. Weinberg, General Counsel, at (202) 357-0133, Appraisal Subcommittee, 1776 G Street, N.W., Suite 850B, Washington, D.C. 20006.
SUPPLEMENTAL INFORMATION:
I. Introduction
On August 9, 1989, Congress adopted FIRREA, including ' 1102 of Title XI, which established the ASC and placed it within the FFIEC. The ASC consists of representatives appointed by the heads of the Federal Financial Institutions Regulatory Agencies ("FFIRA") and the Department of Housing and Urban Development. Congress intended Title XI of FIRREA and the ASC, the FFIRAs and the Resolution Trust Corporation ("RTC") to protect federal financial and public policy interests in real estate-related financial transactions requiring the services of an appraiser.
The ASC has several statutory duties under Title XI. First, it must monitor the appraisal regulations adopted by the FFIRAs and the RTC (collectively, "Agencies"). Those regulations set out appraisal standards for federally related transactions and define those federally related transactions requiring the services of a State certified or State licensed appraiser. Second, the ASC must monitor and review the practices, procedures, activities, and organizational structure of the Appraisal Foundation. Third, the ASC must monitor each State's certification and licensing programs for real estate appraisers and must review each State's compliance with the requirements of Title XI. It also is authorized by Title XI to take action against non-complying States.
II. Statutory Authority
After December 31, 1991, all financial institutions must use State licensed or certified appraisers, as appropriate, in federally related transactions. Thus, each State ideally should have in place at that time its entire regulatory scheme for certifying, licensing and supervising appraisers.
Section 1119(b) of Title XI, however, provides the ASC and the States with a degree of flexibility in dealing with extraordinary circumstances that may occur at any time after December 31st. This Section enables the ASC to waive, on a temporary basis and with the FFIEC's approval, any State certification or licensing requirement on a written finding that: (1) "there is a scarcity of certified or licensed appraisers to perform appraisals in connection with federally related transactions"; and (2) that the scarcity is "leading to inordinate delays in the performance of such appraisals." Either a State in compliance with Title XI or the ASC can make a written "scarcity/delay" finding. A State, however, cannot grant or deny a waiver under ' 1119(b); that authority belongs only to the ASC. Congress intended that the ASC exercise this waiver authority "cautiously." Temporary waivers terminate when the ASC "determines that such inordinate delays have been eliminated."
While the Section speaks clearly to the ASC and the States, it does not explicitly limit the universe of persons who may either request that the ASC provide temporary waiver relief or provide information to the ASC that could lead to the ASC granting temporary waiver relief on its own initiative. Therefore, the ASC encourages the Agencies, their respective regulated financial institutions, and other persons or institutions to submit to the ASC critical information respecting appraiser scarcities and delays occurring in the States. In connection with those informational submissions, they also may request that the ASC exercise its discretionary authority to provide temporary waiver relief. The ASC will consider such submissions and requests in determining whether it should initiate a temporary waiver proceeding.
III. Description of the Proposed Rule
Proposed Rule 1102 provides a specific procedure for handling ' 1119(b) waiver proceedings. The ASC tailored the proposal to afford expeditious administrative processing of these proceedings, while, at the same time, providing interested parties with an opportunity to participate meaningfully in the process. The ASC intends to work closely with the States to assure that temporary waivers will provide sufficient relief. In return, the ASC expects requests for waiver relief to be designed as narrowly as possible.
Proposed Rule 1102 sets out a highly streamlined procedure for processing temporary waivers. Upon the ASC's proper receipt of a request or when the ASC on its own initiative determines to commence a temporary waiver proceeding, the ASC must publish promptly in the Federal Register a notice containing a concise general statement of the nature and the basis for the waiver. The notice must request written comments from interested members of the public for a 30 calendar-day period. The ASC has at most 45 calendar days from the notice's publication within which to issue an order either granting or denying a waiver. The ASC can grant or deny a waiver in whole, in part, and upon specified terms and conditions, including provisions for the termination of the order. The ASC must discuss in the order the reasons for its finding and note that the ASC will be preparing appropriate notifications regarding the terms and conditions of the temporary waiver order to the Agencies for dissemination to their respective regulated lending institutions should the order become effective. An ASC temporary waiver relief order will not become effective until the FFIEC concurs with the ASC's action. The order then would be published promptly in the Federal Register.
Proposed Rule 1102.2 is central to the waiver procedure. It describes the specific information needed by the ASC for granting or denying a temporary waiver request. A request must set out fully and accurately:
(1) The requirement or requirements from which relief is being sought;
(2) A description of all significant problems currently being encountered in efforts to comply with Title XI;
(3) The nature of the scarcity of certified or licensed appraisers;
(4) The extent of the delays anticipated or experienced in obtaining the services of certified or licensed appraisers;
(5) The reasons why the requester believes that the requirement or requirements are causing the scarcity of certified or licensed appraisers and the inordinate delays in obtaining needed appraiser services; and
(6) A specific plan for expeditiously alleviating the scarcity and the service delays.
A requester must provide this information fully and accurately. If a requester fails to do so, the ASC will not consider the request "received" for processing, and the proposal's deadlines for action will not be triggered. Other persons requesting relief or providing information to the ASC respecting scarcities and inordinate service delays under proposed Rule 1102.3 also should address these items in their documents. While ASC acceptance of informational submissions from other persons cannot be "received" and will not trigger the proposal's deadlines for action, the ASC must consider them in determining whether to initiate a temporary waiver proceeding.
Proposed Rule 1102 also enables the ASC to terminate a waiver whenever the ASC finds that: (1) the "inordinate delays" in obtaining the services of a State licensed or certified appraiser no longer exist; or (2) the terms and conditions of the waiver order are not being satisfied. The ASC must publish a finding of waiver termination promptly in the Federal Register and request public comment on that finding for a 30-day period. Absent further ASC action to the contrary, the finding will become final ten days after the close of the comment period. During this ten-day period, the ASC will prepare appropriate notifications regarding the terms and conditions of the temporary waiver finding to the Agencies for dissemination to their respective regulated lending institutions. The ASC will notify the FFIEC about a proposed waiver termination.
IV. Interim temporary waiver procedures
The ASC has reason to believe that, notwithstanding good faith efforts to comply fully with Title XI by the Title's January 1, 1992 full implementation date, one or more States in all likelihood will be requesting temporary waiver relief between now and the final adoption of proposed Rule 1102. During this interim period, the ASC will accept and consider requests for temporary waiver relief. Moreover, the ASC will accept informational submissions respecting the availability of State licensed or certified appraisers in the States. To facilitate this process, the ASC asks requesters and submitters to use the criteria in proposed Rule 1102.2 as a guideline in formulating their documents. This should greatly assist (1) requesters in drafting well focused waiver requests during this critical transitional period and (2) the ASC in determining whether to initiate temporary waiver proceedings.
During this period, the ASC will retain its procedural flexibility under ' 1119(b) in responding to written temporary waiver requests and will not be bound formally by the proposed Rule's time frames and other procedural requirements. That is, until the ASC finally adopts Rule 1102, the ASC only must comply with ' 1119(b)'s provisions, i.e., determining whether the appropriate statutory tests for relief have been met, issuing a written finding and obtaining FFIEC concurrence. Nothing in Title XI, and in particular
' 1119(b) or any other provision of federal law, specifically requires the ASC to propose and adopt written procedures governing the process for granting or denying temporary waivers. The ASC, however, believes that putting in place formal temporary waiver procedures makes good regulatory sense. Such procedures should: (1) ensure the uniform procedural treatment of temporary waiver requests; (2) provide substantive guidance in formulating those requests; and (3) provide the expeditious and efficient resolution of requests.
V. Regulatory Flexibility Act Statement
Pursuant to section 605(b) of the Regulatory Flexibility Act, the ASC certifies that this notice of proposed rulemaking is not expected to have a significant adverse economic impact on a substantial number of small business entities. Accordingly, a regulatory flexibility analysis is not required.
Proposed Rule 1102 would set out the ASC's procedures relating to proceedings granting and terminating temporary waivers under ' 1119(b) of Title XI. This section of FIRREA generally requires the ASC to make written findings and to determine that such findings satisfy the stated criteria for granting a waiver.
The purpose of the proposed rule is to secure a just and orderly determination of administrative proceedings. Temporary waiver proceedings by their very nature provide relief for small and large business entities and individuals.
VI. Executive Order 12291 Statement
The ASC has determined that this notice of proposed rulemaking does not constitute a "major rule" within the meaning of Executive Order 12291. Accordingly, a Regulatory Impact Analysis is not required on the grounds that this notice of proposed rulemaking, if adopted: (1) would not have an annual effect on the economy of $100 million or more; (2) would not result in a major increase in the cost of financial institution operations or governmental supervision; and (3) would not have a significant adverse effect on competition (foreign or domestic), employment, investment, productivity or innovation, within the meaning of the Executive Order.
VII. List of Subjects in 12 CFR Chapter 11
Proceedings; Waiver; Appraisers; State Appraisal Regulatory Agencies.
VIII. Text of the Proposed Rule
SUBPART A--TEMPORARY WAIVER REQUESTS
1. The authority citation for Subpart A is as follows:
Authority: 12 U.S.C. ' 3348(b), unless otherwise noted.
2. By adding new ' 1102 to read as follows:
' 1102.1 Authority, purpose and scope.
(a) Authority. This subpart is issued under section 1119(b) of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") (12 U.S.C.
' 3348(b)).
(b) Purpose and scope. This subpart prescribes rules of practice and procedure governing temporary waiver proceedings under section 1119(b) of Title XI of FIRREA (12 U.S.C. ' 3348(b)). These procedures apply to whenever a state appraiser regulatory agency requests the Subcommittee for a waiver of any requirement relating to certification or licensing of a person to perform appraisals under Title XI of FIRREA. They also apply whenever the Subcommittee, based on sufficient, credible information or requests received from other persons or entities, initiates a temporary waiver proceeding.
' 1102.2 Requirements for requests.
A request will not be deemed received by the Subcommittee unless it fully and accurately sets out:
(a) If the requester is a State Appraiser Regulatory Agency, a written, duly authorized determination by the State Appraiser Regulatory Agency that there is a scarcity of State licensed or State certified appraisers leading to inordinate delays in obtaining appraisals in federally related transactions. In the absence of such a written determination, a State Appraiser Regulatory Agency must ask the ASC for such a determination. A requester other than a State Appraiser Regulatory Agency may ask the ASC for such a determination;
(b) The requirement or requirements from which relief is being sought;
(c) A description of all significant problems currently being encountered in efforts to comply with Title XI;
(d) The nature of the scarcity of certified or licensed appraisers (including supporting documentation);
(e) The extent of the delays anticipated or experienced in obtaining the services of certified or licensed appraisers (including supporting documentation);
(f) The reasons why the requester believes that the requirement or requirements are causing the scarcity of certified or licensed appraisers and the service delays; and
(g) A specific plan for expeditiously alleviating the scarcity and the service delays.
' 1102.3 Other requests and information submissions.
The Federal Financial Institutions Regulatory Agencies and the Resolution Trust Corporation, their respective regulated financial institutions, and other persons or institutions may submit the information requested in ' 1102.2 and may ask that the Subcommittee exercise its discretionary authority to initiate a temporary waiver proceeding. The Subcommittee shall consider these submissions and requests in exercising that authority. When the Subcommittee initiates a temporary waiver proceeding, these documents shall correspond to a received request under ' 1102.4 of this Subpart.
' 1102.4 Notice and comment.
The Subcommittee shall publish promptly in the Federal Register a notice respecting: (1) the received request; or (2) the Subcommittee order initiating a temporary waiver proceeding. The notice or initiation order shall contain a concise general statement of the nature and basis for the action and shall give interested persons 30 calendar days from its publication in which to submit written data, views and arguments.
' 1102.5 Subcommittee determination.
Within 45 calendar days of the date of the publication of the notice or initiation order in the Federal Register, the Subcommittee, by order, shall either grant or deny a waiver in whole, in part, and upon specified terms and conditions, including provisions for waiver termination. Such order shall respond to comments received from interested members of the public and shall provide the reasons for the Subcommittee's finding. The order shall be published promptly in the Federal Register, which, in the case of an approval order, shall be after Federal Financial Institution Examination Council concurrence. The Subcommittee's approval order shall be effective only upon Examination Council concurrence.
' 1102.6 Waiver extension.
A State Appraiser Regulatory Agency may request an extension of temporary waiver relief by forwarding an additional written request to the Subcommittee. This additional request shall be subject to all the requirements of this Subpart.
' 1102.7 Waiver termination.
The Subcommittee at any time may terminate a waiver order on the finding that: (1) the inordinate delays in obtaining the services of certified or licensed appraisers no longer exist; or (2) the terms and conditions of the waiver order are not being satisfied. The Subcommittee shall publish a finding of waiver termination promptly in the Federal Register, giving interested persons 30 calendar days from publication in which to submit written data, views and arguments. In the absence of further Subcommittee action to the contrary, the finding of waiver termination automatically shall become final ten calendar
days after the close of the comment period.

By the Appraisal Subcommittee of the Federal Financial Institutions Examination Council,

Date Diana L. Garmus, Acting Chairperson

FR Temporary Waiver Rules Proposal: