[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Notices]
[Pages 49371-49372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17660]
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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
[Docket No. AS20-08]
Appraisal Subcommittee; Order Extending Commercial Real Estate
Transaction Temporary Waiver Relief
AGENCY: Appraisal Subcommittee, Federal Financial Institutions
Examination Council.
ACTION: Order extending, with specified terms and conditions,
commercial real estate transaction temporary waiver relief.
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SUMMARY: The Appraisal Subcommittee (ASC) of the Federal Financial
Institutions Examination Council (FFIEC), with approval of the FFIEC,
is issuing an Order pursuant to section 1119(b) of Title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989,
as amended (Title XI) and the rules promulgated thereunder, extending
temporary waiver relief of appraiser credentialing requirements for
appraisals of federally related transactions (FRTs) under $1,000,000
for commercial real estate transactions throughout the State of North
Dakota for an additional one-year period and subject to specified terms
and conditions.
DATES: Applicable August 7, 2020.
FOR FURTHER INFORMATION CONTACT: James R. Park, Executive Director, at
(202) 595-7575, or Alice M. Ritter, General Counsel, at (202) 595-7577,
ASC, 1325 G Street NW, Suite 500, Washington, DC 20005.
SUPPLEMENTARY INFORMATION: Section 1119(b) of Title XI authorizes the
ASC to waive, on a temporary basis and subject to the approval of the
FFIEC, ``any requirement relating to certification or licensing of a
person to perform appraisals under [Title XI]'' upon ``a written
determination that there is a scarcity of certified or licensed
appraisers to perform appraisals in connection with [FRTs] \1\ in a
State, or in any geographical political subdivision of a State, leading
to significant delays in the performance of such appraisals.'' \2\ The
ASC has promulgated regulations that set forth procedures \3\ that
govern the processing of temporary waiver requests.
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\1\ ``Federally related transaction'' (FRT) refers to any real
estate related financial transaction which: (a) A federal financial
institutions regulatory agency engages in, contracts for, or
regulates; and (b) requires the services of an appraiser. (Title XI
Sec. 1121 (4), 12 U.S.C. 3350.)
\2\ 12 U.S.C. 3348(b).
\3\ 12 CFR part 1102, subpart A.
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On August 1, 2018, the Governor of North Dakota, the North Dakota
Department of Financial Institutions, and the North Dakota Bankers
Association (Requesters) submitted a temporary waiver request to the
ASC. The Requesters sought a temporary waiver of not less than five
years of appraiser credentialing requirements for appraisals for FRTs
under $500,000 for 1-to-4 family residential real estate transactions
and under $1,000,000 for agricultural and commercial real estate
transactions throughout the State of North Dakota.\4\
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\4\ On September 7, 2018, ASC staff responded with a request for
clarification and additional information, and on April 10, 2019, the
Requesters submitted an additional letter with a clarification of
the request and additional information.
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On July 9, 2019, the ASC convened a Special Meeting to consider the
request. Based on the information provided by the Requester, the North
Dakota Real Estate Appraiser Qualifications and Ethics Board (Appraiser
Board), and by the public through comment letter submissions, the ASC
issued an Order (2019 Order) approving a limited version of the waiver
request.\5\ The 2019 Order was published in the Federal Register,\6\
and in pertinent part \7\ included a temporary waiver of appraiser
credentialing requirements for appraisals of FRTs under $1,000,000 for
commercial real estate transactions throughout the State of North
Dakota for a period of one year. The 2019 Order also provided that,
among other things, the parties requesting the waiver should submit
certain information to the ASC at least 30 days prior to the expiration
of the one-year period and the ASC would consider the information
submitted and by vote in open session may extend the temporary waiver
for an additional one-year period.
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\5\ An approval of a temporary waiver by the ASC is subject to
the approval of the FFIEC. (See 12 U.S.C. 3348(b); 12 CFR 1102.5.)
On July 12, 2019, the FFIEC approved the temporary waiver granted by
the ASC on July 9, 2019.
\6\ 84 FR 38630 (August 7, 2019).
\7\ The Order also included a temporary waiver of appraiser
credentialing requirements for appraisals of FRTs under $500,000 for
1-to-4 family residential real estate transactions throughout the
State of North Dakota for a period of one year, subject to earlier
termination in the event the federal banking agencies issued a rule
increasing appraisal exemption threshold limits for residential real
estate transactions, in which case the residential waiver would
terminate 60 days after the effective date of that threshold
increase. The federal banking agencies issued a final rule
increasing the appraisal exemption threshold for residential real
estate transactions with an effective date of October 9, 2019. 83 FR
63110 (December 7, 2018). The temporary waiver for residential real
estate transactions terminated by its own terms 60 days after the
effective date of that rule on December 8, 2019.
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On July 6, 2020, Requesters submitted certain information and as
amended on July 8, 2020, sought extension of the commercial real estate
transaction temporary waiver relief for an additional one-year
period.\8\ On July 29, 2020, the ASC convened a Special Meeting via
teleconference to consider the information as presented by the
Requesters and voted to extend the commercial real estate transaction
temporary waiver relief in North Dakota for an additional one-year
period, subject to specified terms and conditions, and subject to FFIEC
approval. The FFIEC met on August 7, 2020, via WebEx, and a quorum of
the Council being present, took the following action: Pursuant to Sec.
1119(b) of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989, as amended, the Council approved the attached waiver
extension that was approved by the ASC on July 29, 2020.
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\8\ Requesters were joined in their July 6 submission by the
Credit Union Association of the Dakotas and the Independent
Community Banks of North Dakota.
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ASC Discussion
In order to extend the commercial real estate transaction temporary
waiver relief in North Dakota for an additional one-year period, the
2019 Order set forth the following specified terms and conditions:
1. During the one-year period, the Requester is expected to
develop a plan through continued dialogue with North Dakota
stakeholders, including the Appraiser Board, to identify potential
solutions to address appraiser scarcity and appraisal delay.
2. At least 30 days prior to the expiration of the one-year
period, the Requester should provide (1) a status report to the ASC
on the plan that was developed in collaboration with stakeholders
and any implementation progress made on that plan toward identifying
meaningful solutions to resolve appraiser scarcity and delay issues
faced in North Dakota; and (2) supporting data showing that
appraiser scarcity leading to significant delays continues to exist,
which may include information to identify specific localities
affected by appraiser scarcity. The ASC will consider the
information as presented by the Requester, and by vote in open
session, may extend the temporary waiver for an additional one-year
period.
[[Page 49372]]
In their July 6 submission, Requesters reported that a November 6,
2019 meeting had been held with North Dakota stakeholders, including
appraisers.\9\ Requesters provided a list of 25 ``ideas and potential
solutions'' identified by the meeting's 58 attendees as potential steps
to address appraiser scarcity or appraisal delays. Requesters stated
that a follow-up meeting was planned for the spring of 2020, but that
``due to the challenges presented by the COVID-19 pandemic, all in-
person meetings and conventions were canceled when travel became
restricted and everyone responded to the crisis.'' Requesters further
stated that ``[a]lthough our collaboration efforts have been disrupted
for the time being, we are anticipating future collaboration to do as
much as we can locally.''
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\9\ In its submission, the Appraiser Board advised that
appraisers in attendance at this meeting were not affiliated with
the Appraiser Board.
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In support of their assertion that a scarcity of appraisers
persists in North Dakota, Requesters cited data from the Appraiser
Board indicating that the number of certified general appraisers
(needed to appraise commercial and agricultural properties) has fallen
from 67 as of September 17, 2018, to 65 as of April 30, 2020.
Requesters reported that a May 2020 survey by the North Dakota
Department of Financial Institutions found that turnaround times for
commercial appraisals have improved over the past year (which
Requesters attributed to the current waiver and the increased appraisal
threshold for credit unions for commercial real estate transactions)
but 23 percent of respondents still report delays more than 50 percent
of the time and 23 percent of respondents reported 5 or more delays in
the past 12 months.
The ASC also considered information received from the Appraiser
Board. The Appraiser Board stated that a July 2020 survey found that at
least 80 percent of commercial appraisers responding reported appraisal
turn times of five weeks or less in each of North Dakota's six regions.
According to the same survey, 90 percent of agricultural appraisers
responding reported appraisal turn times of six weeks or less in five
of North Dakota's six regions.
In considering this request to extend commercial real estate
transaction temporary waiver relief in North Dakota, the ASC found the
information submitted by the Requesters to be less robust than the ASC
had expected to support a one-year extension under the terms of the
2019 Order. The ASC also acknowledges extenuating and unprecedented
circumstances. The United States has been operating under a
presidentially declared emergency since March 13, 2020. The ASC
acknowledges challenges posed by Coronavirus Disease 2019 (COVID-19).
As stated in the Interagency Statement on Appraisals and Evaluations
for Real Estate Related Financial Transactions Affected by the
Coronavirus,\10\ ``COVID-19 has significantly affected financial
institutions and their customers.'' It is reasonable to conclude that
the Requesters' intentions to further collaborate with financial
institutions as well as other North Dakota stakeholders were negatively
impacted by the disruption resulting from COVID-19. Further, the
disruption resulting from COVID-19 impacted the ASC's expectations of
what steps the Requesters could be expected to take to further
collaborate with financial institutions as well as other North Dakota
stakeholders. Given the impediments resulting from COVID-19, the State
has sufficiently fulfilled the requirements of the 2019 Order to meet
the ASC's altered expectations.
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\10\ Interagency Statement on Appraisals and Evaluations for
Real Estate Related Financial Transactions Affected by the
Coronavirus was issued April 14, 2020, by the Office of the
Comptroller of the Currency, Board of Governors of the Federal
Reserve System, Federal Deposit Insurance Corporation, Consumer
Financial Protection Bureau, National Credit Union Administration.
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Specifically, in order to extend the temporary waiver, the ASC must
make a determination that a scarcity of credentialed appraisers leading
to significant delays in obtaining appraisals for FRTs continues to
exist. In considering whether to extend the current waiver, the ASC has
examined both evidence of scarcity of appraisers in North Dakota, and
the evidence of scarcity leading to significant delays. The ASC
considered the challenges the current pandemic has posed in gathering
data about turnaround times. After reviewing all the facts of record, a
majority of the ASC members have determined that a scarcity of
appraisers continues to exist in North Dakota and that the scarcity is
leading to significant delays in appraisal services for FRTs under
$1,000,000 for commercial real estate transactions in North Dakota.
Therefore, for the reasons described above and after considering
all the facts of record, by majority vote, the ASC determined to extend
commercial real estate transaction temporary waiver relief for an
additional one-year period, subject to specified terms and conditions,
and subject to FFIEC approval, as follows:
1. A temporary waiver of appraiser credentialing requirements
for appraisals of FRTs under $1,000,000 for commercial real estate
transactions throughout the State of North Dakota is extended for an
additional one-year period, expiring August 7, 2021.
2. During the additional one-year period, Requesters are
expected to continue efforts to develop, through continued dialogue
with the Appraiser Board and other North Dakota stakeholders, a plan
to identify potential solutions to address appraiser scarcity and
appraisal delays.
3. The ASC pursuant to 12 CFR 1102.7 may terminate this waiver
order on a finding that significant delays in the receipt of
appraisals for FRTs no longer exists, or that the terms and
conditions of the order are not being satisfied.
Order
After reviewing all the facts of record, including submissions by
the Requesters and by the Appraiser Board, the ASC has determined that
a scarcity of appraisers continues to exist in North Dakota and that
the scarcity is leading to a significant delays in appraisal services
for FRTs under $1,000,000 for commercial real estate transactions in
North Dakota.
Accordingly, and for the reasons stated in the ``ASC Discussion''
section above, and pursuant to section 1119(b) of Title XI and 12 CFR
part 1102, subpart A, the ASC is extending the commercial real estate
transaction temporary waiver relief for North Dakota for an additional
one-year period, subject to the following specified terms and
conditions, and subject to FFIEC approval:
1. A temporary waiver of appraiser credentialing requirements
for appraisals of FRTs under $1,000,000 for commercial real estate
transactions throughout the State of North Dakota is extended for an
additional one-year period, expiring August 7, 2021.
2. During the additional one-year period, Requesters are
expected to continue efforts to develop, through continued dialogue
with the Appraiser Board and other North Dakota stakeholders, a plan
to identify potential solutions to address appraiser scarcity and
appraisal delays.
3. The ASC pursuant to 12 CFR 1102.7 may terminate this waiver
order on a finding that significant delays in the receipt of
appraisals for FRTs no longer exists, or that the terms and
conditions of the order are not being satisfied.
* * * * *
By the Appraisal Subcommittee, August 7, 2020.
Tim Segerson,
Chairman.
[FR Doc. 2020-17660 Filed 8-12-20; 8:45 am]
BILLING CODE 6700-01-P