24 Cfr 200.200-200.206

Friday,
November 30, 2001

Part IV

Department of
Housing and Urban
Development
24 CFR Part 200
Appraiser Qualifications for Placement on
FHA Single Family Appraiser Roster;
Proposed Rule

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Federal Register / Vol. 66, No. 231 / Friday, November 30, 2001 / Proposed Rules

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Part 200
[Docket No. FR–4620–P–01]
RIN 2502–AH59

Appraiser Qualifications for Placement
on FHA Single Family Appraiser Roster
AGENCY: Office of the Assistant
Secretary for Housing—Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
SUMMARY: This proposed rule would
make several regulatory changes
designed to strengthen the licensing and
certification requirements for placement
on the FHA Appraiser Roster. First, the
proposed rule would require that
appraisers on the Appraiser Roster must
have professional credentials that are
based on the minimum licensing/
certification standards issued by the
Appraiser Qualifications Board of the
Appraisal Foundation. The proposed
rule also clarifies that an appraiser may
be removed from the Appraiser Roster if
the appraiser loses his or her license or
certification in any state due to
disciplinary action, even if the appraiser
continues to be licensed or certified in
another state. Finally, the proposed rule
provides that an appraiser who is
licensed or certified in a single state and
whose license or certification has
expired, or has been revoked,
suspended or surrendered as a result of
a state disciplinary action, will be
automatically suspended from the
Appraiser Roster until HUD receives
evidence demonstrating renewal or that
the state imposed sanction has been
lifted.
DATES:

Comments Due Date: January 29,

2002.
Interested persons are
invited to submit comments regarding
this proposed rule to the Regulations
Division, Office of General Counsel,
Room 10276, Department of Housing
and Urban Development, 451 Seventh
Street, SW., Washington, DC 20410–
0500. Communications should refer to
the above docket number and title.
Facsimile (FAX) comments are not
acceptable. A copy of each
communication submitted will be
available for public inspection and
copying between 7:30 am and 5:30 pm
weekdays at the above address.
FOR FURTHER INFORMATION CONTACT:
Vance T. Morris, Director, Office of
Single Family Program Development,
Room 9266, U.S. Department of Housing
and Urban Development, 451 Seventh
ADDRESSES:

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Street, SW., Washington, DC 20410–
8000; telephone (202) 708–2121 (this is
not a toll-free number). Hearing- or
speech-impaired individuals may access
this number via TTY by calling the tollfree Federal Information Relay Service
at 1–800–877–8339.
SUPPLEMENTARY INFORMATION:
I. Background
HUD has taken various steps to ensure
the integrity of Federal Housing
Administration (FHA) appraisals. In
August 1999, HUD launched dramatic
and comprehensive reforms of the FHA
appraisal process through its
Homebuyer Protection Plan. The
purpose of these reforms is to ensure
that homebuyers seeking FHA-insured
mortgages receive accurate and
complete appraisals of the homes they
seek to purchase. As part of the
Homebuyer Protection Plan, HUD has
established regulatory placement and
removal procedures for the FHA
Appraiser Roster. These procedures are
codified in subpart G of HUD’s
regulations at 24 CFR part 200
(consisting of §§ 200.200—200.206).
HUD’s Appraiser Roster lists those
appraisers who are eligible to perform
FHA single family appraisals. HUD
maintains the Appraiser Roster to
provide a means by which HUD can
monitor the quality of appraisals
performed on single family homes
financed through the FHA single family
programs and to ensure that appraisers
performing FHA appraisals meet high
competency standards. The Appraiser
Roster is an important part of the FHA
Single Family Mortgage Insurance
program because accurate appraisals are
vital to the success of the program and
HUD’s ability to protect the FHA
Insurance Fund.
This proposed rule would make
several regulatory changes that are
designed to strengthen the FHA
Appraiser Roster licensing and
certification requirements. First, the
proposed rule would amend § 200.202,
which requires that an applicant for
placement on the Appraiser Roster must
be a state-licensed or state-certified
appraiser. The proposed rule would
require that the state licensed or
certified appraiser have professional
credentials that are based on the
minimum licensing/certification
standards issued by the Appraiser
Qualifications Board (AQB) of the
Appraisal Foundation. HUD believes
that the proposed amendment will help
to ensure that appraisers on the
Appraiser Roster meet high competency
standards, thereby improving the
quality and accuracy of their FHA
appraisals. For purposes of the rule, an

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appraiser would not be deemed to have
professional credentials based on AQB
standards if the state licensing/
certification requirements did not
conform to AQB criteria at the time the
appraiser obtained the license or
certification. This is true even if the
state has subsequently adopted AQB
criteria and has ‘‘grandfathered’’
previously licensed or certified
appraisers.
The proposed rule would also amend
§ 200.204, which describes the actions
HUD may take against an appraiser on
the Appraiser Roster that does not meet
HUD’s established guidelines for
performance, education, competency,
and other professional criteria.
Specifically, the proposed rule clarifies
that an appraiser may be removed from
the Appraiser Roster if the appraiser
loses his or her license or certification
in any state due to disciplinary action,
even if the appraiser continues to be
licensed or certified in another state.
The proposed rule would also provide
that an appraiser who is licensed or
certified in a single state and whose
state license or certification has expired,
or has been revoked, suspended or
surrendered as a result of a state
disciplinary action, will be
automatically suspended from the
Appraiser Roster and prohibited from
conducting FHA appraisals until HUD
receives evidence demonstrating
renewal or that the state imposed
sanction has been lifted.
II. Findings and Certifications
Regulatory Planning and Review
The Office of Management and Budget
(OMB) reviewed this rule under
Executive Order 12866, Regulatory
Planning and Review. OMB determined
that this proposed rule is a ‘‘significant
regulatory action’’ as defined in section
3(f) of the Order (although not an
economically significant regulatory
action under the Order). Any changes
made to this rule as a result of that
review are identified in the docket file,
which is available for public inspection
in the office of the Department’s Rules
Docket Clerk, Room 10276, 451 Seventh
Street, SW., Washington, DC 20410–
0500.
Public Reporting Burden
The information collection
requirements for the FHA Appraiser
Roster have been approved by the Office
of Management and Budget (OMB)
under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3520) and have
been assigned OMB control number
2502–0538. In accordance with the
Paperwork Reduction Act, HUD may not

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Federal Register / Vol. 66, No. 231 / Friday, November 30, 2001 / Proposed Rules
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless the collection
displays a currently valid OMB control
number.
Environmental Impact
This proposed rule does not direct,
provide for assistance or loan and
mortgage insurance for, or otherwise
govern or regulate, real property
acquisition, disposition, leasing,
rehabilitation, alteration, demolition, or
new construction, or establish, revise, or
provide for standards for construction or
construction materials, manufactured
housing, or occupancy. Accordingly,
under 24 CFR 50.19(c)(1), this proposed
rule is categorically excluded from
environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Regulatory Flexibility Act
The Secretary has reviewed this
proposed rule before publication, and
by approving it certifies, in accordance
with the Regulatory Flexibility Act (5
U.S.C. 605(b)), that this proposed rule
would not have a significant economic
impact on a substantial number of small
entities. The reasons for HUD’s
determination are as follows.
The proposed rule would require that
appraisers on the Appraiser Roster have
professional credentials that are based
on the minimum licensing/certification
standards issued by the Appraiser
Qualifications Board (AQB) of the
Appraisal Foundation. An analysis of
the FHA Appraiser Roster indicates that
of the approximately 22,163 appraisers
currently on the Roster, only
approximately 330 do not have
licensing in conformance with the
standards issued by the AQB. In most
instances, these appraisers already have
some of the hours of education or
experience required to meet the AQB
criteria, thus further minimizing the
impacts of the proposed rule. For
example, most appraisers on the Roster
have been listed on the Roster for some
time, and thus few of these appraisers
will have difficulty providing evidence
to their state board demonstrating
acceptable experience levels. With
regards to the education requirements,
the AQB standards only require 120
hours of education for certification.
Given the few number of appraisers
currently on the Roster who do not have
a state designation based on AQB
criteria and the relative low time and
expense that would be required for most
of these appraisers to meet AQB criteria,
HUD believes that the proposed rule
will not have a significant economic
impact on small entities.

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In addition to the new AQB
standards, the proposed rule also
clarifies that an appraiser may be
removed from the Appraiser Roster if
the appraiser loses his or her license or
certification in any state due to
disciplinary action, even if the appraiser
continues to be licensed or certified in
another state. The proposed rule would
also provide that an appraiser who is
licensed or certified in a single state and
whose state license or certification has
expired, or has been revoked,
suspended or surrendered as a result of
a state disciplinary action, will be
automatically suspended from the
Appraiser Roster and prohibited from
conducting FHA appraisals until HUD
receives evidence demonstrating
renewal or that the state imposed
sanction has been lifted. To the extent
that these changes have an impact on
small entities it will be as a result of
actions taken by the appraisers
themselves—that is, violation of
applicable standards resulting in
disciplinary action or otherwise failing
to maintain their professional state
licensing or certification.
Notwithstanding HUD’s
determination that this rule will not
have a significant economic effect on a
substantial number of small entities,
HUD specifically invites comments
regarding any less burdensome
alternatives to this rule that will meet
HUD’s objectives as described in this
preamble.
Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial direct compliance costs on
state and local governments and is not
required by statute, or the rule preempts
state law, unless the agency meets the
consultation and funding requirements
of section 6 of the Executive Order. This
proposed rule would not have
federalism implications and would not
impose substantial direct compliance
costs on state and local governments or
preempt state law within the meaning of
the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (2 U.S.C. 1531–
1538) establishes requirements for
Federal agencies to assess the effects of
their regulatory actions on state, local,
and tribal governments, and on the
private sector. This proposed rule
would not impose any Federal mandates
on any state, local, or tribal
governments, or on the private sector,

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within the meaning of the Unfunded
Mandates Reform Act of 1995.
List of Subjects in 24 CFR Part 200
Administrative practice and
procedure, Claims, Equal employment
opportunity, Fair housing, Home
improvement, Housing standards,
Incorporation by reference, Lead
poisoning, Loan programs—housing and
community development, Minimum
property standards, Mortgage insurance,
Organization and functions
(Government agencies), Penalties,
Reporting and recordkeeping
requirements, Social security,
Unemployment compensation, Wages.
Accordingly, for the reasons
discussed in the preamble, HUD
proposes to amend 24 CFR part 200 as
follows:
PART 200—INTRODUCTION TO FHA
PROGRAMS
1. The authority citation for 24 CFR
part 200 continues to read as follows:
Authority: 12 U.S.C. 1701–1715z–18; 42
U.S.C. 3535(d).

Subpart G—Appraiser Roster
2. Revise § 200.202(b)(1) to read as
follows:
§ 200.202 How do I apply for placement on
the Appraiser Roster?

*

*
*
*
*
(b) * * *
(1) You must be a state-licensed or
state-certified appraiser with
professional credentials based on the
minimum licensing/certification criteria
issued by the Appraiser Qualifications
Board (AQB) of the Appraisal
Foundation (for purposes of this section,
an appraiser is not deemed to have
professional credentials based on AQB
standards if the state licensing/
certification requirements did not
conform to AQB criteria at the time the
appraiser obtained the license or
certification. This is true even if the
state has subsequently adopted AQB
criteria and has ‘‘grandfathered’’
previously licensed or certified
appraisers).
*
*
*
*
*
3. Amend § 200.204 as follows:
a. Revise paragraph (a)(1);
b. Redesignate paragraphs (c) and (d)
as paragraphs (d) and (e) respectively;
and
c. Add new paragraph (c):
§ 200.204 What actions may HUD take
against unsatisfactory appraisers on the
Appraiser Roster?

*

*
*
(a) * * *

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Federal Register / Vol. 66, No. 231 / Friday, November 30, 2001 / Proposed Rules

(1) Cause for removal. Cause for
removal includes, but is not limited to:
(i) Significant deficiencies in
appraisals, including non-compliance
with Civil Rights requirements
regarding appraisals;
(ii) Losing standing as a state-certified
or state-licensed appraiser due to
disciplinary action in any state in which
the appraiser is certified or licensed;
(iii) Prosecution for committing,
attempting to commit, or conspiring to
commit fraud, misrepresentation, or any
other offense that may reflect on the
appraiser’s character or integrity;
(iv) Failure to perform appraisal
functions in accordance with
instructions and standards issued by
HUD;

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(v) Failure to comply with any
agreement made between the appraiser
and HUD or with any certification made
by the appraiser;
(vi) Being issued a final debarment,
suspension, or limited denial of
participation;
(vii) Failure to maintain eligibility
requirements for placement on the
Appraiser Roster as set forth under this
subpart or any other instructions or
standards issued by HUD; or
(viii) Failure to comply with HUDimposed education requirements under
paragraph (d) of this section within the
specified period for complying with
such education requirements.
*
*
*
*
*
(c) Automatic suspension from
Appraiser Roster. An appraiser who is

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licensed or certified in a single state and
whose state licensing or certification has
expired, or has been revoked,
suspended or surrendered as a result of
a state disciplinary action, is
automatically suspended from the
Appraiser Roster and prohibited from
conducting FHA appraisals until HUD
receives evidence demonstrating
renewal or that the state imposed
sanction has been lifted.
*
*
*
*
*
Dated: September 10, 2001.
John C. Weicher,
Assistant Secretary for, Housing-Federal
Housing Commissioner.
[FR Doc. 01–29681 Filed 11–29–01; 8:45 am]
BILLING CODE 4210–27–P

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