SPST-NEW Minimum Standards for State Registration of AMCs NPR 4-16-14

Supporting Statement

Minimum Standards for State Registration of

Appraisal Management Companies

OMB Control No. 3064-NEW

A. Justification.

1. Circumstances that make the collection necessary:

The FDIC, Board, OCC, NCUA, Bureau, and FHFA (Agencies) have issued a proposed rule to implement the minimum requirements in section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) to be applied by States in the registration and supervision of appraisal management companies (AMCs). The proposed rule also implements the requirement in section 1473 of the Dodd-Frank Act for States to report required information to the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council, thus enabling the ASC to administer the new national registry of appraisal management companies (AMC National Registry or Registry).

2. Use of the information:

The collection of information requirements in the proposed rule are found in

sections 34.212-34.216.

State Recordkeeping Requirements

States seeking to register AMCs must have an AMC certifying and licensing program. Section 34.213(a) requires each State to establish and maintain within its appraiser certifying and licensing agency a licensing program with the legal authority and mechanisms to: (i) review and approve or deny an application for initial registration; (ii) periodically review and renew, or deny renewal of, an AMC’s registration; (iii) examine an AMC’s books and records and require the submission of reports, information, and documents; (iv) verify an AMC’s certifications or licenses of the appraisers on the AMC’s list, network, panel, or roster; (v) investigate and assess potential violations of appraisal-related laws, regulations, or orders; (vi) discipline, suspend, terminate, or deny registration renewals of AMCs that violate laws, regulations, or orders; and (vii) report an AMC’s violations of appraisal-related laws, regulations, or orders, and disciplinary and enforcement actions and other relevant information about an AMC’s operations to the Appraisal Subcommittee.

Section 34.213(b) requires each State to impose requirements on AMCs not owned and controlled by an insured depository institution and regulated by a Federal financial institution regulatory agency. Such an AMC must: (i) register with and be subject to supervision by a State appraiser certifying and licensing agency in each State in which the AMC operates; (ii) use only State-certified or State-licensed appraisers for Federally related transactions in conformity with any applicable regulations; (iii) 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; (iv) direct the appraiser to perform the assignment in accordance with the Uniform Standards of Professional Appraisal Performance (USPAP); and (v) establish and comply with processes and controls reasonably designed to ensure that the AMC conducts its appraisal management services in accordance with section 129E(a)-(i) of the Truth in Lending Act and regulations thereunder.

State Reporting Burden

Section 34.216 requires each State that registers AMCs for purposes of permitting AMCs to provide appraisal management services relating to covered transactions in that State to submit the AMC-related information required by the ASC to that body.

AMC Reporting Requirements

Section 34.214(b) requires that a Federally-regulated AMC (an AMC that is owned and controlled by an insured depository institution or a credit union) must report to the State or States in which it operates the information required to be submitted by the State pursuant to ASC’s policies regarding: (i) determination of the AMC National Registry fee, including but not limited to a statement that the AMC is a Federally-regulated AMC, and (ii) collection of information related to registration limitations pursuant to section 34.215.

Section 34.215 provides that an AMC shall not be registered by a State or included on the AMC National Registry if such company is owned, directly or indirectly, by any person who has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any State. Each person that owns more than 10 percent of an appraisal management company shall submit to a background investigation carried out by the State appraiser certifying and licensing agency. An AMC shall not be registered by a State if the State appraiser certifying and licensing agency determines as a result of that investigation that a person with more than 10 percent ownership in that AMC does not have good moral character, or fails to submit to a background investigation carried out by the State appraiser certifying and licensing agency. While section 34.215 does not authorize States to conduct background investigations of Federally-regulated AMCs, it would allow a State to do so if the Federally-regulated AMC chooses to register voluntarily with the State.

AMC Recordkeeping Requirements

Section 34.212(b) provides that an appraiser in an AMC’s network or panel is deemed to remain on the network or panel until: (i) the AMC sends a written notice to the appraiser removing the appraiser from the network or panel with an explanation of the AMC’s action; or (ii) the AMC receives a written notice from the appraiser asking to be removed or a notice of the death or incapacity of the appraiser. The AMC would retain these notices in its files.

3. Consideration of the use of improved information technology:

Respondents may use any type of improved information technology they have available to meet the requirements of this regulation.

4. Efforts to identify duplication:

This information is not available elsewhere.

5. Methods used to minimize burden if the collection has a significant impact on substantial number of small entities:

This collection does not have a significant impact on a substantial number of small entities.

6. Consequences to the Federal program if the collection were conducted less frequently:

Less frequent collection would result in safety and soundness concerns.

7. Special circumstances necessitating collection inconsistent with 5 C.F.R. Part 1320:

This collection is conducted in accordance with the guidelines in 5 C.F.R. § 1320.6.

8. Efforts to consult with persons outside the agency:

The Agencies issued a notice of proposed rulemaking for 60 days of comment on April 9, 2014 (78 FR 52194).

9. Payment to respondents.

There is no payment to respondents.

10. Any assurance of confidentiality:

There is no assurance of confidentiality.

11. Justification for questions of a sensitive nature:

There are no questions of a sensitive nature.

12. Estimate of Hour Burden Including Annualized Hourly Costs:

IC # 1 - Written notice of appraiser removal from network or panel.

	Burden Hours
Current Number of Appraisers in U.S.	81,050
25% Laid off or Resign Each Year	20,263
Licenses Revoked or Voluntarily Surrendered 2001-2010	2,283
Average Revoked or Voluntarily Surrendered per year	229
Total Laid off/Resigned/Revoked/Surrendered	20,492
Total Appraiser Removal Notices Issued	20,492
0.08 Burden Hours Taken per Notice	1,640
FHFA Burden	164
FDIC/FRB/OCC Burden Each	492

IC # 2 - Develop and maintain a state licensing program.

	Burden Hours
Number of States without Registration Systems	14
Burden Hours per State	40
Total Burden Hours	560
FDIC/FRB/OCC/FHFA Burden Each	140

IC # 3 – AMC Reporting Requirements (State and Federal AMCs).

	Burden Hours
Number of AMCs	500
Burden Hours per AMC	1
Frequency	6
Total Burden Hours	3,000
FHFA Burden	300
FDIC/FRB/OCC Burden Each	900

IC #4 - State reporting requirements to the Appraisal Subcommittee.

	Burden Hours
Number of States	50
Burden Hours to be Carried Per State (placeholder)	1
Total	50
FDIC/FRB/OCC/FHFA Burden Each	13

Total Burden:

FDIC/FRB/OCC
IC #1	492
IC #2	140
IC #3	900
IC #4	13
Total	1,545
FHFA
IC #1	164
IC #2	140
IC #3	300
IC #4	13
Total	617

Cost of Hour Burden: 1,545 hours x $ 92 per hour = $142,140

To estimate compensation costs associated with the collection, we used $92 per hour, which is based on May 2012 Bureau of Labor Statistics wage data for the average of the 90^th percentile for seven occupations (i.e., accountants and auditors, compliance officers, financial analysts, lawyers, management occupations, software developers, and statisticians) plus an additional 33 percent to cover adjustments and private sector benefits.  According to Bureau of Labor Statistics employer costs of employee benefits data, thirty percent represents the average private sector costs of employee benefits.

13. Estimate of Start-up Costs to Respondents:

None.

14. Estimate of annualized costs to the government:

None.

15. Changes in burden:

The increase in burden of 1,545 hours is due to the fact that this is new collection.

16. Information regarding collections whose results are planned to be published for statistical use:

The FDIC has no plans to publish the information for statistical use.

17. Display of expiration date.

Not applicable.

18. Exceptions to certification statement.

None.

B. Collections of Information Employing Statistical Methods.

Not applicable.