Due to a shortage of licensed and certified appraisers, DS News (among others) recently reported that several federal agencies have issued a joint advisory to regulated institutions on suggested alternatives.
This joint advisory—which was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency—offers two possible solutions for those that are currently dealing with appraiser shortages. In particular, the suggested alternatives are aimed at helping more rural areas that are especially struggling with the availability of state certified and licensed appraisers.
The first option is for states to issue temporary practice permits, which would allow appraisers that are licensed in other states to work in the areas experiencing a shortage. These out-of-state appraisers would need to apply to the wanting state’s regulatory agency for their temporary permit.
The second option would call on the Appraisal Subcommittee (ASC) to issue temporary waivers of any state imposed certification or licensing requirements to help facilitate the timely completion of federally related transactions.
This option is a little more complicated and time-consuming, because in order for the ASC to consider a temporary waiver, a federal bank regulatory agency, regulated financial institution/credit union, or state appraisal licensing agency must submit a request to the Subcommittee and provide evidence of the shortage. They must also prove that the appraiser shortage is the direct cause of significant delays in loan closings.
The ASC is then required to post a public notice on the Federal Registrar, and has 15 days to post its decision. Even if the temporary waiver is eventually approved by the ASC, its validity must still be granted by the Federal Financial Institutions Examination Council (FFIEC) – who has the final say.
Once officially approved, however, the temporary waiver will apply to all regulated institutions in the geographical area – regardless of which institution submitted the application. The ASC will determine how long the waiver will last, and may terminate the waiver if the shortage declines.
For more information on these suggested alternatives, check out the regulators’ joint advisory.