Appraisal Subcommittee of the Federal Financial Institutions, B-279866.3, February 28, 2000

B-279866.3 Feb 28, 2000 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights The ASC did not apply the law unreasonably or otherwise abuse its discretion when it concluded that a state's policy for assessing fees for an appraiser's first period of coverage is not appropriate if the initial registry fee covers more than a 12-month period. ASC asks whether Georgia's fee collection practice is consistent with section 1109 of FIRREA. ASC's position is that an annual registry fee covering more than a 12-month period would violate section 1109 of FIRREA. The purpose of ASC's enabling legislation is to "provide that Federal financial and public policy interests in real estate related transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing. View Decision Matter of: Appraisal Subcommittee of the Federal Financial Institutions Examination Council – State Agency Fee Collection Practice for Appraisers under Title XI of FIRREA File: B-279866.3 Date: February 28, 2000 DIGEST DECISION Pursuant to section 1109 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council maintains a registry of appraisers qualified and eligible to perform appraisals in federally related transactions. 12 U.S.C. Sec. 3338(b)(1). To be eligible, the appraiser must pay an annual registry fee to a state appraiser certifying and licensing agency, which must transmit collected fees to ASC on an annual basis. 12 U.S.C. Sec. 3338(a)(2). The State of Georgia has a licensing and certification program that results in an appraiser's initial licensing period being as short as one month or as long as 23 months depending on the applicant's month of birth and the month the licensing period begins. Georgia collects from the appraiser and transmits to ASC an annual registry fee covering the initial licensing period regardless of its duration. ASC asks whether Georgia's fee collection practice is consistent with section 1109 of FIRREA, which requires that state agencies collect and transmit registry fees to ASC on an annual basis. ASC's position is that an annual registry fee covering more than a 12-month period would violate section 1109 of FIRREA. We conclude that ASC's interpretation of section 1109 of FIRREA reflects a reasonable exercise of its discretion in administering section 1109 of FIRREA. BACKGROUND As part of FIRREA, Congress established the ASC within the Federal Financial Institutions Examination Council. 12 U.S.C. Sec. 3310. The ASC consists of designees of the heads of the federal financial institutions regulatory agencies, namely, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration Board. 12 U.S.C. Secs. 3310, 3350. Shortly after FIRREA became law, Congress added the Secretary of the Department of Housing and Urban Development, or his designee, to the ASC. 12 U.S.C. Sec. 1708(e). The purpose of ASC's enabling legislation is to "provide that Federal financial and public policy interests in real estate related transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision." 12 U.S.C. Sec. 3331. To accomplish these objectives, ASC (1) monitors the requirements established by the states for certifying and licensing individuals qualified to perform appraisal in connection with federally related transactions, including a code of professional responsibility; (2) monitors appraisal standards of the Federal financial institutions regulatory agencies; and (3) maintains a national registry of state certified and licensed appraisers eligible to perform appraisals in federally related transactions. 12 U.S.C. Sec. 3332. ASC's funding comes from registry fees paid by certified and licensed appraisers. /1/ Each state agency is required to transmit to ASC no less than annually a roster of individuals who have received a state certification or license. 12 U.S.C. Sec. 3338(a)(1). For each certified or licensed appraiser who performs or seeks to perform appraisals in federally related transactions, the state agency is to collect an annual registry fee of not more than $25, and transmit the fees to ASC on an annual basis. 12 U.S.C. Sec. 3338(a)(2). The ASC has adopted ten Policy Statements to help the states comply with the applicable requirements of FIRREA.