RULES AND REGULATIONS
Title 49—PROFESSIONAL AND VOCATIONAL STANDARDS
STATE BOARD OF CERTIFIED REAL ESTATE APPRAISERS
[ 49 PA. CODE CH. 36 ]
Federally Mandated Revisions
[54 Pa.B. 3157]
[Saturday, June 8, 2024]The State Board of Certified Real Estate Appraisers (Board) amends Chapter 36, Subchapter A (relating to general provisions) by amending §§ 36.41 and 36.91 (relating to continuing education requirement; and reactivation of lapsed certification) and Subchapter E (relating to appraisal management companies) by amending § 36.412 (relating to qualifications of owners and key persons) to read as set forth in Annex A.
Effective Date
This final-omitted rulemaking will be effective upon publication in the Pennsylvania Bulletin.
Statutory Authority
Regarding the continuing education component of this final-omitted rulemaking, section 5(1) of the Real Estate Appraisers Certification Act (act or REACA) (63 P.S. § 457.5(1)) authorizes the Board ''[t]o pass upon the qualifications and fitness of applicants for certification or licensure and to adopt and revise rules and regulations requiring applicants for certification to pass examinations relating to their qualifications for certification.'' Under section 5(2) of the act, the Board is empowered ''[t]o adopt and, from time to time, revise such rules and regulations as may be necessary to carry out the provisions of this act.'' Under section 6 of the act (63 P.S. § 457.6), the Board is authorized to issue certificates to real estate appraisers that meet the minimum education and experience requirements established by the Appraiser Qualifications Board (AQB) under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) (Pub.L. No. 101-73, 103 Stat. 183), as amended (12 U.S.C. §§ 3331—3356). Under section 10(b), (b.1) and (b.2) of the act (63 P.S. § 457.10(b), (b.1) and (b.2)), continuing education is a condition of biennial renewal for certified residential and general appraisers, certified broker/appraisers and licensed appraiser trainees if, and only to the minimum extent, required under FIRREA.
Regarding the qualifications of owners and key persons amendments in this final-omitted rulemaking, section 4(a) of the Appraisal Management Company Registration Act (AMCRA) (63 P.S. § 457.24(a)) authorizes the Board to implement, administer and enforce the act, including the power to adopt rules and regulations consistent with the act. Title XI of the FIRREA at 12 U.S.C. § 3353 requires the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), Consumer Financial Protection Bureau (Bureau) and Federal Housing Finance Agency (FHFA), to establish minimum requirements to be applied by states in the registration and supervision of appraisal management companies (AMC), regarding AMC minimum requirements. Under this authority, these Federal agencies jointly adopted regulations establishing the minimum requirements for AMCs found at 12 CFR 34.210—34.216, 12 CFR 225.190—225.196, 12 CFR 323.8—323.14 and 12 CFR 1222.20—1222.26.
Omission of Proposed Rulemaking
Under section 204(3) of the Commonwealth Documents Law (CDL) (45 P.S. § 1204(3)), the Board is authorized to omit the procedures for proposed rulemaking in section 201 and 202 of the CDL (45 P.S. §§ 1201 and 1202) if the Board finds that the specified procedures are impracticable, unnecessary or contrary to the public interest. The Board has determined that publication of proposed rulemaking is unnecessary under the circumstances because this final-omitted rulemaking is needed to comply with recently adopted AQB requirements concerning appraiser training on valuation bias and fair housing laws and regulations, a recently adopted name change of the 7-hour National Uniform Standards of Professional Appraisal Practice (USPAP) Update Course and applicable Federal law concerning AMC ownership limitations.
Background and Need for the Amendments
FIRREA is the Federal legislation that established the broad framework by which state appraiser regulatory bodies are to credential real estate appraisers and licensed appraiser trainees. The Appraisal Subcommittee (ASC) was created as a result of Title XI of FIRREA to provide Federal oversight for all appraiser programs of every state appraiser regulatory agency in the United States. See 12 U.S.C. § 3310. As required under 12 U.S.C. § 3332(b), the ASC monitors and reviews the practices, procedures, activities and organizational structure of the Appraisal Foundation. The AQB and the Appraisal Standards Board (ASB) are independent boards that are under the umbrella of the Appraisal Foundation. The Appraisal Foundation, through the AQB, is charged under FIRREA with establishing the minimum initial education, continuing education, examination and experience requirements for state-credentialed appraisers. These minimum qualification criteria are binding on the Board. Additionally, under Title IX of FIRREA, the ASB is responsible for writing, amending and interpreting the USPAP, which provides the generally recognized ethical and performance standards for the appraisal profession in the United States.
Regarding the continuing education component of this final-omitted rulemaking, all State appraiser programs must meet the minimum Federal standards that are established by the AQB for continuing education, as well as the standards set forth in USPAP. The AQB publishes the Federal minimum requirements for real property appraisers in the Real Property Appraiser Qualification Criteria (Criteria) (AQB Qualification Criteria) found at https://appraisalfoundation.sharefile.com/share/view/ s63f99dc2b9f241e0b3fd1645f7b63680.
In June of 2021, the Biden Administration created the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) which is dedicated to ending bias in property valuation. The PAVE Task Force is co-chaired by Marcia Fudge, Secretary of the United States Department of Housing and Urban Development (HUD), and Neera Tanden, Director, White House Domestic Policy Council (DPC). The PAVE Task Force is comprised of 13 Federal agencies, including the ASC, HUD, DPC, Board of Governors of the Federal Reserve System, the Bureau, FDIC, FHFA, NCUA, OCC, United States Department of Agriculture, United States Department of Justice, United States Department of Labor and United States Department of Veterans Affairs. On March 31, 2022, the PAVE Task Force issued an action plan which outlined the historical role of racism in the valuation of residential property, examined the forms of bias that could impact property valuation, and described affirmative steps that Federal agencies should take to advance equity in the appraisal process.
The AQB engaged the appraiser community Nationwide by releasing exposure drafts and soliciting written and verbal comments. On January 31, 2023, the AQB released the First Exposure Draft of Proposed Changes to the Real Property Appraiser Qualification Criteria, which can be found at https://appraisalfoundation.sharefile.com/share/view/sad153ab0d1f94d208860a41be6268580/fo691e7b-5fc0-4a99-ac55-82dbcb621eba.
The proposed changes included valuation bias and fair housing as a required component of an appraiser's qualifying and continuing education. The written comment period was open between January 31, 2023, through March 13, 2023. At its virtual public meeting on March 22, 2023, the AQB discussed the written comments received and entertained additional verbal comments. For the most part, the commentors expressed support for the changes. There was concern that the implementation date for the valuation bias and fair housing course did not provide sufficient time for states to implement it because of the various rulemaking processes of each state. Additionally, some appraisers questioned why the course was required for all appraisers and suggested that the course only be required for appraisers who performed residential appraisal assignments and for appraisers that have been identified as being deficient in understanding valuation bias and fair housing laws and regulations.
At the conclusion of the March 22, 2023, public meeting, the AQB voted to release a second exposure draft. In drafting the Second Exposure Draft of Proposed Changes to the Criteria (Second Exposure Draft), the AQB considered comments received in response to the First Exposure Draft of Proposed Changes to the Criteria (First Exposure Draft), recognizing that the First Exposure Draft did not take into consideration the rulemaking processes of the different states. Regarding the question as to why everyone had to take the course, the AQB emphasized the importance for all appraisers being trained on valuation bias and fair housing issues. The Second Exposure Draft which can be found at https://appraisalfoundation.sharefile.com/share/view/sad153ab0d1f94d208860a41be6268580/fo691e7b-5fc0-4a99-ac55-82dbcb621eba, was released on May 17, 2023. The written comment period was open from May 17, 2023, through June 17, 2023. At its virtual public meeting on June 22, 2023, the AQB discussed the written comments received and entertained additional verbal comments. At the conclusion of the June 22, 2023, public meeting, the AQB voted to adopt the Second Exposure Draft. The AQB announcement regarding the adoption of the changes to the AQB Criteria was posted on the Board's web site on June 27, 2023, was sent out to all licensees as an e-mail blast on June 27, 2023, and was announced at the July 27, 2023, Board meeting as required under § 36.2(f) (relating to application process) of the Board's regulations.
The Second Exposure Draft makes training on valuation bias and fair housing laws and regulations a required component of every appraiser's qualifying and continuing education. Credentialed appraisers must successfully complete a course which meets the content requirements of the AQB's valuation bias and fair housing laws and regulations course outline every 2 calendar years. The first time an appraiser completes the continuing education course, it must be a 7-hour course. If an appraiser has successfully completed a 7-hour (plus 1-hour exam) course as part of their qualifying education, the 7-hour course length requirement is satisfied. After the 7-hour course length requirement is satisfied, appraisers are required to take a valuation bias and fair housing law and regulations course that is at least 4 hours in length as a condition of renewal.
The changes to the AQB Qualification Criteria will be effective as of January 1, 2026, to ensure that each state appraiser regulatory agency has time to complete their respective rulemaking process to adopt these Federal requirements. The AQB is encouraging state regulatory agencies, however, to implement these changes as soon as their regulatory process is completed. The Board reviewed its current regulations; the AQB Qualification Criteria is adopted and incorporated by reference throughout the Board's regulations. Specifically, under § 36.42 (relating to subject matter and sources of continuing education), the Board's regulations require that continuing education subject matter and sources must comply with the requirements in the AQB Qualification Criteria. Heeding the advice of the AQB that state appraiser regulatory agencies should implement the changes as soon as possible, the Board determined that it should amend the regulations as soon as possible to ensure that the regulated community is aware of the specific time frame by which all appraisers in this Commonwealth must complete their 7-hour continuing education course on valuation bias and fair housing. The regulations would be amended to reflect the AQB Criteria and would require appraisers in this Commonwealth and licensed appraiser trainees to complete the 7-hour continuing education course beginning with the 2025—2027 biennial renewal period as a condition of renewal of certification or licensure. Every biennial renewal period thereafter, appraisers and trainees will be required to take the continuing education course that is at least 4 hours in length. The Board's amendments in this final-omitted rulemaking will put the Board in compliance with the Federally required continuing education requirements.
The AQB also adopted a name change for the 7-hour National USPAP Update Course; it is now the 7-hour National USPAP Continuing Education Course. This final-omitted rulemaking updates the Board's regulation to reflect this name change.
Regarding the component of this final-omitted rulemaking addressing qualifications of owners of appraisal management companies, during a recent audit, the ASC advised the Board that § 36.412(b) of the Board's AMC regulations is inconsistent with the Federal standard under 12 CFR 34.214(a)(1) and (2) (relating to ownership limitations for State-registered appraisal management companies) regarding AMC ownership limitations. Thus, the Board must amend its regulation regarding the qualifications of owners and key persons to be in compliance with Federal regulations. Section 36.412(b) of the Board's AMC regulations currently states that ''[a]n individual may not be an owner or key person of an AMC if the individual had a license or certificate refused, denied, cancelled, suspended or revoked or if they voluntarily surrendered a license or certificate, unless the license or certificate was subsequently granted or reinstated to the individual[.]'' Under 12 CFR 34.214(a)(1), a state may not register an AMC that is ''. . . owned by any person who has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any State for a substantive cause, as determined by the appropriate State appraiser certifying and licensing agency.'' Under 12 CFR 34.214(a)(2), however, an individual is not disqualified from becoming an owner of an AMC if the Board determines that the individual's license or certificate was not revoked for a substantive cause and the individual's license or certificate was reinstated by the state in which the individual was licensed or certified. The AMC Final Rule on Minimum Requirements for Appraisal Management Companies published at 80 FR 32658 (June 9, 2015) (AMC Final Rule) addresses the difference between a substantive and technical licensing violation. A substantive cause is a non-technical violation that would include license violations such as fraud, violations of the Truth in Lending Act (15 U.S.C. §§ 1601—1667f) and failure to perform an appraisal in compliance with USPAP. Technical violations are procedural or administrative in nature and would not be related to the quality of appraisals or fraudulent conduct, but rather, would include violations such as lapsed licenses and non-payment of fees or penalties.
Description of the Amendments
The Board is amending § 36.41 to require completion of an AQB-compliant course on valuation bias and fair housing laws and regulations as a condition of renewal of certification or licensure, beginning with the 2025—2027 biennial renewal period. The first time certified real estate appraisers and licensed appraiser trainees take the AQB-compliant course on valuation bias and fair housing laws and regulations, the course length must be 7 hours. If the certified real estate appraiser or licensed appraiser trainee successfully completed a 7-hour (plus 1-hour exam) course as part of their qualifying education, they have satisfied this requirement.
Licensees that have satisfied the 7-hour course length requirement shall complete an AQB-compliant continuing education course of at least 4 hours on valuation bias and fair housing laws and regulations as a condition of renewal of certification or licensure.
The Board is amending § 36.91 by deleting the term ''Update'' and replacing it with ''Continuing Education.'' The phrase ''7-hour National USPAP Update Course'' will, therefore, become ''7-hour National USPAP Continuing Education Course.''
Section 36.412(a) currently states that an individual may not be an owner or key person if they are disqualified from eligibility to be certified or licensed under REACA. Section 36.412(b) states that a person is disqualified from eligibility to be certified or licensed under REACA if the individual had a license or certificate refused, denied, cancelled, suspended or revoked or voluntarily surrendered a license or certificate, unless the license or certificate has been subsequently granted or reinstated to the individual. The Board is amending its regulations by adding § 36.412(b.1), which only applies to owners. Section 36.412(b.1) is the same standard contained in § 36.412(b), except that § 36.412(b.1) includes the Federal standard under 12 CFR 34.214(a)(1) and (2) regarding AMC ownership limitations. Accordingly, under § 36.412(b.1), an individual is not disqualified from becoming an owner of an AMC if the individual's license or certificate was not revoked for a substantive cause and the individual's license or certificate was reinstated by the state in which the individual was licensed or certified. The Board also amends § 36.412(b) to clarify that subsection (b) applies to key persons since § 36.412(b.1) now addresses ownership qualifications.
Fiscal Impact and Paperwork Requirements
This final-omitted rulemaking will have no fiscal impact on the regulated community. Appraisers and appraiser trainees are required to complete 28 hours of continuing education every 2 years as a condition of biennial license renewal. The continuing education course on valuation bias and fair housing laws and regulations will fall within the 28 hours that are already required and, therefore, will not pose an additional cost to licensees. Additionally, the amendments to the AMC regulations will not have a fiscal impact.
This final-omitted rulemaking will not have a fiscal impact and will not create additional paperwork for the general public or the Commonwealth's political subdivisions.
Sunset Date
The Board continuously monitors the effectiveness of the regulations. Therefore, no sunset date has been assigned.
Regulatory Review
Under section 5.1(c) of the Regulatory Review Act (71 P.S. § 745.5a(c)), on April 9, 2024 the Board submitted copies of the final-omitted rulemaking with a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the chairperson of the Consumer Protection and Professional Licensure Committee of the Senate (SPC/PLC) and the chairperson of the Professional Licensure Committee of the House of Representatives (HPLC). On the same date, the Board submitted a copy of the final-omitted rulemaking to the Office of Attorney General under section 204(b) of the Commonwealth Attorneys Act (71 P.S. § 732-204(b)).
Under sections 5.1(e) and (j.2) of the Regulatory Review Act (71 P.S. § 745.5a(e) and (j.2)), the regulations were deemed approved by the SPC/PLC and the HPLC on May 15, 2024, and IRRC met on May 16, 2024, and approved the final-omitted rulemaking.
Additional Information
Further information regarding this final-omitted regulation may be obtained by contacting Kristel Hennessy Hemler, Board Administrator, State Board of Certified Real Estate Appraisers, 2601 North Third Street, P.O. Box 2649, Harrisburg, PA 17105-2649. Reference regulation No. 16A-7031 (Federally Mandated Revisions), when requesting information.
Findings
The Board finds that:
(1) Public notice of the Board's intention to amend the Board's regulations under the procedures in sections 201 and 202 of the Commonwealth Documents Law (45 P.S. §§ 1201 and 1202) has been omitted under section 204 of the CDL (45 P.S. § 1204) because publication of proposed rulemaking and public comment is unnecessary in that the rulemaking is needed to comply with recently adopted AQB Federal requirements concerning appraiser training on valuation bias and fair housing laws and regulations, to comply with the recently adopted name change of the 7-hour National USPAP Update Course, and to comply with applicable Federal law concerning AMC ownership limitations.
(2) The promulgation of the regulations in the manner provided in this order is necessary to comply with Federal law and for the administration of the Real Estate Appraisers Certification Act (63 P.S. §§ 457.1—457.20) and the Appraisal Management Company Registration Act (63 P.S. §§ 457.21—457.32).
Order
The Board, acting under its authorizing statute, orders that:
(a) The regulations of the Board, 49 Pa. Code Chapter 36 are amended by amending §§ 36.41, 36.91 and 36.412, to read as set forth in Annex A.
(b) The Board shall submit this final-omitted rulemaking to the Office of Attorney General and the Office of General Counsel for approval as required by law.
(c) The Board shall submit this final-omitted rulemaking to IRRC, the HPLC and the SPC/PLC as required by law.
(d) The Board shall certify this final-omitted rulemaking and deposit it with the Legislative Reference Bureau as required by law.
(e) This final-omitted rulemaking shall take effect upon publication in the Pennsylvania Bulletin.
MARK V. SMELTZER, Sr.,
Chairperson(Editor's Note: See 54 Pa.B. 3134 (June 1, 2024) for IRRC's approval order.)
Fiscal Note: 16A-7031. No fiscal impact; recommends adoption.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 36. STATE BOARD OF CERTIFIED REAL ESTATE APPRAISERS
Subchapter A. GENERAL PROVISIONS
CONTINUING EDUCATION § 36.41. Continuing education requirement.
(a) Continuing education for certified real estate appraisers and licensed appraiser trainees is necessary to ensure that they maintain and increase their skill, knowledge and competency in real estate appraising. Except as provided in subsection (b), certified real estate appraisers and licensed appraiser trainees shall satisfy the continuing education requirements in the AQB Qualification Criteria, which must include at least 2 hours on the act, this chapter and the policies of the Board during each biennial renewal period as a condition of renewal of certification for the next biennial renewal period.
(a.1) Beginning with the renewal of certification or licensure for the 2025—2027 biennial renewal period, certified real estate appraisers and licensed appraiser trainees shall provide evidence of completion of an AQB-compliant course on valuation bias and fair housing laws and regulations as a condition of renewal of certification or licensure. The following apply:
(1) 7-hour course length requirement. The first time a certified real estate appraiser or licensed appraiser trainee completes the AQB-compliant course on valuation bias and fair housing laws and regulations referenced in this subsection, the course length must be 7 hours. If a certified real estate appraiser or licensed appraiser trainee successfully completed a 7-hour (plus 1-hour exam) course as part of their qualifying education, the 7-hour course length requirement is satisfied.
(2) 4-hour course length requirement. A certified real estate appraiser or licensed appraiser trainee who has satisfied the 7-hour course length requirement shall, as a condition of renewal of certification or licensure, complete an AQB-compliant continuing education course of at least 4 hours on valuation bias and fair housing laws and regulations.
(b) A certified general real estate appraiser, residential real estate appraiser or licensed appraiser trainee whose initial certification or license becomes effective between January 1 and June 30 of a biennial renewal year will not be required to furnish proof of continuing education as a condition of renewal of certification in that biennial renewal year.
MISCELLANEOUS PROVISIONS § 36.91. Reactivation of lapsed certification.
A certified real estate appraiser whose certification has lapsed for failure to biennially renew certification may apply to the Board for reactivation of certification by paying the renewal fee required under § 36.6 (relating to fees) and providing documentation of having completed the continuing education hours that would have been required under § 36.41 (relating to continuing education requirement) if the certified real estate appraiser had maintained current certification, except that only the most recent versions of the 7-hour National USPAP Continuing Education Course and the 2-hour course on the act, this chapter and Board policies must be completed. A certified real estate appraiser who performed an appraisal, or held himself out as an appraiser, during a period when his certification was lapsed shall be subject to disciplinary action by the Board under section 3 of the act (63 P.S. § 457.3) in addition to being required to pay late renewal fees under section 225 of the Bureau of Professional and Occupational Affairs Fee Act (63 P.S. § 1401-225).
Subchapter E. APPRAISAL MANAGEMENT COMPANIES
REGISTRATION § 36.412. Qualifications of owners and key persons.
(a) A person who would be disqualified from eligibility to be certified or licensed under REACA as defined in subsections (b) and (b.1) may not be an owner or a key person.
(b) An individual would be disqualified from eligibility to be certified or licensed under REACA, as provided in section 8(d)(1) of AMCRA (63 P.S. § 457.28(d)(1)), and may not be a key person if the individual had a license or certificate refused, denied, cancelled, suspended or revoked, or voluntarily surrendered a license or certificate under any of the following provisions of REACA or CHRIA, or similar provision of another jurisdiction, unless the license or certificate has been subsequently granted or reinstated to the individual:
(1) Section 3 of REACA (63 P.S. § 457.3).
(2) Section 6(c)(1) of REACA (63 P.S. § 457.6(c)(1)).
(3) Section 11 of REACA (63 P.S. § 457.11).
(4) Section 9124(c)(1) or (2) of CHRIA (18 Pa.C.S. § 9124(c)(1) and (2) (relating to use of records by licensing agencies)).
(b.1) An individual would be disqualified from eligibility to be certified or licensed under REACA and may not be an owner if the individual had a license or certificate refused, denied, cancelled, suspended or revoked, or voluntarily surrendered a license or certificate under any of the following provisions of REACA or CHRIA, or similar provision of another jurisdiction, unless the Board determines that the individual's license or certificate was not revoked for a substantive cause and the license or certificate has been subsequently reinstated to the individual:
(1) Section 3 of REACA (63 P.S. § 457.3).
(2) Section 6(c)(1) of REACA (63 P.S. § 457.6(c)(1)).
(3) Section 11 of REACA (63 P.S. § 457.11).
(4) Section 9124(c)(1) or (2) of CHRIA (18 Pa.C.S. § 9124(c)(1) and (2) (relating to use of records by licensing agencies)).
(c) Nothing in AMCRA or this subchapter may be construed as a requirement that an owner or a key person shall possess the education or experience required by the AQB or REACA for certification or licensure.
(d) A person who has been suspended or revoked, or has voluntarily surrendered a license under RELRA, 7 Pa.C.S. Chapter 61 (relating to Mortgage Licensing Act) or sections 301—318 of the Mortgage Bankers and Brokers and Consumer Equity Protection Act (63 P.S. §§ 456.301—456.318) (repealed) may not be an owner or key person.
(e) The Board may consider a disqualifying violation described in subsection (b) if the individual's license or certificate has been subsequently reinstated or granted in determining whether the individual possesses good moral character as required under section 5(c)(4) of AMCRA (63 P.S. § 457.25(c)(4)).
[Pa.B. Doc. No. 24-791. Filed for public inspection June 7, 2024, 9:00 a.m.]
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