S. 1635 — Appraisal Industry Improvement Act

This section revises appraiser qualification standards under the National Housing Act for mortgages insured under title II (i.e., FHA single-family mortgage insurance program, which insures loans to promote homeownership access) by requiring that appraisers (A) be state-certified or licensed where the property is located (except federal employees, who need licensure in only one state or territory), (B) meet Uniform Standards of Professional Appraisal Practice competency requirements before accepting an assignment, and (C) complete verifiable FHA-specific appraisal education via an FHA-provided or approved course or seminar. It exempts appraisers already FHA-approved before the effective date from the education requirement; requires full compliance for post-effective-date appraisals; and directs the HUD Secretary to issue implementing mortgagee letter, notice, or regulations within 240 days of enactment that take effect no later than 180 days after issuance (with transition provisions for prior competency demonstrations).

This section authorizes the Appraisal Subcommittee to establish a new formula to decrease annual registry fees for appraisal management companies (i.e., fees of $25 per appraiser, adjustable up to $50, under 12 U.S.C. 3338(a)(4)(B)) if such fees result in adverse consequences or are not appropriately tailored to the Subcommittee's functions. (As background, these fees—collected by states from companies registered in the state or operating as subsidiaries of federally regulated financial institutions and remitted to the Federal Financial Institutions Examination Council—fund the Subcommittee's oversight of state appraiser licensing and certification programs to ensure standards for appraisals in federally related mortgage transactions.)

This section amends the duties of the Appraisal Subcommittee (ASC) to require maintenance of a national registry that includes State credentialed trainee appraisers eligible to perform appraisals in federally related transactions (previously, State certified and licensed appraisers only). (As background, the ASC oversees state appraiser certification and licensing programs to ensure compliance with federal standards for appraisals in connection with federally related mortgage transactions.) The section further (1) authorizes a State certified appraiser to use the assistance of a State credentialed trainee appraiser or unlicensed trainee appraiser when performing such an appraisal; (2) requires states with trainee programs to submit rosters of credentialed trainees to the ASC and transmit reports on credentials, sanctions, and disciplinary actions; (3) authorizes the ASC to collect an annual registry fee of not more than $20 from State credentialed trainee appraisers (in addition to the existing fee of not more than $40 from certified and licensed appraisers); and (4) defines State credentialed trainee appraiser as an individual meeting Appraiser Qualification Board criteria and credentialed by a state agency. (Thus, states are not required to establish trainee programs.)

This section authorizes the Appraisal Subcommittee to make grants to state appraiser certifying and licensing agencies to support education and training activities or other activities deemed appropriate by the Appraisal Subcommittee for purposes of addressing appraiser industry workforce needs. (As background, the Appraisal Subcommittee oversees state regulation of real estate appraisers who perform appraisals in federally related mortgage transactions.)

This section expands the membership of the Appraisal Subcommittee of the Federal Financial Institutions Examination Council—which oversees state appraiser licensing boards and appraisal standards for federally related mortgage transactions—by adding designees from the Department of Veterans Affairs, the Rural Housing Service of the Department of Agriculture, and the Department of Housing and Urban Development.