S.Amdt. 4007

SA 4007. Mr. CASEY submitted an amendment intended to be proposed to
amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd (for himself and
Mrs. Lincoln)) to the bill S. 3217, to promote the financial stability
of the United States by improving accountability and transparency in
the financial system, to end ``too big to fail'', to protect the
American taxpayer by ending bailouts, to protect consumers from abusive
financial services practices, and for other purposes; which was ordered
to lie on the table; as follows:

On page 1522, between lines 6 and 7, insert the following:

Subtitle I--Appraisal Activities

SEC. 1111. PROPERTY APPRAISAL REQUIREMENTS.

(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after 129B (as
added by this Act) the following new section:

``SEC. 129C. PROPERTY APPRAISAL REQUIREMENTS.

``(a) In General.--A creditor may not extend credit in the
form of a subprime mortgage to any consumer without first
obtaining a written appraisal of the property to be mortgaged
prepared in accordance with the requirements of this section.
``(b) Appraisal Requirements.--
``(1) Physical property visit.--An appraisal of property to
be secured by a subprime mortgage does not meet the
requirement of this section unless it is performed by a
qualified appraiser who conducts a physical property visit of
the interior of the mortgaged property.
``(2) Second appraisal under certain circumstances.--
``(A) In general.--If the purpose of a subprime mortgage is
to finance the purchase or acquisition of the mortgaged
property from a person within 180 days of the purchase or
acquisition of such property by that person at a price that
was lower than the current sale price of the property, the
creditor shall obtain a second appraisal from a different
qualified appraiser. The second appraisal shall include an
analysis of the difference in sale prices, changes in market
conditions, and any improvements made to the property between
the date of the previous sale and the current sale.
``(B) No cost to applicant.--The cost of any second
appraisal required under subparagraph (A) may not be charged
to the applicant.
``(3) Qualified appraiser defined.--For purposes of this
section, the term `qualified appraiser' means a person who--
``(A) is, at a minimum, certified or licensed by the State
in which the property to be appraised is located; and
``(B) performs each appraisal in conformity with the
Uniform Standards of Professional Appraisal Practice and
title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, and the regulations prescribed under
such title, as in effect on the date of the appraisal.
``(c) Free Copy of Appraisal.--A creditor shall provide 1
copy of each appraisal conducted in accordance with this
section in connection with a subprime mortgage to the
applicant without charge, and at least 3 days prior to the
transaction closing date.
``(d) Consumer Notification.--At the time of the initial
mortgage application, the applicant shall be provided with a
statement by the creditor that any appraisal prepared for the
mortgage is for the sole use of the creditor, and that the
applicant may choose to have a separate appraisal conducted
at their own expense.
``(e) Violations.--In addition to any other liability to
any person under this title, a creditor found to have
willfully failed to obtain an appraisal as required in this
section shall be liable to the applicant or borrower for the
sum of $2,000.
``(f) Subprime Mortgage Defined.--For purposes of this
section, the term `subprime mortgage' means a residential
mortgage loan, other than a reverse mortgage loan insured by
the Federal Housing Administration, secured by a principal
dwelling with an annual percentage rate that exceeds the
average prime offer rate for a comparable transaction, as of
the date the interest rate is set--
``(1) by 1.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that does not exceed the amount
of the maximum limitation on the original principal
obligation of mortgage in effect for a residence of the
applicable size, as of the date of such interest rate set,
pursuant to the sixth sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2));
``(2) by 2.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that exceeds the amount of the
maximum limitation on the original principal obligation of
mortgage in effect for a residence of the applicable size, as
of the date of such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)); and
``(3) by 3.5 or more percentage points for a subordinate
lien residential mortgage loan.''.
(b) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after
the item relating to section 129B the following new item:

``129C. Property appraisal requirements.''.

SEC. 1112. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING
TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

(a) In General.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section
129C (as added by section 1111(a)) the following new section:

``SEC. 129D. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING
TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

``(a) In General.--It shall be unlawful, in extending
credit or in providing any services for a consumer credit
transaction secured by the principal dwelling of the
consumer, to engage in any unfair or deceptive act or
practice as described in or pursuant to regulations
prescribed under this section.
``(b) Appraisal Independence.--For purposes of subsection
(a), unfair and deceptive practices shall include--
``(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is
conducted in connection with such transaction in which a
person with an interest in the underlying transaction
compensates, coerces, extorts, colludes, instructs, induces,
bribes, or intimidates a person conducting or involved in an
appraisal, or attempts, to compensate, coerce, extort,
collude, instruct, induce, bribe,

[[Page S3724]]

or intimidate such a person, for the purpose of causing the
appraised value assigned, under the appraisal, to the
property to be based on any factor other than the independent
judgment of the appraiser;
``(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the property
securing the extension of the credit;
``(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making
or pricing of the transaction; and
``(4) withholding or threatening to withhold timely payment
for an appraisal report or for appraisal services rendered.
``(c) Exceptions.--The requirements of subsection (b) shall
not be construed as prohibiting a mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, consumer, or any other person with an interest in a
real estate transaction from asking an appraiser to provide 1
or more of the following services:
``(1) Consider additional, appropriate property
information, including the consideration of additional
comparable properties to make or support an appraisal.
``(2) Provide further detail, substantiation, or
explanation for the appraiser's value conclusion.
``(3) Correct errors in the appraisal report.
``(d) Prohibitions on Conflicts of Interest.--No certified
or licensed appraiser conducting, and no appraisal management
company procuring or facilitating, an appraisal in connection
with a consumer credit transaction secured by the principal
dwelling of a consumer may have a direct or indirect
interest, financial or otherwise, in the property or
transaction involving the appraisal.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, or any other person involved in a real estate
transaction involving an appraisal in connection with a
consumer credit transaction secured by the principal dwelling
of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable
laws, or is otherwise engaging in unethical or unprofessional
conduct, shall refer the matter to the applicable State
appraiser certifying and licensing agency.
``(f) No Extension of Credit.--In connection with a
consumer credit transaction secured by a consumer's principal
dwelling, a creditor who knows, at or before loan
consummation, of a violation of the appraisal independence
standards established in subsections (b) or (d) shall not
extend credit based on such appraisal unless the creditor
documents that the creditor has acted with reasonable
diligence to determine that the appraisal does not materially
misstate or misrepresent the value of such dwelling.
``(g) Rulemaking Proceedings.--The Board, the Comptroller
of the Currency, the Director of the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, and the Federal
Trade Commission--
``(1) shall, for purposes of this section, jointly
prescribe regulations no later than 180 days after the date
of the enactment of this section, and where such regulations
have an effective date of no later than 1 year after the date
of the enactment of this section, defining with specificity
acts or practices which are unfair or deceptive in the
provision of mortgage lending services for a consumer credit
transaction secured by the principal dwelling of the consumer
or mortgage brokerage services for such a transaction and
defining any terms in this section or such regulations; and
``(2) may jointly issue interpretive guidelines and general
statements of policy with respect to unfair or deceptive acts
or practices in the provision of mortgage lending services
for a consumer credit transaction secured by the principal
dwelling of the consumer and mortgage brokerage services for
such a transaction, within the meaning of subsections (a),
(b), (c), (d), (e), and (f).
``(h) Penalties.--
``(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who
violates this section shall forfeit and pay a civil penalty
of not more than $10,000 for each day any such violation
continues.
``(2) Subsequent violations.--In the case of any person on
whom a civil penalty has been imposed under paragraph (1),
paragraph (1) shall be applied by substituting `$20,000' for
`$10,000' with respect to all subsequent violations.
``(3) Assessment.--The agency referred to in subsection (a)
or (c) of section 108 with respect to any person described in
paragraph (1) shall assess any penalty under this subsection
to which such person is subject.''.
(b) Clerical Amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after
the item relating to section 129C the following new item:

``129D. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.''.

SEC. 1113. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF
FIEC, APPRAISER INDEPENDENCE MONITORING,
APPROVED APPRAISER EDUCATION, APPRAISAL
MANAGEMENT COMPANIES, APPRAISER COMPLAINT
HOTLINE, AUTOMATED VALUATION MODELS, AND BROKER
PRICE OPINIONS.

(a) Consumer Protection Mission.--
(1) Purposes.--Section 1101 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3331) is amended by inserting ``and to provide the Appraisal
Subcommittee with a consumer protection mandate'' before the
period at the end.
(2) Functions of appraisal subcommittee.--Section 1103(a)
of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended--
(A) by striking ``and'' at the end of paragraph (3); and
(B) by amending paragraph (4) to read as follows:
``(4) monitor the efforts of, and requirements established
by, States and the Federal financial institutions regulatory
agencies to protect consumers from improper appraisal
practices and the predations of unlicensed appraisers in
consumer credit transactions that are secured by a consumer's
principal dwelling; and''.
(3) Threshold levels.--Section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3341(b)) is amended by inserting before the period
the following: ``, and that such threshold level provides
reasonable protection for consumers who purchase 1-4 unit
single-family residences. In determining whether a threshold
level provides reasonable protection for consumers, each
Federal financial institutions regulatory agency shall
consult with consumer groups and convene a public hearing''.
(b) Annual Report of Appraisal Subcommittee.--Section
1103(a) of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended at the
end by inserting the following new paragraph:
``(5) transmit an annual report to the Congress not later
than January 31 of each year that describes the manner in
which each function assigned to the Appraisal Subcommittee
has been carried out during the preceding year. The report
shall also detail the activities of the Appraisal
Subcommittee, including the results of all audits of State
appraiser regulatory agencies, and provide an accounting of
disapproved actions and warnings taken in the previous year,
including a description of the conditions causing the
disapproval and actions taken to achieve compliance.''.
(c) Open Meetings.--Section 1104(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3333(b)) is amended by inserting ``in public
session after notice in the Federal Register'' after ``shall
meet''.
(d) Regulations.--Section 1106 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3335) is amended--
(1) by inserting ``prescribe regulations after notice and
opportunity for comment,'' after ``hold hearings''; and
(2) at the end by inserting ``Any regulations prescribed by
the Appraisal Subcommittee shall (unless otherwise provided
in this title) be limited to the following functions:
temporary practice, national registry, information sharing,
and enforcement. For purposes of prescribing regulations, the
Appraisal Subcommittee shall establish an advisory committee
of industry participants, including appraisers, lenders,
consumer advocates, and government agencies, and hold
meetings as necessary to support the development of
regulations.''.
(e) Appraisals and Appraisal Reviews.--Section 1113 of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 3342) is amended--
(1) by striking ``In determining'' and inserting ``(a) In
General.--In determining'';
(2) in subsection (a) (as designated by paragraph (1)), by
inserting before the period the following: ``, where a
complex 1-to-4 unit single family residential appraisal means
an appraisal for which the property to be appraised, the form
of ownership, the property characteristics, or the market
conditions are atypical''; and
(3) by adding at the end the following new subsection:
``(b) Appraisals and Appraisal Reviews.--All appraisals
performed at a property within a State shall be prepared by
appraisers licensed or certified in the State where the
property is located. All appraisal reviews, including
appraisal reviews by a lender, appraisal management company,
or other third party organization, shall be performed by an
appraiser who is duly licensed or certified by a State
appraisal board.''.
(f) Appraisal Management Services.--
(1) Supervision of third party providers of appraisal
management services.--Section 1103(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3332(a)) (as previously amended by this section)
is further amended--
(A) by amending paragraph (1) to read as follows:
``(1) monitor the requirements established by States--
``(A) for the certification and licensing of individuals
who are qualified to perform appraisals in connection with
federally related transactions, including a code of
professional responsibility; and
``(B) for the registration and supervision of the
operations and activities of an appraisal management
company;''; and

[[Page S3725]]

(B) by adding at the end the following new paragraph:
``(7) maintain a national registry of appraisal management
companies that either are registered with and subject to
supervision of a State appraiser certifying and licensing
agency or are operating subsidiaries of a Federally regulated
financial institution.''.
(2) Appraisal management company minimum qualifications.--
Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended
by adding at the end the following new section (and amending
the table of contents accordingly):

``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM
QUALIFICATIONS.

``(a) In General.--The Appraiser Qualifications Board of
the Appraisal Foundation shall establish minimum
qualifications to be applied by a State in the registration
of appraisal management companies. Such qualifications shall
include a requirement that such companies--
``(1) register with and be subject to supervision by a
State appraiser certifying and licensing agency in each State
in which such company operates;
``(2) verify that only licensed or certified appraisers are
used for federally related transactions;
``(3) require that appraisals coordinated by an appraisal
management company comply with the Uniform Standards of
Professional Appraisal Practice; and
``(4) require that appraisals are conducted independently
and free from inappropriate influence and coercion pursuant
to the appraisal independence standards established under
section 129C of the Truth in Lending Act.
``(b) Exception for Federally Regulated Financial
Institutions.--The requirements of subsection (a) shall not
apply to an appraisal management company that is a subsidiary
owned and controlled by a financial institution and regulated
by a federal financial institution regulatory agency. In such
case, the appropriate federal financial institutions
regulatory agency shall, at a minimum, develop regulations
affecting the operations of the appraisal management company
to--
``(1) verify that only licensed or certified appraisers are
used for federally related transactions;
``(2) require that appraisals coordinated by an institution
or subsidiary providing appraisal management services comply
with the Uniform Standards of Professional Appraisal
Practice; and
``(3) require that appraisals are conducted independently
and free from inappropriate influence and coercion pursuant
to the appraisal independence standards established under
section 129C of the Truth in Lending Act.
``(c) Registration Limitations.--An appraisal management
company shall not be registered by a State if such company,
in whole or in part, directly or indirectly, 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. Additionally, each
person that owns more than 10 percent of an appraisal
management company shall be of good moral character, as
determined by the State appraiser certifying and licensing
agency, and shall submit to a background investigation
carried out by the State appraiser certifying and licensing
agency.
``(d) Regulations.--The Appraisal Subcommittee shall
promulgate regulations to implement the minimum
qualifications developed by the Appraiser Qualifications
Board under this section, as such qualifications relate to
the State appraiser certifying and licensing agencies. The
Appraisal Subcommittee shall also promulgate regulations for
the reporting of the activities of appraisal management
companies in determining the payment of the annual registry
fee.
``(e) Effective Date.--
``(1) In general.--No appraisal management company may
perform services related to a federally related transaction
in a State after the date that is 36 months after the date of
the enactment of this section unless such company is
registered with such State or subject to oversight by a
federal financial institutions regulatory agency.
``(2) Extension of effective date.--Subject to the approval
of the Council, the Appraisal Subcommittee may extend by an
additional 12 months the requirements for the registration
and supervision of appraisal management companies if it makes
a written finding that a State has made substantial progress
in establishing a State appraisal management company
registration and supervision system that appears to conform
with the provisions of this title.''.
(3) State appraiser certifying and licensing agency
authority.--Section 1117 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3346) is amended by adding at the end the following: ``The
duties of such agency may additionally include the
registration and supervision of appraisal management
companies.''.
(4) Appraisal management company definition.--Section 1121
of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3350) is amended by adding
at the end the following:
``(11) Appraisal management company.--The term `appraisal
management company' means, in connection with valuing
properties collateralizing mortgage loans or mortgages
incorporated into a securitization, any external third party
authorized either by a creditor of a consumer credit
transaction secured by a consumer's principal dwelling or by
an underwriter of or other principal in the secondary
mortgage markets, that oversees a network or panel of more
than 15 certified or licensed appraisers in a State or 25 or
more nationally within a given year--
``(A) to recruit, select, and retain appraisers;
``(B) to contract with licensed and certified appraisers to
perform appraisal assignments;
``(C) to manage the process of having an appraisal
performed, including providing administrative duties such as
receiving appraisal orders and appraisal reports, submitting
completed appraisal reports to creditors and underwriters,
collecting fees from creditors and underwriters for services
provided, and reimbursing appraisers for services performed;
or
``(D) to review and verify the work of appraisers.''.
(g) State Agency Reporting Requirement.--Section 1109(a) of
the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3338(a)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(1);
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) transmit reports on sanctions, disciplinary actions,
license and certification revocations, and license and
certification suspensions on a timely basis to the national
registry of the Appraisal Subcommittee;
``(3) transmit reports on a timely basis of supervisory
activities involving appraisal management companies or other
third-party providers of appraisals and appraisal management
services, including investigations initiated and disciplinary
actions taken; and''.
(h) Registry Fees Modified.--
(1) In general.--Section 1109(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3338(a)) is amended--
(A) by amending paragraph (4) (as modified by section
9503(g)) to read as follows:
``(4) collect--
``(A) from such individuals who perform or seek to perform
appraisals in federally related transactions, an annual
registry fee of not more than $40, such fees to be
transmitted by the State agencies to the Council on an annual
basis; and
``(B) from an appraisal management company that either has
registered with a State appraiser certifying and licensing
agency in accordance with this title or operates as a
subsidiary of a federally regulated financial institution, an
annual registry fee of--
``(i) in the case of such a company that has been in
existence for more than a year, $25 multiplied by the number
of appraisers working for or contracting with such company in
such State during the previous year, but where such $25
amount may be adjusted, up to a maximum of $50, at the
discretion of the Appraisal Subcommittee, if necessary to
carry out the Subcommittee's functions under this title; and
``(ii) in the case of such a company that has not been in
existence for more than a year, $25 multiplied by an
appropriate number to be determined by the Appraisal
Subcommittee, and where such number will be used for
determining the fee of all such companies that were not in
existence for more than a year, but where such $25 amount may
be adjusted, up to a maximum of $50, at the discretion of the
Appraisal Subcommittee, if necessary to carry out the
Subcommittee's functions under this title.''; and
(B) by amending the matter following paragraph (4), as
redesignated, to read as follows:

``Subject to the approval of the Council, the Appraisal
Subcommittee may adjust the dollar amount of registry fees
under paragraph (4)(A), up to a maximum of $80 per annum, as
necessary to carry out its functions under this title. The
Appraisal Subcommittee shall consider at least once every 5
years whether to adjust the dollar amount of the registry
fees to account for inflation. In implementing any change in
registry fees, the Appraisal Subcommittee shall provide
flexibility to the States for multi-year certifications and
licenses already in place, as well as a transition period to
implement the changes in registry fees. In establishing the
amount of the annual registry fee for an appraisal management
company, the Appraisal Subcommittee shall have the discretion
to impose a minimum annual registry fee for an appraisal
management company to protect against the under reporting of
the number of appraisers working for or contracted by the
appraisal management company.''.
(2) Incremental revenues.--Incremental revenues collected
pursuant to the increases required by this subsection shall
be placed in a separate account at the United States
Treasury, entitled the ``Appraisal Subcommittee Account''.
(i) Grants and Reports.--Section 1109(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3348(b)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(3);
(2) by striking the period at the end of paragraph (4) and
inserting a semicolon;
(3) by adding at the end the following new paragraphs:

[[Page S3726]]

``(5) to make grants to State appraiser certifying and
licensing agencies to support the efforts of such agencies to
comply with this title, including--
``(A) the complaint process, complaint investigations, and
appraiser enforcement activities of such agencies; and
``(B) the submission of data on State licensed and
certified appraisers and appraisal management companies to
the National appraisal registry, including information
affirming that the appraiser or appraisal management company
meets the required qualification criteria and formal and
informal disciplinary actions; and
``(6) to report to all State appraiser certifying and
licensing agencies when a license or certification is
surrendered, revoked, or suspended.''.

Obligations authorized under this subsection may not exceed
75 percent of the fiscal year total of incremental increase
in fees collected and deposited in the ``Appraisal
Subcommittee Account'' pursuant to subsection (h).
(j) Criteria.--Section 1116 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3345) is amended--
(1) in subsection (c), by inserting ``whose criteria for
the licensing of a real estate appraiser currently meet or
exceed the minimum criteria issued by the Appraisal
Qualifications Board of The Appraisal Foundation for the
licensing of real estate appraisers'' before the period at
the end; and
(2) by striking subsection (e) and inserting the following
new subsection:
``(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of `Trainee
Appraiser' and `Supervisory Appraiser' shall meet or exceed
the minimum qualification requirements of the Appraiser
Qualifications Board of The Appraisal Foundation. The
Appraisal Subcommittee shall have the authority to enforce
these requirements.''.
(k) Monitoring of State Appraiser Certifying and Licensing
Agencies.--Section 1118 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347) is
amended--
(1) by amending subsection (a) to read as follows:
``(a) In General.--The Appraisal Subcommittee shall monitor
each State appraiser certifying and licensing agency for the
purposes of determining whether such agency--
``(1) has policies, practices, funding, staffing, and
procedures that are consistent with this title;
``(2) processes complaints and completes investigations in
a reasonable time period;
``(3) appropriately disciplines sanctioned appraisers and
appraisal management companies;
``(4) maintains an effective regulatory program; and
``(5) reports complaints and disciplinary actions on a
timely basis to the national registries on appraisers and
appraisal management companies maintained by the Appraisal
Subcommittee.

The Appraisal Subcommittee shall have the authority to remove
a State licensed or certified appraiser or a registered
appraisal management company from a national registry on an
interim basis pending State agency action on licensing,
certification, registration, and disciplinary proceedings.
The Appraisal Subcommittee and all agencies,
instrumentalities, and Federally recognized entities under
this title shall not recognize appraiser certifications and
licenses from States whose appraisal policies, practices,
funding, staffing, or procedures are found to be inconsistent
with this title. The Appraisal Subcommittee shall have the
authority to impose sanctions, as described in this section,
against a State agency that fails to have an effective
appraiser regulatory program. In determining whether such a
program is effective, the Appraisal Subcommittee shall
include an analyses of the licensing and certification of
appraisers, the registration of appraisal management
companies, the issuance of temporary licenses and
certifications for appraisers, the receiving and tracking of
submitted complaints against appraisers and appraisal
management companies, the investigation of complaints, and
enforcement actions against appraisers and appraisal
management companies. The Appraisal Subcommittee shall have
the authority to impose interim actions and suspensions
against a State agency as an alternative to, or in advance
of, the derecognition of a State agency.''.
(2) in subsection (b)(2), by inserting after ``authority''
the following: ``or sufficient funding''.
(l) Reciprocity.--Subsection (b) of section 1122 of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 3351(b)) is amended to read as follows:
``(b) Reciprocity.--A State appraiser certifying or
licensing agency shall issue a reciprocal certification or
license for an individual from another State when--
``(1) the appraiser licensing and certification program of
such other State is in compliance with the provisions of this
title; and
``(2) the appraiser holds a valid certification from a
State whose requirements for certification or licensing meet
or exceed the licensure standards established by the State
where an individual seeks appraisal licensure.''.
(m) Consideration of Professional Appraisal Designations.--
Section 1122(d) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351(d)) is
amended by striking ``shall not exclude'' and all that
follows through the end of the subsection and inserting the
following: ``may include education achieved, experience,
sample appraisals, and references from prior clients.
Membership in a nationally recognized professional appraisal
organization may be a criteria considered, though lack of
membership therein shall not be the sole bar against
consideration for an assignment under these criteria.''.
(n) Appraiser Independence.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3351) is amended by adding at the end the
following new subsection:
``(g) Appraiser Independence Monitoring.--The Appraisal
Subcommittee shall monitor each State appraiser certifying
and licensing agency for the purpose of determining whether
such agency's policies, practices, and procedures are
consistent with the purposes of maintaining appraiser
independence and whether such State has adopted and maintains
effective laws, regulations, and policies aimed at
maintaining appraiser independence.''.
(o) Appraiser Education.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3351) is amended by inserting after subsection (g)
(as added by subsection (l) of this section) the following
new subsection:
``(h) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the
Appraiser Qualification Board's Course Approval Program.''.
(p) Appraisal Complaint Hotline.--Section 1122 of the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (12 U.S.C. 3351), as amended by this section, is
further amended by adding at the end the following new
subsection:
``(i) Appraisal Complaint National Hotline.--If, 1 year
after the date of the enactment of this subsection, the
Appraisal Subcommittee determines that no national hotline
exists to receive complaints of non-compliance with appraisal
independence standards and Uniform Standards of Professional
Appraisal Practice, including complaints from appraisers,
individuals, or other entities concerning the improper
influencing or attempted improper influencing of appraisers
or the appraisal process, the Appraisal Subcommittee shall
establish and operate such a national hotline, which shall
include a toll-free telephone number and an email address. If
the Appraisal Subcommittee operates such a national hotline,
the Appraisal Subcommittee shall refer complaints for further
action to appropriate governmental bodies, including a State
appraiser certifying and licensing agency, a financial
institution regulator, or other appropriate legal
authorities. For complaints referred to State appraiser
certifying and licensing agencies or to Federal regulators,
the Appraisal Subcommittee shall have the authority to follow
up such complaint referrals in order to determine the status
of the resolution of the complaint.''.
(q) Automated Valuation Models.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3331 et seq.), as amended by this section, is
further amended by adding at the end the following new
section (and amending the table of contents accordingly):

``SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN
MORTGAGES.

``(a) In General.--Automated valuation models shall adhere
to quality control standards designed to--
``(1) ensure a high level of confidence in the estimates
produced by automated valuation models;
``(2) protect against the manipulation of data;
``(3) seek to avoid conflicts of interest; and
``(4) require random sample testing and reviews, where such
testing and reviews are performed by an appraiser who is
licensed or certified in the State where the testing and
reviews take place.
``(b) Adoption of Regulations.--The Appraisal Subcommittee
and its member agencies, in consultation with the Appraisal
Standards Board of the Appraisal Foundation and other
interested parties, shall promulgate regulations to implement
the quality control standards required under this section.
``(c) Enforcement.--Compliance with regulations issued
under this subsection shall be enforced by--
``(1) with respect to a financial institution, or
subsidiary owned and controlled by a financial institution
and regulated by a Federal financial institution regulatory
agency, the Federal financial institution regulatory agency
that acts as the primary Federal supervisor of such financial
institution or subsidiary; and
``(2) with respect to other persons, the Appraisal
Subcommittee.
``(d) Automated Valuation Model Defined.--For purposes of
this section, the term `automated valuation model' means any
computerized model used by mortgage originators and secondary
market issuers to determine the collateral worth of a
mortgage secured by a consumer's principal dwelling.''.
(r) Broker Price Opinions.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3331 et seq.), as amended by this section, is
further amended by adding at the end the following

[[Page S3727]]

new section (and amending the table of contents accordingly):

``SEC. 1126. BROKER PRICE OPINIONS.

``(a) General Prohibition.--In conjunction with the
purchase of a consumer's principal dwelling, broker price
opinions may not be used as the primary basis to determine
the value of a piece of property for the purpose of a loan
origination of a residential mortgage loan secured by such
piece of property.
``(b) Broker Price Opinion Defined.--For purposes of this
section, the term `broker price opinion' means an estimate
prepared by a real estate broker, agent, or sales person that
details the probable selling price of a particular piece of
real estate property and provides a varying level of detail
about the property's condition, market, and neighborhood, and
information on comparable sales, but does not include an
automated valuation model, as defined in section 1125(c).''.
(s) Amendments to Appraisal Subcommittee.--Section 1011 of
the Federal Financial Institutions Examination Council Act of
1978 (12 U.S.C. 3310) is amended--
(1) in the first sentence, by adding before the period the
following: ``and the Federal Housing Finance Agency''; and
(2) by inserting at the end the following: ``At all times
at least one member of the Appraisal Subcommittee shall have
demonstrated knowledge and competence through licensure,
certification, or professional designation within the
appraisal profession.''.
(t) Technical Corrections.--
(1) Section 1119(a)(2) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3348(a)(2)) is amended by striking ``council,'' and inserting
``Council,''.
(2) Section 1121(6) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is
amended by striking ``Corporations,'' and inserting
``Corporation,''.
(3) Section 1121(8) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is
amended by striking ``council'' and inserting ``Council''.
(4) Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended--
(A) in subsection (a)(1) by moving the left margin of
subparagraphs (A), (B), and (C) 2 ems to the right; and
(B) in subsection (c)--
(i) by striking ``Federal Financial Institutions
Examination Council'' and inserting ``Financial Institutions
Examination Council''; and
(ii) by striking ``the council's functions'' and inserting
``the Council's functions''.

SEC. 1114. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL
PROCESS AND COMPLIANCE PROGRAMS.

(a) Study.--The Comptroller General shall conduct a
comprehensive study on possible improvements in the appraisal
process generally, and specifically on the consistency in and
the effectiveness of, and possible improvements in, State
compliance efforts and programs in accordance with title XI
of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989. In addition, this study shall
examine the existing exemptions to the use of certified
appraisers issued by Federal financial institutions
regulatory agencies. The study shall also review the
threshold level established by Federal regulators for
compliance under title XI and whether there is a need to
revise them to reflect the addition of consumer protection to
the purposes and functions of the Appraisal Subcommittee. The
study shall additionally examine the quality of different
types of mortgage collateral valuations produced by broker
price opinions, automated valuation models, licensed
appraisals, and certified appraisals, among others, and the
quality of appraisals provided through different distribution
channels, including appraisal management companies,
independent appraisal operations within a mortgage
originator, and fee-for-service appraisals. The study shall
also include an analysis and statistical breakdown of
enforcement actions taken during the last 10 years against
different types of appraisers, including certified, licensed,
supervisory, and trainee appraisers. Furthermore, the study
shall examine the benefits and costs, as well as the
advantages and disadvantages, of establishing a national
repository to collect data related to real estate property
collateral valuations performed in the United States.
(b) Report.--Before the end of the 18-month period
beginning on the date of the enactment of this Act, the
Comptroller General shall submit a report on the study under
subsection (a) to the Committee on Financial Services of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate, together with such
recommendations for administrative or legislative action, at
the Federal or State level, as the Comptroller General may
determine to be appropriate.
(c) Additional Study Required.--The Comptroller General
shall conduct an additional study to determine the effects
that the changes to the seller-guide appraisal requirements
of Fannie Mae and Freddie Mac contained in the Home Valuation
Code of Conduct have on small business, like mortgage brokers
and independent appraisers, and consumers, including the
effect on the--
(1) quality and costs of appraisals;
(2) length of time for obtaining appraisals;
(3) impact on consumer protection, especially regarding
maintaining appraisal independence, abating appraisal
inflation, and mitigating acts of appraisal fraud;
(4) structure of the appraisal industry, especially
regarding appraisal management companies, fee-for-service
appraisers, and the regulation of appraisal management
companies by the states; and
(5) impact on mortgage brokers and other small business
professionals in the financial services industry.
(d) Additional Report.--Before the end of the 6-month
period beginning on the date of the enactment of this Act,
the Comptroller General shall submit an additional report to
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate containing the findings and
conclusions of the Comptroller General with respect to the
study conducted pursuant to subsection (c). Such additional
report shall take into consideration the Small Business
Administration's views on how small businesses are affected
by the Home Valuation Code of Conduct.

SEC. 1115. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.

Subsection (e) of section 701 of the Equal Credit
Opportunity Act (15 U.S.C. 1691) is amended to read as
follows:
``(e) Copies Furnished to Applicants.--
``(1) In general.--Each creditor shall furnish to an
applicant a copy of any and all written appraisals and
valuations developed in connection with the applicant's
application for a loan that is secured or would have been
secured by a first lien on a dwelling promptly upon
completion, but in no case later than 3 days prior to the
closing of the loan, whether the creditor grants or denies
the applicant's request for credit or the application is
incomplete or withdrawn.
``(2) Waiver.--The applicant may waive the 3 day
requirement provided for in paragraph (1), except where
otherwise required in law.
``(3) Reimbursement.--The applicant may be required to pay
a reasonable fee to reimburse the creditor for the cost of
the appraisal, except where otherwise required in law.
``(4) Free copy.--Notwithstanding paragraph (3), the
creditor shall provide a copy of each written appraisal or
valuation at no additional cost to the applicant.
``(5) Notification to applicants.--At the time of
application, the creditor shall notify an applicant in
writing of the right to receive a copy of each written
appraisal and valuation under this subsection.
``(6) Regulations.--The Board shall prescribe regulations
to implement this subsection within 1 year of the date of the
enactment of this subsection.
``(7) Valuation defined.--For purposes of this subsection,
the term `valuation' shall include any estimate of the value
of a dwelling developed in connection with a creditor's
decision to provide credit, including those values developed
pursuant to a policy of a government sponsored enterprise or
by an automated valuation model, a broker price opinion, or
other methodology or mechanism.''.

SEC. 1116. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
AMENDMENT RELATING TO CERTAIN APPRAISAL FEES.

Section 4 of the Real Estate Settlement Procedures Act of
1974 is amended by adding at the end the following new
subsection:
``(c) The standard form described in subsection (a) shall
include, in the case of an appraisal coordinated by an
appraisal management company (as such term is defined in
section 1121(11) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))),
a clear disclosure of--
``(1) the fee paid directly to the appraiser by such
company; and
``(2) the administration fee charged by such company.''.

SEC. 1117. APPRAISAL INDEPENDENCE REQUIREMENTS.

(a) Promulgation of New Requirements.--The Director shall
lead a Negotiated Rulemaking Committee under the Federal
Advisory Committee Act, the Negotiated Rulemaking Act, and
section 1022(b) of this title to promulgate appraisal
independence requirements for residential loan purposes, and
such Committee shall promulgate such requirements not later
than the end of the 60-day period beginning on the date of
the enactment of this title.
(b) Certain Regulation Requirements.--Regulations
promulgated by the Negotiated Rulemaking Committee under this
section--
(1) shall not prohibit lenders, the Federal National
Mortgage Association, or the Federal Home Loan Mortgage
Corporation from accepting any appraisal report completed by
an appraiser selected, retained, or compensated in any manner
by a mortgage loan originator--
(A) licensed or registered in accordance with the SAFE
Mortgage Licensing Act of 2008; and
(B) subject to Federal or State laws that make it unlawful
for a mortgage loan originator to make any payment, threat,
or promise, directly or indirectly, to any appraiser of a
property, for the purposes of influencing the independent
judgment of the appraiser with respect to the value of the
property, except that nothing in this section shall prohibit
a person with an interest in a real estate transaction from
asking an appraiser to--
(i) consider additional, appropriate property information;
(ii) provide further detail, substantiation, or explanation
for the appraiser's value conclusion; or

[[Page S3728]]

(iii) correct errors in the appraisal report; and
(2) shall include a requirement that lenders and their
agents compensate appraisers at a rate that is customary and
reasonable for appraisal services performed in the market
area of the property being appraised.
(c) Sunset.--Effective on the date the appraisal
independence requirements are promulgated pursuant to
subsection (a), the Home Valuation Code of Conduct announced
by the Federal Housing Finance Agency on December 23, 2008,
shall have no force or effect.
______