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NEW JERSEY REGISTER
VOLUME 38, ISSUE 23
ISSUE DATE: DECEMBER 4, 2006
RULE PROPOSALS
Law And Public Safety
Division Of Consumer Affairs
State Board of Real Estate Appraisers

Proposed Amendments: N.J.A.C. 13:40A-1.1, 2.2, 2.3, 2A.2, 2A.3, 3.2, 3.3 and 3.4
Purpose and Scope; Definitions
Certification of General Real Estate Appraisers
Certification of Residential Real Estate Appraisers
Licensing of Real Estate Appraisers

Authorized By: State Board of Real Estate Appraisers, Dr. James Hsu, Executive Director.
Calendar Reference: See Summary below for explanation of exception to the calendar requirements.
Authority: N.J.S.A. 45:14F-8.
Proposal Number: PRN 2006-394.

Submit written comments by February 2, 2007 to:

   Dr. James Hsu, Executive Director
   State Board of Real Estate Appraisers
   PO Box 45032
   124 Halsey Street
   Newark, New Jersey 07101

The agency proposal follows:

Summary

In 1989, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to address the then-recent savings and loan crisis. This legislation included Title XI, which required that the only appraisers permitted to perform appraisals for Federally-related transactions were to be those regulated by the individual states. The regulatory program contained three components: 1. each state government is to establish an appraiser regulatory body to issue licenses and certificates and to address enforcement or disciplinary issues; 2. private-sector expertise regarding appraisal standards and appraiser qualifications as provided by The Appraisal Foundation; and 3. a Federal government agency (the Appraisal Subcommittee) to oversee the program to ensure it remained consistent with the intent of Congress.

Under Title XI, in order for its appraisers to qualify to appraise Federally-related transactions, each state was required to put a regulatory system into place. The regulatory agency is responsible for issuing licenses and certificates to individuals who meet the Real Property Appraiser Qualification Criteria (Criteria) established by the Appraiser Qualifications Board (AQB) of the Appraisal Foundation. The mission of the Appraisal Foundation is to promote professionalism in appraising. This is accomplished through the work of two independent boards, the Appraisal Standards Board (ASB) and the AQB.

The ASB promulgates the generally-recognized performance standards of the appraisal profession, known as the Uniform Standards of Professional Appraisal Practice (USPAP).

The AQB is charged with setting the minimum qualifying education, experience, continuing education and examination requirements to become a state certified or licensed appraiser. Recently, the AQB adopted changes to the Criteria that will become effective January 1, 2008 (2008 Criteria). The changes include increased qualifying education for those individuals seeking certification as either a general real estate appraiser or a residential real estate appraiser. The 2008 Criteria amend the experience requirements for those seeking licensure to require that the experience must be completed in no fewer than 12 months. Examination requirements have not changed, although beginning on January 1, 2008, the content of the examination will reflect the 2008 Criteria.

Under its rulemaking authority set forth in N.J.S.A. 45:14F-8(g), the State Board of Real Estate Appraisers (the Board), is proposing amendments to Subchapters 1, 2, 2A and 3 to reflect the 2008 Criteria.

The Board proposes an amendment to N.J.A.C. 13:40A-1.1 to inform applicants that the Board has elected to adopt the "segmented approach" with regard to implementation of the new Criteria. The "segmented approach" provides that the requirements for licensure or certification be broken down into three components: education, experience and examination. An applicant would have to meet the Criteria in effect at the time he or she completes a particular component. Any segment completed prior to January 1, 2008, must satisfy the current Criteria, while any component not completed by January 1, 2008, would have to conform to the 2008 Criteria. In addition, the Board proposes that the "segmented approach" would only be available until December 31, 2009. Therefore, an applicant who has not completed all three components by December 31, 2009, will have to conform to the 2008 Criteria with regard to every component. The Board proposes a cut-off date of December 31, 2009 to ensure that the components are recent and not "banked" for years.

The Board proposes amendments to Subchapter 2, Certification of General Real Estate Appraisers, to reflect the 2008 Criteria for this credential. More specifically, the Board is proposing to amend N.J.A.C. 13:40A-2.2, which sets forth the requirements an applicant must satisfy before being eligible to take the examination. Since the 2008 Criteria have increased the level of qualifying education requirements, the Board is proposing to amend N.J.A.C. 13:40A-2.2(a) to include that the level of education must be the equivalent to that established by "The Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation. This proposed amendment guarantees that the Board's educational requirement will meet Federal standards.

Pursuant to recodified N.J.A.C. 13:40A-2.2(a)6, the Board requires the applicant for certification as a general real estate appraiser to complete the required experience as set forth in N.J.A.C. 13:40A-2.4 to be eligible to take the examination. However, the Board is proposing N.J.A.C. 13:40A-2.2(b), to allow an applicant, only during the time period that the "segmented approach" is applicable, to complete the experience requirement subsequent to taking the examination. The Board is proposing this deviation during the transitional period so that applicants will be examined on the Criteria that they have completed and not be subject to an examination based on the 2008 Criteria.

The Board is also proposing new N.J.A.C. 13:40A-2.3(b) to require that all qualifying education courses taken on or after January 1, 2007, to satisfy the educational requirements for certification as a general real estate appraiser, with the exception of the college level course requirement as defined by the AQB, must be approved by the AQB's Course Approval Program (CAP). Requiring such courses to be CAP-approved ensures that the courses meet the requirements of the 2008 Criteria. Since the Board does not have the resources to conduct the required reviews, CAP will henceforth evaluate qualifying education to ensure that course offerings meet the requirements of the 2008 Criteria.

The AQB established CAP at the request of and as a service to state appraiser regulatory agencies and all providers of real estate appraisal education. CAP was designed to encourage the development of high quality real estate appraisal education and centralize the review process and alleviate the administrative burden on state regulatory agencies and education providers. Although CAP is not mandated by the AQB, the AQB urges state appraiser regulatory agencies and providers of real estate appraisal education to participate in this program in an effort to develop high quality real estate appraisal education programs and meaningful education standards.

The Board is also proposing amendments to Subchapter 2A, Certification of Residential Real Estate Appraisers. The 2008 Criteria will apply to individuals applying for certification as a residential real estate appraiser as well; therefore, the Board is proposing the amendments as discussed above for Subchapter 2 to Subchapter 2A.

The Board is also proposing amendments to Subchapter 3 which sets forth the requirements an applicant must satisfy before being granted a license as a real estate appraiser. The 2008 Criteria do not amend the level of education requirements for licensure; but, it increases the number of creditable class hours an applicant must complete before being eligible to take the examination. The Board is proposing new N.J.A.C. 13:40A-3.2(b), which would allow, while the segmented approach is applicable, an applicant for licensure as a real estate appraiser to complete the experience requirement subsequent to taking the examination for licensure.

The Board is proposing new N.J.A.C. 13:40A-3.3(b) to require that all qualifying education courses taken on or after January 1, 2007 be approved by the AQB's Course Approval Program. The Board proposes N.J.A.C. 13:40A-3.3(b) to ensure that all qualifying education satisfy the AQB educational requirements for licensure as a licensed real estate appraiser.

The Board is also proposing new N.J.A.C. 13:40A-3.4(b) to require that the experience by an applicant for licensure be completed in no fewer than 12 months. This proposed language reflects the 2008 Criteria.

The Board has determined that the comment period for this notice of proposal shall be 60 days; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice is excepted from the rulemaking calendar requirement.

Social Impact

The proposed amendments will have a positive social impact on the public since they are intended to phase in the January 1, 2008 requirements, in lieu of the "firm date" alternative, which is also allowable in imposing the new Criteria. The substantive requirements themselves do not result from the proposed amendments, inasmuch as regulations already adopted under the Board's enabling act presently incorporate the Criteria by reference: hence, a change in the Criteria does not require any amendment to the Board's rules. Although the new Criteria impose more stringent standards upon prospective licensees, the "segmented approach" to the necessary changes will be less disruptive to the planning of individuals seeking licensure or certification than the "firm date" approach, in the Board's opinion.

The proposed amendment requiring CAP-approval for qualifying education may impact those providers of qualifying education who will be faced with a new administrative requirement in terms of learning the submission requirements for CAP approval, but the new core curriculum requirements require adaption to a new method of evaluation of the number of hours devoted to various components of the core curriculum in any case, whether it is the Board or the CAP that reviews course submissions.

Although these amendments may have a negative social impact upon, these amendments are necessary to be in compliance with the minimal standards established by AQB.

Economic Impact

The proposed amendments, which require qualifying education to be CAP-approved, will have an economic impact upon providers of qualifying education courses. Courses submitted are reviewed in depth by a qualified member of the AQB Course Review Panel. Course reviewers are independent appraisal educators who have extensive experience in course development, review or instruction in the real estate or appraisal field and have substantial education and/or experience in the appraisal field. There are fees associated with the review of qualifying education courses. These fees vary according to the length of the course. For example, courses 15 hours in length cost $ 1,000; courses 16 to 29 hours in length cost $ 1,200; courses over 30 hours in length cost $ 1,400. The approval is good for three years.

In addition, the new Criteria and the segmented phase-in may have an economic impact to the extent that applicants will have to comply with the new criteria for any components not completed by January 1, 2008, which may result in additional expense.

Although there will be an economic impact upon qualifying education providers, which may ultimately be passed to individuals studying to become State-certified real estate appraisers, the benefit of requiring these courses to be CAP-approved outweighs the economic impact upon the providers or the certificants. Since the Board lacks the resources to conduct the required reviews and since CAP-approved courses ensure that the qualifying education satisfies AQB curriculum standards, the Board's proposed language requiring CAP-approval eliminates any chance that it approve a course that could later be disapproved by the Appraisal Subcommittee because it did not meet AQB curriculum standards.

Federal Standards Statement

A Federal standards analysis is not required because the proposed amendments do not exceed standards and requirements set forth by the Appraiser Qualification Board of the Appraisal Foundation, which may be viewed as establishing and setting forth Federal standards and requirements.

Jobs Impact

The proposed amendments will not result in the generation or loss of jobs in New Jersey.

Agriculture Industry Impact

The Board believes the proposed amendments will have no impact upon the agriculture industry in New Jersey.

Regulatory Flexibility Analysis

If, for the purposes of the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. (the Act), any of the approximately 2,830 real estate appraisers licensed or certified by the Board are deemed "small businesses," then the following analysis applies.

The proposed amendments do not impose any recordkeeping or reporting requirements upon licensees or certificate holders. They do, however, impose compliance requirements upon applicants applying for licensure or certification. Each applicant must comply with the qualifying educational standards established by the AQB before being considered for State licensure or certification.

The proposed amendments also impose compliance requirements upon qualifying education providers. All qualifying education taken on or after January 1, 2007, to satisfy the educational requirements for certification, as a either a residential real estate appraiser or a general real estate appraiser, with the exception of the college level course requirement as defined by the AQB, must be approved by the AQB's Course Approval Program. Any costs associated with the amendments is as discussed in the Economic Impact above.

Ultimately, any negative impact upon applicants or qualifying education providers is strongly outweighed by the protection the restrictions afford to the public. In order to ensure that these protections are afforded to all consumers, the Board believes that the proposed amendments must be uniformly applied and has not provided differing compliance requirements for any licensees or certificate holders based on the size of the business. No additional professional services will be needed to comply with the proposed amendments.

Smart Growth Impact

The Board does not believe that the proposed amendments will have any impact upon the achievement of smart growth or upon the implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus):

SUBCHAPTER 1.    PURPOSE AND SCOPE; DEFINITIONS

13:40A-1.1  Purpose and scope

(a)-(b) (No change.)

(c) Beginning on January 1, 2008, in order to implement the Real Property Appraiser Qualification Criteria (2008 Criteria) that goes into effect on that date, the Board has adopted the segmented approach, with a cut-off date of December 31, 2009. States are required to implement appraiser certification requirements that are no less stringent than those issued by the AQB in the Real Property Appraiser Qualification Criteria (Criteria), pursuant to the Financial Institutions Reform Recovery and Enforcement Act of 1989, 12 U.S.C. ß 3331 et seq. Certification requirements are broken down into three components: education, examination, and experience. The segmented approach requires an applicant to meet the Criteria in effect at the time he or she completes a particular component. Any component completed prior to January 1, 2008, would satisfy the current Criteria, while any component not completed by January 1, 2008, would have to conform to the 2008 Criteria. Any applicant for a license or certification who has not demonstrated completion of all three components by December 31, 2009 shall conform to the 2008 Criteria with regard to every component.

SUBCHAPTER 2.    CERTIFICATION OF GENERAL REAL ESTATE APPRAISERS

13:40A-2.2  Eligibility for admission to examination

(a) An applicant for certification as a general real estate appraiser shall present the following:

1.-4. (No change.)

5. The level of education as established by "The Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation as amended and supplemented, which are incorporated herein by reference as part of this rule;

Recodify existing 5. and 6. as 6. and 7. (No change in text.)

(b) During the time period in which the segmented approach is applicable, applicants for certification as a general real estate appraiser may elect to complete the experience requirement subsequent to taking the examination for certification.

13:40A-2.3  Educational requirements for certification as a general real estate appraiser

(a) In order to be eligible to take the examination for certification as a general real estate appraiser, an applicant shall complete, by the time the application is submitted to the Board, the educational requirements for a general real estate appraiser as established by "The Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation as amended and supplemented, which are incorporated herein by reference as part of this rule.

(b) All qualifying education taken on or after (the effective date of this amendment), to satisfy the educational requirements for certification as a general real estate appraiser, with the exception of the college level course requirement as defined by the AQB, shall be approved by the AQB's Course Approval Program.

SUBCHAPTER 2A.   CERTIFICATION OF RESIDENTIAL REAL ESTATE APPRAISERS

13:40A-2A.2  Eligibility for admission to examination

(a) An applicant for certification as a residential real estate appraiser shall present the following:

1.-4. (No change.)

5. The level of education as established by "The Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation as amended and supplemented, which are incorporated herein by reference as part of this rule;

Recodify existing 5. and 6. as 6. and 7. (No change in text.)

(b) During the time period in which the segmented approach is applicable, applicants for certification as a residential real estate appraiser may elect to complete the experience requirement subsequent to taking the examination for certification.

13:40A-2A.3  Educational requirements for certification as a residential real estate appraiser

(a) In order to be eligible to take the examination for certification as a residential real estate appraiser, an applicant shall complete, by the time the application is submitted to the Board, the educational requirements for a residential real estate appraiser as established by "The Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation as amended and supplemented, which are incorporated herein by reference as part of this rule.

(b) All qualifying education taken on or after (the effective date of this amendment), to satisfy the educational requirements for certification as a residential real estate appraiser, with the exception of the college level course requirement as defined by the AQB, shall be approved by the AQB's Course Approval Program.

SUBCHAPTER 3.    LICENSING OF REAL ESTATE APPRAISERS

13:40A-3.2  Eligibility for admission to examination

(a) (No change.)

(b) During the time period in which the segmented approach is applicable, applicants for licensure as a licensed real estate appraiser may elect to complete the experience requirement subsequent to taking the examination for certification.

13:40A-3.3  Educational requirements for licensure

(a) In order to be eligible to take the examination for licensure as a licensed real estate appraiser, an applicant shall complete, by the time the application is submitted to the Board, the educational requirements for a licensed real estate appraiser as established by "the Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation as amended and supplemented, which are incorporated herein by reference as part of this rule.

(b) All qualifying education taken on or after (the effective date of this amendment), to satisfy the educational requirements for licensure as a licensed real estate appraiser shall be approved by the AQB's Course Approval Program.

13:40A-3.4  Experience requirements for licensure

(a) Each applicant applying for licensure as a licensed real estate appraiser shall complete, by the time the application is submitted to the Board, the experience requirements for a licensed real estate appraiser as established by "The Real Property Appraiser Qualification Criteria and Interpretation of the Criteria" as promulgated by the AQB of the Appraisal Foundation as amended and supplemented, which are incorporated herein by reference as part of this rule.

(b) The experience requirement shall be completed in no fewer than 12 months.

 



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