BEFORE THE BOARD OF REAL ESTATE APPRAISERS

DEPARTMENT OF LABOR AND INDUSTRY

STATE OF MONTANA

 

In the matter of the amendment of ARM 24.207.401 fees, 24.207.502 application requirements, 24.207.504, 24.207.505, 24.207.506, 24.207.507 qualifying education requirements, 24.207.509 qualifying experience, 24.207.515 inactive license or certification, 24.207.516 inactive to active license, 24.207.517 trainee requirements, 24.207.518 mentor requirements, 24.207.2101 and 24.207.2102 continuing education

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO: All Concerned Persons

 

            1. On January 13, 2011, at 9:00 a.m., a public hearing will be held in room B-07, 301 South Park Avenue, Helena, Montana, to consider the proposed amendment of the above-stated rules.

 

            2. The Department of Labor and Industry (department) will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the Board of Real Estate Appraisers (board) no later than 5:00 p.m., on January 7, 2011, to advise us of the nature of the accommodation that you need. Please contact Barb McAlmond, Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513; telephone (406) 841-2325; Montana Relay 1 (800) 253-4091; TDD (406) 444-2978; facsimile (406) 841-2373, e-mail realestateappraiser@mt.gov.

 

3. General Statement of Reasonable Necessity: In 2009, the federal Appraisal Subcommittee (ASC) conducted an audit of the board.  The ASC is the national body responsible for certifying that state appraiser licensing boards are in compliance with Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), which allows licensed appraisers to appraise properties in relation to federally related transactions.  Following the audit, the ASC mandated that the board amend the following rules to maintain compliance with the FIRREA and the federal regulations promulgated thereunder. Where additional specific bases for a proposed action exist, the board will identify those reasons immediately following that rule.

 

            4. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

            24.207.401 FEES (1) through (1)(l) remain the same.

            (m) reactivation fee                                                                                         250

            (m) remains the same, but is renumbered (n).

 

            AUTH: 37-1-131, 37-1-134, 37-54-105, MCA

            IMP:     37-1-131, 37-1-134, 37-1-141, 37-54-105, 37-54-112, 37-54-212, 37-54-302, 37-54-310, MCA

 

REASON: The board determined it is reasonably necessary to amend this rule and create a reactivation fee which, in accordance with 37-1-134, MCA, must reflect the costs incurred by the department in processing the renewal and providing additional board services. Currently, a licensee may place a license on inactive status, renew at a reduced fee, and later, reactivate without paying the difference in renewing inactive vs. active, while receiving increased services on active license status. The board estimates that the reactivation fee will affect one licensee a year, resulting in approximately $250 in additional annual revenue.

 

            24.207.502 APPLICATION REQUIREMENTS (1) through (4) remain the same.

            (5) Application must also include work product that is applicable to the level of licensure sought The board will select work product from the experience log. The work product requested will be commensurate with the level of licensure sought:

            (a) licensure level - single family unit residential appraisals are required;

            (b) certified residential - two to four family unit income-producing residential appraisals are required; and

            (c) remains the same.

            (6) The applicant shall correct any deficiencies and submit required material.  Failure to submit the required material within 60 days of notification notice with no additional application fee of deficiencies shall be treated as a voluntary withdrawal of the application. Failure to submit materials will be treated as a voluntary withdrawal. After voluntary withdrawal, an applicant will be required to submit an entirely new application to begin the process again.

            (7) remains the same.

 

            AUTH: 37-1-131, 37-54-105, MCA

            IMP:     37-1-131, 37-54-105, 37-54-202, MCA

 

REASON: The board is amending (5) to comply with Appraisal Subcommittee policy statement 10G, which specifically requires that state agencies select the work product from an applicant's experience log to be reviewed for compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). Currently, the board allows the applicant to select the work product. The board is clarifying application requirements in (6) to to address confusion among applicants with incomplete applications who hesitate to provide additional information because they believe they must also submit a new application fee. This amendment will clarify that no new fee is required as long as the missing material is timely provided.

 

            24.207.504 QUALIFYING EDUCATION REQUIREMENTS (1) through (5) remain the same.

            (6) The board shall have the authority to deny or revoke its approval of a previously-approved previously approved course or course provider for cause.

            (7) An applicant must attend a minimum of 90 100 percent of the scheduled class hours, complete all required exercises, and achieve a passing score on the course examination in order to receive credit for the course.

            (8) remains the same.

            (9) A classroom hour is defined as 50 minutes out of each 60-minute segment.

            (10) through (13) remain the same.

 

            AUTH: 37-1-131, 37-54-105, MCA

            IMP:     37-1-131, 37-54-105, 37-54-202, MCA

 

            24.207.505 QUALIFYING EDUCATION REQUIREMENTS FOR LICENSED REAL ESTATE APPRAISERS (1) Applicants for original licensure as a licensed real estate appraiser shall complete at least 90 150 classroom hours of instruction in the listed core curriculum.,15 hours of which must cover the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by The Appraisal Foundation at the time the educational offering was completed and at least 15 hours of which must cover report writing. Applicants must demonstrate that their education involves coverage of all topics listed below with particular emphasis on the appraisals of one- to four-unit residential properties:

            (a) influences on real estate value;

            (b) legal considerations in appraisal;

            (c) types of value;

            (d) economic principles;

            (e) real estate markets and analysis;

            (f) evaluation process;

            (g) property description;

            (h) highest and best use analysis;

            (i) appraisal statistical concepts/methods;

            (j) sales comparison approach;

            (k) site value;

            (l) cost approach;

            (m) income approach:

            (i) gross rent multiplier;

            (ii) estimation of income and expenses;

            (iii) operating expense ratios.

            (n) evaluation of partial interests;

            (o) appraisal standards and ethics; and

            (p) (2)  types Types of misconduct for which disciplinary proceedings may be initiated against a licensed real estate appraiser, as set forth by statute.

            (2) (3) Effective January 1, 2008, the The required core curriculum for a licensed real estate appraiser is:

            (a) through (h) remain the same.

            (3) (4) To upgrade from a trainee to a licensed real estate appraiser, an applicant may use education obtained for licensure as a trainee, as long as the education meets the required core curriculum as outlined in ARM 24.207.506.

            (4) (5) Effective January 1, 2008, applicants Applicants for original licensure as a licensed real estate appraiser shall complete at least 150 hours of board approved board-approved instruction in the required core curriculum ,15 hours of which must cover the USPAP as promulgated by The Appraisal Foundation at the time the educational offering was completed and at least 15 hours of which must cover report writing. Applicants shall demonstrate that their education involves coverage of all topics listed in (1) with particular emphasis on the appraisal of one to four-unit residential properties.

 

            AUTH: 37-1-131, 37-54-105, MCA

            IMP:     37-1-131, 37-54-105, 37-54-202, MCA

 

REASON: The board determined it is reasonably necessary to amend this rule to incorporate the newly revised Appraisal Qualifications Board (AQB) requirements. The AQB is the federal entity that establishes the qualifications for certified appraisers. Per the ASC audit, Montana must amend the requirements in this rule to remain federally compliant.

 

            24.207.506 QUALIFYING EDUCATION REQUIREMENTS FOR RESIDENTIAL CERTIFICATION (1) Applicants for certification as certified residential real estate appraisers shall provide evidence of completion of 120 hours of board approved board-approved instruction in the required core curriculum, 15 hours of which must cover the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by The Appraisal Foundation and at least 15 hours of which must cover report writing.

     (2) In addition to the topics listed in ARM 24.207.505, applicants for certification as a certified residential real estate appraiser shall demonstrate that their education involved coverage of the required core curriculum requirements narrative report writing and direct capitalization within the income approach. The education for this class shall place particular emphasis on the appraisal of two- to four-unit residential properties.

            (3) Effective January 1, 2008, the The required core curriculum for certified residential licensure is:

            (a) through (k) remain the same.

            (4) To upgrade from a trainee or a licensed real estate appraiser to a certified residential real estate appraiser, an applicant may use education obtained for licensure as a licensed real estate appraiser, as long as the education meets the required core curriculum.

            (5) Effective January 1, 2008, applicants Applicants for original certification as certified residential real estate appraisers shall provide evidence of completion of:

            (a) 200 hours of board approved board-approved instruction in the required core curriculum, 15 hours of which must cover the USPAP as promulgated by The Appraisal Foundation and at least 15 hours of which must cover report writing; and

            (b) through (e) remain the same.

 

            AUTH: 37-1-131, 37-54-105, 37-54-303, MCA

            IMP:     37-1-131, 37-54-105, 37-54-303, MCA

 

REASON: The board determined it is reasonably necessary to amend this rule to incorporate the newly revised Appraisal Qualifications Board (AQB) requirements. The AQB is the federal entity that establishes the qualifications for certified appraisers. Per the ASC audit, Montana must amend the requirements in this rule to remain federally compliant. Authority cites are being amended to accurately reflect the statutory sources of the board's rulemaking authority.

 

            24.207.507 QUALIFYING EDUCATION REQUIREMENTS FOR GENERAL CERTIFICATION (1) Applicants for certification as certified general real estate appraisers shall provide evidence of 180 300 hours of board approved board-approved instruction in the required core curriculum , 15 hours of which must cover the Uniform Standards of Professional Appraisal Practice (USPAP), as promulgated by The Appraisal Foundation and at least 15 hours of which must cover report writing.

            (2) In addition to the topics listed in ARM 24.207.505, applicants for general certification shall demonstrate that the education included:

            (a) narrative report writing; and

            (b) income approach, including the following:

            (i) addressing estimation of income and expenses;

            (ii) operating statement ratios;

            (iii) direct capitalization;

            (iv) cash flow estimates;

            (v) measures of cash flow; and

            (vi) discounted cash flow analysis.

            (3) remains the same, but is renumbered (2).

            (4) (3)  Effective January 1, 2008, the The core curriculum for certified general licensure is:

            (a) through (k) remain the same.

            (5) (4)  To upgrade from a trainee or licensed real estate appraiser to a certified general appraiser, an applicant may use prior education that also meets the specific criteria identified in (4) (3) and a minimum of 30 semester credit hours covering the requirements of (7) (6)(b).

            (6) (5) To upgrade from certified residential real estate appraiser to a certified general real estate appraiser, an applicant may use prior education for licensure that meets the specific criteria identified in (4) (3) and a minimum of 30 semester credit hours covering the requirements of (7) (6)(b).

            (7) (6) Effective January 1, 2008, applicants Applicants for certification as a certified general real estate appraiser shall provide evidence of:

            (a) 300 hours of board approved board-approved instruction in the core curriculum , 15 of which must cover the USPAP as promulgated by The Appraisal Foundation and at least 15 hours of which must cover report writing; and

            (b) remains the same.

 

            AUTH: 37-1-131, 37-54-105, 37-54-303, MCA

            IMP:     37-1-131, 37-54-105, 37-54-303, MCA

 

REASON: The board determined it is reasonably necessary to amend this rule to incorporate the newly revised Appraisal Qualifications Board (AQB) requirements. The AQB is the federal entity that establishes the qualifications for certified appraisers. Per the ASC audit, Montana must amend the requirements in this rule to remain federally compliant.

The board is deleting an unnecessary past effective date from this rule and renumbering both rule sections and internal references following amendment of the rule. Authority cites are being amended to accurately reflect the statutory sources of the board's rulemaking authority.

 

            24.207.509 QUALIFYING EXPERIENCE (1) through (5)(c) remain the same.

            (d) description of work performed; and

            (e) number of work hours. ;

            (f) scope of work completed by trainee; and

            (g) scope of work completed by approved mentor.

     (6) remains the same.

            (7) Qualifying experience must be obtained within five years prior to application date, unless otherwise determined by the board.

            (8) through (10) remain the same.

            (11) The board may provide a variance from the hourly standards provided in (9) and (10). To be considered for such a variance, an applicant must submit a written request for a variance supported by documentation, which demonstrates the need for additional credit hours.

 

            AUTH: 37-1-131, 37-54-105, 37-54-303, MCA

            IMP:     37-1-131, 37-54-105, 37-54-202, 37-54-303, MCA

 

REASON: To address a citation in the Appraisal Subcommittee audit, the board is amending this rule to require that trainee experience logs clearly identify the work in each appraisal performed by the trainee and the work performed by the mentor. Authority cites are being amended to accurately reflect the statutory sources of the board's rulemaking authority.

 

            24.207.515 INACTIVE LICENSE/CERTIFICATION (1) through (3) remain the same.

            (4) Inactive licensees must not appraise real property or sign appraisal reports while their license is on inactive status.

 

            AUTH: 37-1-131, 37-1-319, 37-54-105, 37-54-310, MCA

            IMP:     37-1-131, 37-1-319, 37-54-105, 37-54-310, MCA

 

REASON: The board determined it is reasonably necessary to amend this rule and clarify that appraisers on inactive status may not appraise real property within Montana.  The public reasonably expects that a licensee on inactive status would not be able to engage in the same activities as an active licensee, and an inactive licensee is not subject to the same level of supervision by the board as an active licensee. Authority cites are being amended to accurately reflect the statutory sources of the board's rulemaking authority.

 

            24.207.516 INACTIVE TO ACTIVE LICENSE (1) remains the same.

            (a) file an updated application form with the board office and pay the required reactivation fee in accordance with ARM 24.207.401.

 

            AUTH: 37-1-131, 37-1-319, 37-54-105, 37-54-310, MCA

            IMP:     37-1-131, 37-1-319, 37-54-105, 37-54-310, MCA

 

REASON: The board is amending this rule to clarify that licensees are required to pay a reactivation fee when changing from inactive to active status. This amendment coincides with the reactivation fee as proposed in ARM 24.207.401. Authority cites are being amended to accurately reflect the statutory sources of the board's rulemaking authority.

 

            24.207.517 Trainee Requirements (1) through (3) remain the same.

            (4) A trainee license must be renewed by the date set by ARM 24.101.413, following the trainee's original year of licensure. A trainee license may be renewed a total of four times, but may be extended by the board for cause.

            (5) through (10) remain the same.

            (11) Effective January 1, 2008, the The core curriculum for trainee licensure is:

            (a) through (d) remain the same.

 

            AUTH: 37-1-131, 37-54-105, MCA

            IMP:     37-1-131, 37-54-105, 37-54-201, 37-54-202, 37-54-303, 37-54-403, MCA

 

REASON: The board is deleting the 2008 effective date from this rule as it is no longer necessary.

 

            24.207.518 Mentor requirements (1) through (1)(b) remain the same.

            (i) a mentor shall make application on forms approved by the board and submit two appraisal reports prepared by the mentor in accordance with Uniform Standards of Professional Appraisal Practice (USPAP) standards with all three approaches to value;

            (ii) failure to prepare appraisal reports in compliance with USPAP can result in denial of mentor status.; and

            (iii)   mentor applications must be received in the board office 45 days prior to the next scheduled board meeting.

            (c) and (d) remain the same.

            (e) certify the mentor's agreement to provide on-going ongoing supervision of the licensed trainee;

            (f) through (h) remain the same.

            (i) prior to allowing the trainee to perform an assignment with limited supervision, the mentor shall evaluate the competency of the trainee after the first 50 properties. The mentor must determine that the trainee is competent to perform an assignment within the minimum criteria of USPAP, with limited supervision. Failure to provide adequate supervision is unprofessional conduct according to 37-1-316, MCA;

            (i) and (j) remain the same, but are renumbered (j) and (k).

            (2) and (3) remain the same.

 

            AUTH: 37-1-131, 37-54-105, MCA

            IMP:     37-1-131, 37-54-105, 37-54-201, 37-54-202, 37-54-301, 37-54-403, 37-54-411, MCA

 

REASON: The board is amending (1)(b)(i) to clarify that an applicant for mentor status must submit appraisal reports that demonstrate an understanding of all three approaches to value.  A mentor is expected to impart to a trainee a thorough understanding of the three approaches to valuing real property, and therefore, the board determined it is reasonably necessary to require all mentor applicants to submit appraisal reports that reflect such an understanding.

The board is adding (1)(b)(iii) to require that mentor applicants submit application materials at least 45 days prior to the meeting at which it will be reviewed.  This requirement will help ensure sufficient time for a complete review of the appraisals for compliance with USPAP, and allow the appraisals and review to be disseminated to board members prior to the meeting.

The board decided to add (1)(i) to ensure that mentors are providing an appropriate level of supervision to their trainees.  This amendment will increase public protection by ensuring that all appraisal work performed by trainees is done in a professional manner that is consistent with USPAP.

 

            24.207.2101 CONTINUING EDUCATION (1) through (3) remain the same.

            (4) Application may be made for continuing education credit for participation other than as a student in appraisal education processes and programs. Examples of activities for which credit may be granted are teaching, program development, authorship of textbooks, or similar activities, which are determined by the board to be equivalent to obtaining continuing education. These activities cannot be approved for more than 50 percent of continuing education requirements.

            (5) Every other renewal year, licensees shall provide evidence to the board of having completed must complete at least 28 hours of instruction in courses or seminars approved by the board, at least seven hours of which must be the national Uniform Standards of Professional Appraisal Practice (USPAP) update course. No online or alternative USPAP courses will be accepted.

            (6) and (7) remain the same.

            (8) Education completion certificates must be retained and available for audit for a period of five years, according to the record keeping requirements of USPAP.

 

            AUTH: 37-1-131, 37-1-319, 37-54-105, 37-54-303, MCA

            IMP:     37-1-131, 37-1-306, 37-54-105, 37-54-303, 37-54-310, MCA

 

REASON: The board determined it is reasonably necessary to amend (4) to limit certain CE activities to 50 percent of required continuing education (CE) per Appraisal Qualifications Board (AQB) requirements. The AQB is the federal entity that establishes the minimum requirements to license and regulate appraisers that conduct federally related transactions. Per the ASC audit, Montana must amend (4) to remain compliant.

The board is amending (5) to clarify that licensees must complete the USPAP update course as acceptable continuing education.  Currently, there are two different USPAP courses: a 15-hour course intended as a foundation level of knowledge for new appraisers and a 7-hour update course. The 15-hour course is not intended as a CE course and is not acceptable. The board is also amending (5) to specify that the board will not accept alternative delivery of this course and licensees must attend the class.

The board is amending (8) to comply with ASC requirements. Montana received an audit citation for not requiring licensees to maintain CE certificates for five years.

 

            24.207.2102 CONTINUING EDUCATION NONCOMPLIANCE (1) remains the same.

            (2) Noncompliance of CE mandated by the AQB will be reported to the ASC National Registry Compliance Database.

 

            AUTH: 37-1-136, 37-1-319, 37-54-105, 37-54-202, 37-54-210, 37-54-310, MCA

            IMP:     37-1-131, 37-1-136, MCA

 

REASON: The board determined it is reasonably necessary to add (2) to comply with the ASC requirement for states to notify the National Registry when a licensee fails to comply with mandated continuing education. Authority cites are being amended to accurately reflect the statutory sources of the board's rulemaking authority and to delete reference to a repealed statute.

 

            5. Concerned persons may present their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to the Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513, by facsimile to (406) 841-2373, or by e-mail to realestateappraiser@mt.gov, and must be received no later than 5:00 p.m., January 21, 2011.

 

            6. An electronic copy of this Notice of Public Hearing is available through the department and board's site on the World Wide Web at www.realestateappraiser.mt.gov. The department strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems, and that technical difficulties in accessing or posting to the e-mail address do not excuse late submission of comments.

 

            7. The board maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this board. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies the person wishes to receive notices regarding all board administrative rulemaking proceedings or other administrative proceedings. The request must indicate whether e-mail or standard mail is preferred. Such written request may be sent or delivered to the Board of Real Estate Appraisers, 301 South Park Avenue, P.O. Box 200513, Helena, Montana 59620-0513; faxed to the office at (406) 841-2373; e-mailed to realestateappraiser@mt.gov; or made by completing a request form at any rules hearing held by the agency.

 

            8. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

            9. Don Harris, attorney, has been designated to preside over and conduct this hearing.

 

 

                                                                     BOARD OF REAL ESTATE APPRAISERS

                                                                     KRAIG KOSENA CHAIRPERSON

 

 

/s/ DARCEE L. MOE                                 /s/ KEITH KELLY

Darcee L. Moe                                           Keith Kelly, Commissioner

Alternate Rule Reviewer                         DEPARTMENT OF LABOR AND INDUSTRY

 

 

            Certified to the Secretary of State December 13, 2010