Technical Standards for the Recognition and Qualification of Asset Appraisers for Securitization Processes

SECURITIZATION
Approval: 09/23/2024
Validity: 10/09/2024

THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:
I. That Article 46, letter a) of the Securitization of Assets Law establishes that Securitization Funds may be constituted and integrated with real estate assets, which must be appraised by experts registered with the Superintendency of the Financial System or with other entities whose registries are recognized by the Superintendency, using for the appraisals they perform methods of recognized technical value approved by this body.

II. That Article 51, second paragraph of the Securitization of Assets Law, establishes that prior to the alienation of assets by the Originator to a Securitization Fund, such assets must be subjected to the opinion of an appraiser qualified by the Superintendency of the Financial System.

III. That Article 93, letter g) of the Securitization of Assets Law, empowers the Securities Superintendency, now the Superintendency of the Financial System, with regulatory authority which, by virtue of the entry into force of the Law on Supervision and Regulation of the Financial System, was transferred to the Central Reserve Bank of El Salvador, through its Committee of Standards, to issue Technical Standards, of general application, that are necessary for the operation of Securitization processes and for the sound development of the Securities Market.

IV. That Article 3, letter h) of the Law on Supervision and Regulation of the Financial System, establishes that it is the responsibility of the Superintendency to authorize the registrations, registry entries, modifications and cancellations thereof, of the persons, institutions and operations that are subject to such requirement, in accordance with the laws on the matter;

V. That Article 78 of the Law on Supervision and Regulation of the Financial System, establishes that the Superintendency of the Financial System will organize and keep updated the registries that the laws entrust to it, among which are those relating to Experts in the cases indicated by law.

THEREFORE,

by virtue of the regulatory powers conferred upon it by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

SECURITIZATION
Approval: 09/23/2024
Validity: 10/09/2024

TECHNICAL STANDARDS FOR THE RECOGNITION AND QUALIFICATION OF ASSET APPRAISERS FOR SECURITIZATION PROCESSES

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards aim to define the minimum requirements that other registries of real estate asset appraisers, different from that of the Superintendency of the Financial System, must meet to be recognized by this body. Such recognition will enable professionals registered in them to perform appraisals of real estate assets participating in Securitization processes.

Likewise, it establishes the minimum requirements for natural or legal persons interested in being qualified by the Superintendency of the Financial System as experts to perform appraisals of financial assets in Securitization processes.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are:
a) Entities interested in receiving the recognition of the registry of asset appraisers other than that of the Superintendency of the Financial System; and b) Natural or legal persons interested in receiving the qualification of asset appraisers for financial assets for securitization processes.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Financial assets: Any value, right or financial instrument that can integrate securitization funds, in accordance with the Securitization of Assets Law and the standards issued by the Committee of Standards of the Central Reserve Bank of El Salvador; b) Real estate assets: Real estate, land, buildings, and constructions of all kinds adherent to the soil. Rooted plants, pending fruits, mine deposits, doors, windows, slabs, etc., of buildings, and in general, all natural objects or objects of use or ornamentation that are fixed and permanently attached to real estate, so as to form a single body with them, are part of the real estate assets; c) Central Bank: Central Reserve Bank of El Salvador; d) Securitization Fund: Independent patrimony, different from that of the Securitization Company and the Originator, formed by a set of assets and liabilities that result from or are integrated as a consequence of the development of the respective securitization process. The assets of the Fund will have as their main purpose, generating the payments of the securities issued against it; e) Securitization Law: Securitization of Assets Law; f) Expert or Appraiser: Natural or legal person authorized to perform the appraisal of assets in accordance with what is established in the Securitization Law and standards issued by the Committee of Standards of the Central Reserve Bank of El Salvador, that are applicable; g) Registry: Control system carried out and maintained by public or private entities, whose object is to list or register professional persons who have a relationship with the valuation of assets; h) Representative of Security Holders: Legal person in charge of representing the owners of the securities of each Fund in accordance with what is established in the Securitization of Assets Law; i) Superintendency: Superintendency of the Financial System; j) Securitization Company: Legal person that administers Securitization Funds, registered with the Superintendency of the Financial System; and k) Value: Any negotiable amount in an organized market, expressed in monetary terms.

CHAPTER II
OF THE EXPERTS AUTHORIZED TO PARTICIPATE IN THE APPRAISAL OF REAL ESTATE ASSETS PARTICIPATING IN SECURITIZATION PROCESSES

Experts who may participate in the appraisal of real estate assets Art. 4.- In accordance with what is established in letter a) of Article 46 of the Securitization Law, the experts authorized to perform appraisals on real estate assets are the following:
a) Those who are registered in the registry kept by the Superintendency for this purpose in accordance with the "Technical Standards for the Registration of Appraiser Experts and their Professional Obligations" (NRP-27), issued by the Central Bank through its Committee of Standards; and b) Those who are registered in other registries recognized by the Superintendency, in accordance with the requirements set forth in these Standards. In any case, for experts registered in other registries to participate in the performance of appraisals of real estate assets in securitization processes, they must also comply with the particular requirements set forth in these Standards.

CHAPTER III
REQUIREMENTS FOR THE RECOGNITION OF OTHER REGISTRIES

Art. 5.- For the Superintendency to recognize other registries, it is indispensable that they be maintained by institutions or entities legally established and additionally that within their respective regulations, such registries be fully authorized to qualify the registration of professionals in areas such as: Civil Engineering, Architecture or related areas.

Documentation
Art. 6.- For the Superintendency to recognize other registries, they must present the following documentation:
a) Request the respective recognition from the Superintendency. Such request must be signed by the Legal Representative of the registry in question; b) Present a certification, signed by the Legal Representative of the registry in question, stating that the interested party is recorded or registered in it and that as of that date, they are current in the fulfillment of their obligations with said registry; c) Present documentation accrediting that said registry is legally established, as well as the internal regulations to which the professionals registered therein are subject; and d) That the Legal Representative of the corresponding registry present a document expressing the commitment to provide the information required by the Superintendency, regarding the registered professionals who intend to provide real estate valuation services for Securitization processes.

Art. 7.- Once the recognition of the registry is granted, the experts recorded therein who wish to participate in the performance of appraisals on real estate assets for Securitization processes, must comply with the requirements set forth in Chapter Four of these Standards, insofar as they are applicable.

Art. 8.- Experts registered in other registries recognized by the Superintendency may only participate in the appraisal of real estate assets in securitization processes.

CHAPTER IV
REQUIREMENTS FOR THE QUALIFICATION OF APPRAISERS OF FINANCIAL ASSETS PARTICIPATING IN SECURITIZATION PROCESSES

Requirements for qualification of experts
Art. 9.- Experts qualified to appraise financial assets susceptible to securitization, which intend to integrate a Securitization Fund, when these are negotiable securities on the stock exchange, will be the Specialized Agents in Securities Valuation, authorized by the Superintendency in accordance with the Securities Market Law.

Documentation
Art. 10.- For an expert to participate in the performance of appraisals of other financial assets other than those defined in Article 9 of these Standards, they must be previously qualified by the Superintendency, for which they will comply with the following requirements:
a) Requirements for Natural Persons:
i. Request the respective qualification from the Superintendency, in accordance with the request and documentation established in Article 11 of these Standards;
ii. Be a professional with a university degree in Industrial Engineering, Public Accounting, Business Administration, Economics or other related fields;
iii. Have training in finance or, in default thereof, have received specialized training in the appraisal of assets and demonstrate experience in the performance of asset appraisals;
iv. Demonstrate that they have sufficient technical equipment, installed capacity and sufficient and suitable human resources for the performance of appraisals;
v. Not have been suspended from the practice of their profession;
vi. Not have been sanctioned by the Superintendency;
vii. Not be a debtor, co-debtor or guarantor of credits from institutions belonging to the Salvadoran Financial System, to which fifty percent (50%) or more of sanitation reserves have been constituted, in accordance with the regulations applicable thereto. In the case of foreigners or Salvadorans domiciled abroad, they must also demonstrate that in their respective countries of domicile and origin, they are not in the aforementioned circumstance;
viii. Not be in a state of bankruptcy, suspension of payments or creditors' concurso;
ix. Not have been convicted by a final judgment in El Salvador or abroad, for having committed or participated fraudulently in the commission of any crime; and
x. Not have been judicially proven to have participated in activities related to drug trafficking and related crimes, and money laundering, terrorism financing and financing of the proliferation of weapons of mass destruction, in accordance with the legislation and regulation in this matter. (1)
b) Legal Persons that intend to participate in the valuation of financial assets must additionally comply with the following requirements:
i. That the purpose stated in the Deed of Constitution or form of constitution of simplified joint-stock companies and their modifications, is not incompatible with the activity related to the valuation of assets;
ii. That their Legal Representative and the members of their administrative body comply with the following:

1. The requirements set forth in romans i, and vi to x of letter a) of this article and those set forth in Article 12 of these Standards;
2. Be Salvadoran domiciled in the country, and in the case of foreigners, prove their residence and physical presence in the country;
3. Be over twenty-five (25) years of age; and
4. Be of recognized honorability and financial competence.
   iii. Demonstrate that they have sufficient technical equipment, installed capacity and sufficient and suitable human resources for the performance of appraisals.

Content of the request
Art. 11.- The request established in roman i of letter a) of Article 10 of these Standards, must be accompanied by the following documentation:
a) Requirements for Natural Persons:
i. Curriculum vitae and notarially certified copy of the academic title of the interested party, duly accredited by the Ministry of Education or by the competent authority in the country of origin if they are titles issued abroad;
ii. Certification issued by the General Directorate of Penal Centers or by the equivalent authority when it comes to foreigners, stating that the applicant has no criminal record. When the applicant is a legal person, this requirement must be met by its Legal Representative and by the members of its administrative body;
iii. Legible copy of the Applicant's Unique Identity Document, its Tax Identification Number which will be in accordance with what is established by the Tax Administration, and Taxpayer Registration Card for the Tax on the Transfer of Movable Property and the Provision of Services, if applicable;
iv. Documentation accrediting that the applicant and their technical team have training in finance or specialized training in asset appraisal and with experience in the performance of financial asset appraisals; and
v. Sworn declaration signed by the applicant or their Legal Representative or attorney-in-fact if applicable, in which they declare compliance with the requirements established in these Standards.
b) Legal Persons that intend to participate in the valuation of financial assets must additionally annex to what is defined in romans ii to v of letter a) of this article, the following information:
i. Notarially certified copy of their current Social Pact and the latest credential of the election of their administrative body. If as of that date the term for the election of administrators has already expired, a certificate must be presented stating that as of that date no new administration has been elected and that therefore, the previously elected one continues in the full exercise of its functions. It is understood that in accordance with what is provided in the second paragraph of Article 265 of the Commercial Code, such certificate will only be admissible in the case that six (6) months have not elapsed from the expiration of the period for which the respective administrators were elected. After said period has elapsed, a copy of the credential of election of the new administration that is in force as of that date must be presented, which must be registered in the Commerce Registry; and
ii. If the current Social Pact establishes that to request this circumstance, the Legal Representative of the applicant needs authorization from any superior body, a notarially certified copy of the certification of the Minute Point in which such agreement is recorded must be presented.

The request and documentation may be presented through the means made available by the Superintendency, which may be electronic. In any case, the period referred to in the first paragraph of Article 13 of these Standards, will begin to run from the next business day after the request has been presented.

Art. 12.- Experts at the time of performing an appraisal of a financial asset that intends to be transferred to a Securitization Fund, must comply with the following requirements:
a) Not be a debtor of the Originator or the Representative of Security Holders, for amounts equivalent to or greater than two percent (2%) with respect to the amount of the issuance to be made; b) Not be a director, administrator or employee of the Originator, the Securitization Company or the Representative of Security Holders; and c) Not have obtained during the last three years, more than 25% of their income from services provided to the Securitization Company, the Originator or the respective economic group or financial conglomerate of both.

A sworn declaration of compliance with the requirements established in the first paragraph of this article must be presented as an annex to the corresponding appraisal report.

Furthermore, in the case that the applicant is a debtor of the Originator or the Representative of Security Holders, they must present a certificate issued by any of them, as applicable, stating the details of the obligations at their charge, the granting amount and the balance currently active as of that date in terms of principal, interest and accessories, if any.

The Securitization Company will be responsible for verifying that the expert it hires to appraise the assets that make up a Securitization Fund complies with what is defined in this article.

CHAPTER V
PROCEDURE FOR THE RECOGNITION AND QUALIFICATION OF EXPERTS

Procedure for the recognition of other registries of asset appraisers and qualification of experts for the valuation of financial assets

Art. 13.- Upon receipt of the request in accordance with what is established in Articles 6, 10 and 11 of these Standards, as applicable, the Superintendency will proceed to verify compliance with the requirements defined in these Standards, having twenty (20) business days to authorize or deny the request.

If the request is not accompanied by the complete and duly formatted information detailed in Articles 6, 10 and 11 of these Standards, the Superintendency, due to the lack of necessary requirements, may require the applicant to present the missing documents within a period of ten (10) business days counted from the day following the notification, a period that may be extended at the request of the applicant when there are reasons justifying such extension.

The Superintendency in the same notice will indicate to the applicant that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the request, leaving them free to present a new request which will give rise to a new procedure.

If after the analysis of the documentation presented in accordance with Articles 6, 10 and 11 of these Standards, the Superintendency has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be accredited; the Superintendency will notify the respective applicant to remedy the deficiencies communicated to them or present additional documentation or information required by the Superintendency.

The applicant will have a maximum period of ten (10) business days counted from the day following the notification, to remedy the observations or present the additional information required by the Superintendency.

The Superintendency may, through a reasoned resolution, extend by up to another ten (10) business days, the period indicated in the previous paragraph, when the nature of the observations or deficiencies notified so requires.

Extension Period
Art. 14.- The applicant may present to the Superintendency a request for extension of the period indicated in the fifth paragraph of Article 13 of these Standards, before the expiration of said period, stating the grounds on which it is based, and proposing, if applicable, the relevant evidence.

The extension period may not exceed ten (10) business days and will begin from the next business day after the expiration date of the original period.

Suspension of the period
Art. 15.- The period of twenty (20) business days indicated in the first paragraph of Article 13 of these Standards, will be suspended for the days that elapse between the notification of the request for information or documentation referred to in the second and fifth paragraphs of said article, until the observations required by the Superintendency are remedied.

Resolution
Art. 16.- Once the complete and duly formatted documentation has been presented, the Superintendency will proceed to respond whether the request is authorized or denied, which it will notify within a maximum period of three (3) business days from the date the resolution is issued.

CHAPTER VI
OTHER PROVISIONS AND VALIDITY

Principles of conduct
Art. 17.- Experts must act in accordance with the following principles:
a) Efficiency: Estimates must adequately reflect the realization value of the assets; b) Independence: Appropriate mechanisms must be established to minimize the possible emergence of conflicts of interest; c) Responsibility: Responsibility for the estimation of the value of the assets must be clearly recorded; d) Objectivity: The determination of the asset's value must be based on technical and professional criteria, which recognize the effects derived from changes in variables that may affect it; e) Transparency: The value of an asset must be determined and assigned with the purpose of revealing a certain, neutral, verifiable and representative economic result of the rights incorporated in the respective asset; f) Evaluation and analysis: The value attributed to an asset must be based on the evaluation and analysis of market conditions and variations in such conditions; and g) Professionalism: The determination of the value of an asset must be based on the conclusions resulting from the analysis and study that a prudent and diligent expert would perform, aimed at the search, obtaining and evaluation of all relevant available information, in such a way that the determined value reflects the amounts that would reasonably be received for its sale.

Art. 18.- Any expert who participates in the valuation of assets in securitization processes, must inform the Superintendency about any detriment in the conditions that had been considered to qualify them as such, no later than within a period of eight (8) business days after said change has occurred, and in this case, must present within said period, a new sworn declaration.

SECURITIZATION
Approval: 09/23/2024
Effective Date: 10/09/2024
Validity and Change of Information Regarding the Recognition of Other Registries Art. 19.- Within twenty (20) business days following the date on which a modification occurs in the information presented to the Superintendence to receive the recognition of the registry of asset appraisers, or any other relevant fact associated with the entity, such change must be brought to the knowledge of the Superintendence. The recognition granted by the Superintendence to other registries shall have indefinite validity, provided that such registry continues to meet the requirements considered for its recognition. Art. 20.- Notwithstanding what is established in the second paragraph of Article 19 of these Standards, professionals who are registered in other registries recognized by the Superintendence and who wish to participate in the valuation of real estate assets must demonstrate compliance with the requirements set forth in these Standards prior to carrying out the respective valuation; except in the case where they have already demonstrated such circumstance within the twelve (12) months prior to the respective valuation. Validity of Appraiser Qualification Art. 21.- The favorable qualification granted by the Superintendence to appraisers who wish to participate in the valuation of financial assets shall be of indefinite character, except in the case where appraisers cease to meet the requirements that were considered for their respective qualification. Control of Appraisers by the Superintendence Art. 22.- The Superintendence shall maintain a database in which the list of persons registered in the registry maintained by the Superintendence of the Financial System and of persons registered in other registries that have been recognized by the Superintendence, who wish to participate in the realization of valuations on real estate assets, shall be recorded. In said database, the list of persons who have been qualified to carry out valuations on financial assets shall also be recorded. Submission of Information Art. 23.- Copies presented before the Superintendence, in compliance with what is established in these Standards, must be legible and certified by a Salvadoran Notary. In cases where the copies correspond to the Unique Identity Document (DUI) and the Tax Identification Number (NIT), which shall be in accordance with what is established by the Tax Administration, notarized certification shall not be required. Likewise, signatures that match any type of documentation issued in El Salvador must be legalized by a Salvadoran Notary.

SECURITIZATION
Approval: 09/23/2024
Effective Date: 10/09/2024
Notwithstanding the foregoing, public or authentic documents emanating from a foreign country, as well as their photocopies, may be admitted without the need for legalization or apostille, provided they allow for the reasonable verification of their authenticity, integrity, and content, in accordance with what is provided in Article 4-A of the Administrative Procedures Law. (1) Documentation originating from a foreign country, written in a language other than Spanish, to have legal effect in El Salvador, must be translated in accordance with what is established in the Law on the Practice of Notarial Work of Voluntary Jurisdiction and Other Proceedings. Sanctions Art. 24.- Non-compliance with the provisions contained in these Standards shall be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System. Repeal Art. 25.- These Standards repeal the Standard "Recognition and Qualification of Asset Appraisers for Securitization Processes" (RCTG-10/2010), approved by the Board of Directors of the Superintendence of Securities in Session No. CD8/2010, on April 29, 2010, whose Organic Law was repealed by Legislative Decree No. 592 containing the Law on Supervision and Regulation of the Financial System, published in the Official Journal No. 23, Volume No. 390, on February 2, 2011. Transitory Art. 26.- Applications submitted in accordance with what is established in the Standard "Recognition and Qualification of Asset Appraisers for Securitization Processes" (RCTG-10/2010), and which were pending at the time these Standards entered into force, shall continue and be concluded in accordance with the regulations under which they began. Unforeseen Aspects Art. 27.- Aspects not provided for in the regulatory matter in these Standards shall be resolved by the Central Bank through its Standards Committee. Validity Art. 28.- These Standards shall enter into force on October 9, 2024. MODIFICATIONS:
(1) Modifications in articles 10 and 23, approved by the Central Bank through its Standards Committee, in Session No. CN-06/2026 on September 8, 2026, with effect from September 23, 2026.