One of many issues that the Dodd-Frank Act touched was supervision of appraisal management companies. Banks and appraisers both, are overseen by multiple agencies, it’s only fair that AMC’s are also. Minimum requirements for state registration and supervision of appraisal management companies were provided in the Act. On March 24, six federal agencies jointly issued a proposed rule to implement these requirements. The agencies are the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Agency and the National Credit Union Administration.
Under the proposed rule, participating states would require that an AMC:
• Register in the state and be subject to its supervision;
• Use only state-certified or licensed appraisers for federally related transactions, such as real estate-related financial transactions overseen by a federal financial institution regulatory agency that require appraiser services;
• Require that appraisals comply with the Uniform Standards of Professional Appraisal Practice;
• Ensure selection of a competent and independent appraiser; and
• Establish and comply with processes and controls reasonably designed to ensure that appraisals comply with the appraisal independence standards established under the Truth in Lending Act.
The proposed rule also would require that a state’s certifying and licensing agency would have the authority to:
• Approve or deny initial AMC registration applications and applications for renewals;
• Examine the AMC and require it to submit relevant information to the state;
• Verify that appraisers on the AMC’s appraiser network or panel hold valid state certifications or licenses;
• Conduct investigations of AMCs to assess potential violations of appraisal-related laws;
• Discipline an AMC that violates appraisal-related laws; and
• Report an AMC’s violation of appraisal-related laws, as well as disciplinary and enforcement actions, and other pertinent information about an AMC’s operations to the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.
States have 36 months to implement the minimum requirements after the rule takes effect. Many states have AMC licensing already in place, and in anticipation of the agencies requirements, these states are all modeled the same. The largest difference is in the application fees and licensing fees.
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