WASHINGTON – March 24, 2014 – Six agencies today issued a proposed rule on the minimum requirements for state registration and supervision of appraisal management companies (AMCs). An AMC serves as an intermediary between appraisers and lenders. The rule stems from changes under the Dodd-Frank Act.
The minimum requirements in the proposed rule would apply to states that create an appraiser certifying and licensing agency with the authority to register and supervise AMCs. It doesn’t compel a state to establish an AMC registration and supervision program, and no penalty is imposed if a state doesn’t participate.
However, an AMC is barred by section 1124 from providing appraisal management services for federally related transactions in a state that hasn’t created such a regulatory structure.
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
• 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 the certifying and licensing agency of a participating state have certain authorities, including the authority to:
• Approve or deny initial AMC registration applications and applications for renewals
• Examine the AMC and require the AMC to submit relevant information to the state
• Verify that the 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 law
• Discipline an AMC that violates appraisal-related laws
• 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.
The proposed rule would give participating states 36 months after its effective date to implement the minimum requirements. An AMC that is a subsidiary of a financial institution and regulated by a federal financial institution regulatory agency is required by section 1124 and the proposed rule to meet the same minimum requirements as other AMCs, although such an AMC is not required to register with a state.
The federal agencies jointly proposing the rules include 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 Bureau, the Federal Housing Finance Agency, and the National Credit Union Administration.
Comments on the proposed rules can be submitted to all of the agencies proposing the rule. For more information on each one, check the original
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