Appraisal management companies (AMCs) may soon be subject to new state registration and supervision requirements, among other changes, under a proposed rule issued jointly by the Consumer Financial Protection Bureau and five other agencies.
Minimum requirements in the proposed rule would apply to states that elect to establish an appraiser certifying and licensing agency with the authority to register and supervise AMCs, those agencies announced on Monday.
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the National Credit Union Administration join the CFPB in issuing the proposed rule in accordance with the Dodd-Frank Act.
The proposed rule isn’t expected to have a substantial impact on the AMC industry because of similar existing rules, sources told RMD.
While the proposed rule doesn’t force states to establish an AMC registration and supervision program and wouldn’t penalize those that don’t establish a regulatory structure for the appraisal management industry, AMCs are barred by a Dodd-Frank provision from providing appraisal management services for federally-related transactions in a state where no such regulatory structure has been established.
States participating in the proposed rule would require AMCs to register in the state and be subject to its supervision and comply with the Uniform Standards of Professional Appraisal Practice.
AMCs would also have to only use state-certified or licensed appraisers for federally-related transactions, ensure election 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.”
Additionally, the certifying and licensing agency of a participating states would have certain authorities such as the power to approve or deny initial AMC registration applications and renewal applications, examine the AMC and require it to submit relevant information to the state, and verify that appraisers on the AMC’s network hold valid state certifications or licenses.
Other authorities include the ability to conduct investigations of AMCs to assess potential violations of appraisal-related laws, discipline an AMC in violation of those laws, and report AMC violations of those laws and carry out disciplinary and enforcement actions.
Under the proposed rule, participating states would have 36 months after the rule’s effective date to implement the minimum requirements.
AMCs that are subsidiaries of a financial institution and regulated by a federal financial institution regulatory agency are required by section 1124 of Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989 and the proposed rule to meet the same minimum requirements as other AMCs, even though they aren’t required to register with a state.
In conjunction with the proposal, the FDIC is proposing to rescind appraisal regulations set forth by the former Office of Thrift Supervision, as the new rule would make them duplicative.
View the notice of the proposed rule in the Federal Register. The issuing agencies are seeking public comment on all aspects of the proposal.
Written by Alyssa GeracePrint Article