Government Affairs

U.S. Appraisal Management Companies State Regulations Deadline Has Passed

In the U.S., states had until early August to enact regulations regarding the registration of appraisal management companies (AMCs). Forty-eight states made the deadline. Only Massachusetts and New York have AMC regulation legislation still pending in their state legislatures. However, the Appraisal Subcommittee of the Federal Financial Institutions Examination Council deemed both states as having made substantial progress toward regulations and thus as allowed under the Dodd-Frank Act have given the states a one-year extension.

The AMC regulations directly impact appraisal management companies, and regulators in certain states have determined the laws apply to relocation management companies as well.

This creates additional regulatory requirements for companies as well as increased costs associated with the application and renewal fees for registering as an AMC. RMCs should consult counsel as to whether a state regulation applies to RMCs and whether their company would be required to register in a particular state.

While the District of Columbia has now elected to participate in the registration and regulation of AMCs within the city, Puerto Rico, the Commonwealth of Northern Marinara Islands, Guam and the U.S. Virgin Islands have opted at this time not to participate.

As to the status of outstanding legislation, in Massachusetts where the state legislative meets year-round, HB 4566 has replaced the original bill (HB 577) to regulate AMCs. The last action on HB 4566 was a referral to the House Ways and Means Committee. In New York, legislation (AB 10831A) was introduced on May 22 on the regulation of AMCs which was substituted by SB 9080. The New York Assembly passed SB 9080 with the text of AB 10381A but the Senate adjourned for the year before passing the revised version of the bill.

If a state did not adopt AMC registration regulations by 10 August 2018, then AMCs with operations in that state, are regulated by the state and meet the thresholds, cannot perform appraisal services related to a federally related transaction. However, a 12-month extension can be granted as is the case with Massachusetts and New York. So, there is presently no state in which AMCs would not be eligible to perform services related to a federally-backed mortgage.

Related: U.S. Senate Passes Provisions on Crumbling House Foundations

Background

Section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act directed federal financial institution regulatory agencies and the Consumer Financial Protection Bureau to issue a joint rule establishing minimum requirements to be implemented by states regarding the registration and supervision of appraisal management companies. The requirements of AMCs include

  1. Only qualified appraisers are used for federally related transactions
  2. Appraisals comply with the Uniform Standards of Professional Appraisal Practice
  3. Appraisals are conducted independently from influence

The law also allowed states to impose fees on AMCs applying and renewing their registration.

In early April 2014, the Office of the Comptroller of the Currency (OCC) along with five other federal financial regulators formally issued the long awaited joint proposed rule on minimum standards for state registration and regulation of AMCs.

On 9 June 2015, the agencies issued a final rule within the Federal Register. The publication of the rule was primarily a formality as the requirements were already outlined within section 1473 of the Dodd-Frank Act which allowed a majority of states to enact regulations before the final rule was issued. States have had three years from the effective date, 10 August 2018, to enact regulations.

Wisconsin Correction

Please note that past updates incorrectly referenced Wisconsin as not having adopted AMC regulations.  At the end of the 2017 session, the Wisconsin Legislature passed legislation that satisfied the AMC requirements of Dodd-Frank. Governor Scott approved SB 453 on 30 November 2017.

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