U.S. Regulations Deadline for Appraisal Management Companies Quickly Approaching

The deadline for states to enact regulations regarding the registration of appraisal management companies (AMCs) is quickly approaching – states have until 11 August 2018 to meet the deadline.

As of now, 47 states have put into law the regulations necessary to comply. Massachusetts, New York and Wisconsin have yet to enact regulations regarding the registration and supervision of AMCs. Two of those state legislatures, New York and Wisconsin, have adjourned for the year. The District of Columbia (DC) City Council decided last year to opt out of adopting a regulation.

How This Impacts Mobility

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.

States in Action

Since our last report, several states have acted on regulations regarding the registration of AMCs:

  • The Ohio Senate has passed HB 213 and, on 14 June 2018, Ohio Governor John Kasich signed the legislation into law.
  • In Alaska, members of the legislature introduced early this year legislation (SB 155) for the first time on the issue. The House and Senate were able to pass SB 155 on 1 May and 7 May, respectively, but there was an error and the text was added, in order to pass before the end of session, to an appropriations bill that was enacted on 27 June.
  • 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.

Finally, in Wisconsin, legislation had yet to be introduced before the legislature adjourned for the year.

Background of Regulations

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 that:

  1. only qualified appraisers are used for federally related transactions,
  2. appraisals comply with the Uniform Standards of Professional Appraisal Practice and
  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.

Related: New York Judge Revives U.S. CFPB Constitutionality Question

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.

If a state does not adopt AMC registration regulations by 11 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. A 12-month extension can be granted, however, if it is determined that a state has made substantial progress toward establishing regulations.

It is up to the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council to determine whether a state has comparable regulations or has made significant progress toward establishing registration requirements. 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.

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