- Regulators Issue Proposed Rule on Minimum Requirements for Appraisal Management Companies
- April 3, 2014 | Authors: Peter L. Cockrell; Brett M. Kitt; J. Scott Sheehan
- Law Firms: Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Washington Office ; Greenberg Traurig, LLP - McLean Office ; Greenberg Traurig, LLP - Houston Office
On March 24th, the CFBP, along with the Office of the Comptroller of the Currency (OCC), Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA) and National Credit Union Administration (NCUA), jointly issued a proposed rule that would implement minimum requirements for state registration and supervision of appraisal management companies (AMCs).1 AMCs serve as intermediaries between appraisers and lenders and provide appraisal management services. Section 1473 of the Dodd-Frank Act added section 1124 to Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989 (FIRREA). As required by section 1124 of FIRREA, the minimum requirements in the proposed rule would apply to states that elect to establish agencies with powers to register and supervise AMCs.
Although states would not be compelled to establish an AMC registration and supervision program under the proposed rule, an AMC is barred by section 1124 from providing appraisal management services for federally related transactions in a state that has not established such a regulatory structure.
Under the proposed rule, a participating state 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.
Participating states would have 36 months after the proposed rule’s effective date to implement the minimum requirements. Comments to the proposed rule are due 60 days following publication in the Federal Register.
1 See the joint proposed rule at http://files.consumerfinance.gov/f/201403&under;cfpb&under;federal-register-notice.pdf.