The Office of the Comptroller of the Currency (OCC) and five other federal agencies have approved a final rule that gives participating states greater latitude for the registration and supervision of appraisal management companies (AMCs).
In accordance with Section 1124 of Title XI of the Financial Institution Reform, Recovery and Enforcement Act of 1989, as added by Section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the minimum requirements in the final rule apply to states that elect to establish an appraiser certifying and licensing agency with the authority to register and supervise AMCs.
The final rule does not compel a state to establish an AMC registration and supervision program, and there is no penalty imposed on a state that does not establish a regulatory structure for AMCs, the agencies explain in a release.
However, 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 final rule, participating states must apply certain minimum requirements in the registration and supervision of AMCs.
An AMC that is a subsidiary of an insured depository institution and is regulated by a federal financial institution regulatory agency (a federally regulated AMC) must meet the same minimum requirements as state-regulated AMCs except for the requirement to register with a state.
The final rule gives participating states 36 months after the effective date to implement the minimum requirements.
Appraisals performed by AMCs registered in the states that adopt the rule must comply with the Uniform Standards of Professional Appraisal Practice. An AMC must also 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.
The final rule also requires that the certifying and licensing agency of a participating state have certain authorities, such as approving or denying initial AMC registration applications and applications for renewals, examining the AMC and requiring the AMC to submit relevant information to the state, and verifying that the appraisers on the AMC's appraiser network or panel hold valid state certifications or licenses.
These other authorities include conducting investigations of AMCs to assess potential violations of appraisal-related laws – and the discipline that would follow. An AMC's violation would result in a report to the Appraisal Subcommittee of the Federal Financial Institutions Examination Council.
In addition to the OCC, the other agencies promulgating the new rule include the Board of Governors of the Federal Reserve System, the FDIC, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency and the National Credit Union Administration.
To read the final rule, click here.