The Office of the Comptroller of the Currency (OCC) and five other agencies are seeking public comment on a proposed rule that would give participating states greater latitude for state 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 proposed rule would apply to states that elect to establish an appraiser certifying and licensing agency with the authority to register and supervise AMCs.
The proposed rule would 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. 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.
The proposed rule would provide participating states 36 months after its effective date to implement the minimum requirements. An AMC that is a subsidiary of a financial institution and regulated by a federal financial institution regulatory agency is required by section 1124 and the proposed rule to meet the same minimum requirements as other AMCs, although such an AMC is not required to register with a state.Â
In conjunction with the proposal, the Federal Deposit Insurance Corp. (FDIC) is proposing to rescind appraisal regulations promulgated by the former Office of Thrift Supervision (OTS).
The OTS appraisal regulations are duplicative of the FDIC's appraisal regulations in Part 323. Similarly, in a separate rulemaking, the OCC is rescinding appraisal regulations promulgated by the former OTS.
The proposal is being issued jointly by the OCC, 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.
Under the proposed rule, participating states would require that an AMC register in the state and be subject to its supervision and use only state-certified or licensed appraisers for federally related transactions.
Also, the appraisals would have to comply with the Uniform Standards of Professional Appraisal Practice. An AMC would have to 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 proposed rule also would require 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.
The agencies are seeking comments from the public on all aspects of the proposal. The public will have 60 days to review and comment on the proposal and the proposed Paperwork Reduction Act analysis.