BLOG VIEW: Appraisal management companies (AMCs) in Iowa are now required to comply with a new set of requirements and conditions, as mandated by a recently enacted bill.
The bill includes provisions on the conditions under which AMCs in Iowa may operate, such as the requirement to become registered and the requirement to obtain a $25,000 AMC bond.
Iowa H.B.2436, also known as the Iowa Appraisal Management Company Registration and Supervision Act, was signed on May 27, with immediate effect. Section 3 of the act defines AMCs as any person who oversees a group of more than 15 certified appraisers in the state of Iowa or 25 or more certified or licensed appraisers nationally in a given year.
Persons who fall within the scope of this definition are now – according to Section 4 of the act – required to become registered at the Iowa Professional Licensing Bureau as an AMC. Exempt from this requirement are performance appraisal companies, government bodies, federally regulated AMCs and departments or divisions of companies that provide such services internally.
The AMC application form provided by the Licensing Bureau that applicants must submit must include the following:
- The name of the applicant, the form of his or her business entity, applicant contact information and address;
- The names and contact information of all other persons who own more than 10% of the AMC;
- Information concerning the designated controlling person (see Section 7 of the act);
- Information concerning the size of the applicant’s nationwide or Iowa appraisal panel;
- Various forms of certification confirming that the applicant complies with appraiser requirements and standards; and
- Additional information that may be required by the Licensing Bureau for the registration of the AMC.
Registrations issued for AMCs in Iowa must be renewed annually.
The act further includes specific requirements and obligations for companies once they are licensed, such as mandatory reporting and detailed record-keeping of requested services. It also spells out what constitutes a prohibited act and what the penalties for such acts are. (Make sure to look at the act for full information on those issues.)
Furthermore, upon applying for a license, AMCs must also obtain and post a surety bond.
Iowa AMC Bond Requirement
Without submitting an AMC bond, applicants will not be able to receive a license. The purpose of the bond, as with all surety bonds, is to offer protection to the clients of AMCs who receive appraisals from them. The act states that the bond is meant to protect against liabilities, damages, losses or claims that arise out of the appraisal management services performed.
If a cause for a claim should occur, bond obligees – clients and the Licensing Bureau – can file a claim against the bond. If the claim is reasonable and legitimate, the surety bond company will compensate the claimants up to the full bond amount, which is $25,000. In return, the AMC will then have to compensate the surety for the backing it has extended.
The bond amount should not be confused with the cost of obtaining a surety bond, though. The price for each surety bond is determined on a case-by-case basis and typically depends on the unique financial indicators of an applicant. Personal credit score plays an important role in determining the cost. High credit applicants usually pay only a small percentage of the total amount of their bonds, while low credit applicants are offered a slightly higher percentage.
Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping business owners get bonded and start their businesses.