AB 533

This bill provides for the regulation of certain appraisal management

companies (AMCs) pursuant to provisions in the Dodd-Frank Wall Street Reform

and Consumer Protection Act, enacted in 2010 (the act). Under current state law,

the state does not regulate AMCs. However, the Department of Safety and

Professional Services and the Real Estate Appraisers Board regulate appraisers.

The bill provides for regulation of AMCs by DSPS and the board pursuant to the act

and regulations promulgated thereunder.

Federal law; Dodd-Frank Act; federal regulations

“Appraisal management company” is defined under the act as “in connection

with valuing properties collateralizing mortgage loans or mortgages incorporated

into a securitization, any external third party authorized either by a creditor of a

consumer credit transaction secured by a consumer's principal dwelling or by an

underwriter of or other principal in the secondary mortgage markets, that oversees

a network or panel of more than 15 certified or licensed appraisers in a State or 25

or more nationally within a given year a) to recruit, select, and retain appraisers; b)

to contract with licensed and certified appraisers to perform appraisal assignments;

c) to manage the process of having an appraisal performed ... ; or d) to review and

verify the work of appraisers.”

Under the act, a number of federal agencies are required, by rule, to jointly

establish minimum requirements to be applied by a state in the registration of

AMCs. The minimum requirements include that an AMC must a) register with and

be subject to supervision by a state appraiser certifying and licensing agency in each

state in which the AMC operates; b) verify that only licensed or certified appraisers

are used for federally related transactions; c) require that appraisals coordinated by

an AMC comply with the Uniform Standards of Professional Appraisal Practice; and

d) require that appraisals are conducted independently and free from inappropriate

influence and coercion pursuant to standards established under the Truth in

Lending Act. Under the act, an AMC that is owned and controlled by a financial

institution and regulated by a federal financial institution regulatory agency is not

required to be registered with the state, but is otherwise required to comply with the

requirements described above.

Also under the act, an AMC may not be registered by a state if the AMC is owned

by any person who has had an appraiser license or certificate refused, denied,

cancelled, surrendered in lieu of revocation, or revoked in any state. In addition,

each person that owns more than 10 percent of an AMC must be of good moral

character, as determined by the state appraiser certifying and licensing agency, and

must submit to a background investigation carried out by the state appraiser

certifying and licensing agency. Finally, under the act, a national registry must be

maintained of AMCs that either are registered with and subject to supervision of a

state appraiser certifying and licensing agency or are operating subsidiaries of a