Magazine article Mortgage Banking

Federal Agencies Propose Minimum Requirements for AMCs

Magazine article Mortgage Banking

Federal Agencies Propose Minimum Requirements for AMCs

Article excerpt

On March 24, six federal agencies issued a proposed rule that would implement requirements for state registration and supervision of appraisal management companies (AMCs).

The proposal stems from a provision added in the Dodd-Frank Wall Street Reform and Consumer Protection Act that would apply to states that elect to establish an appraiser certifying and licensing agency with authority to register and supervise AMCs.

A press release issued by the six agencies states that the proposed rule would not compel a state to establish an AMC registration and supervisory program. Further, 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 [of Title XI of the Financial Institution Reform, Recovery and Enforcement Act of 1989 as added by Dodd-Frank's section 1473] from providing appraisal management services for federally related transactions in a state that has not established such a regulatory structure," the press release stated.

The agencies issuing the proposed rule are the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB), the Federal Housing Finance Agency (FHFA) and the National Credit Union Administration (NCUA).

Under the proposed rule, states that participate in supervising and registering AMCs would have to require that their AMCs: 1) register in the state and be subject to its supervision; 2) use only state-certified or licensed appraisers for federally related transactions; 3) require that appraisals comply with the Uniform Standards of Professional Appraisal Practice (USPAP); 4) ensure the selection of competent and independent appraisers; and 5) establish and comply with processes and controls designed to ensure appraisals comply with appraiser independence standards under the Truth in Lending Act (TILA). …

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