Last month, 6 federal financial regulatory agencies—the Board of Governors of the Federal Reserve System, OCC, FDIC, CFPB, FHFA, and NCUA—jointly issued a final rule that implements minimum requirements for state registration and supervision of appraisal management companies (AMCs). This final rule was officially published on June 9th, and is set to become effective on August 10, 2015.
Though states do not currently have to implement registration and controls to meet the minimum requirements, they must do so within 36 months from the final rule’s effective date of August 10th or AMCs that are not federally regulated will be prohibited from doing business with federal transactions.
Primary components of the final rule include:
- Establishes the minimum requirements in section 1124 of FIRREA for state registration and supervision of AMCs in participating states.
- Requires federally regulated AMCs to meet the minimum requirements of section 1124 (other than registering with the state).
- Requires states to report certain AMC information to the ASC.
- Integrates FDIC appraisal regulations for state nonmember banks and state savings associations.
In January of 2013, Section 1124 was added to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which created minimum requisites for states to establish registration requirements for AMCs. State supervision of AMCs is nothing new, as 38 states have already enacted some type of AMC registration legislation and policing policies.
With that said, the 7 regulations listed below fall within Section 1124 and are important for both lenders and AMCs to become familiar with and fully understand:
- States are not required to implement the minimum AMC requirements. But if a state does not implement the minimum requirements, most AMCs cannot work on federally related transactions with that state.
- The AMC regulation only applies to residential mortgage loans; commercial mortgage loans do not apply.
- AMCs will now be required to mail a letter to any appraiser they remove from their panel.
- The final rule does not limit or affect the discretion of states to treat a portal as an AMC if a state finds that a portal provides appraisal management services.
- Lenders with a department or division that handles appraisal management services only for their organization are not considered AMCs – and thus are not subject to the regulation.
- Any owner with 10% interest or more in an AMC must be of good moral character and submit to a background check.
- Federally regulated AMCs do not need to register with the state.
For more detailed information on these 7 critical regulations listed above, download our “The 7 Things You Need to Know about the New AMC Regulations” whitepaper today!