Six federal regulatory agencies on Thursday issued a final rule that establishes minimum requirements for states that elect to register and supervise appraisal management companies (AMCs), or entities that provide appraisal management services to lenders, underwriters or other principals in the secondary mortgage markets.
As described in the rule, AMC services include contracting with licensed and certified appraisers to perform appraisal assignments.
The rule, issued by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp. (FDIC), the Consumer Financial Protection Bureau (CFPB), the Federal Housing Finance Agency (FHFA) and the National Credit Union Administration (NCUA), contains amendments to Title XI of the Dodd-Frank Act.
Under the rule, states may elect to register and supervise AMCs if they apply certain minimum registration and supervision requirements. Currently, 37 states already meet these requirements. An AMC that is a subsidiary of an insured depository institution and is regulated by a federal financial institution regulatory agency must meet the same minimum requirements as state-regulated AMCs, except for the requirement to register with a state.
The rule does not compel a state to establish an AMC registration and supervision program, and no penalty is imposed on a state that does not establish a regulatory structure for AMCs. However, in states that have not established a regulatory structure after 36 months from the effective date of this final rule, any non-federally regulated AMC is barred by section 1124 of Title XI from providing appraisal management services for federally related transactions. A state may adopt a regulatory structure for AMCs after this 36-month period, which would lift this restriction.
The rule will become effective 60 days after publication in the Federal Register, according to the agencies. Publication is expected shortly.
The agencies said they received 256 comment letters on the published proposal from state certification and licensing agencies, AMCs, appraiser trade and professional organizations, appraisal firms, individual appraisers, financial institutions, consumer groups and others. Several commenters told the agencies that reducing the regulatory burden for AMCs may reduce costs for consumers.