Appraisal management companies (AMC) are now required to register with and be subject to state supervision. In each state where AMCs provide services in connection with federally related mortgage transactions (as that term is defined in the Real Estate Settlement Procedures Act), AMCs are subject to supervision by a state appraiser licensing agency. This requirement is in accordance with amendments to Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 that were made by Section 1473 of the Dodd-Frank Act (Dodd-Frank).
Section 1473 provides that an AMC is not eligible for licensing/registration if it 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. This section further requires that each 10 percent or more owner of an AMC shall be of good moral character and must submit to a background investigation to be carried out by the state licensing agency.
The Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Federal Housing Finance Agency, and the Federal Reserve must jointly issue a rule establishing minimum standards regarding AMC licensing and registration. States must then establish implementing provisions no later than 36 months after the interagency guidance is issued in final form.
Even though no interagency guidance has been proposed to date, as of December 2013, 38 states have passed legislation requiring AMCs to obtain a license or registration. However, licensure is not required in a number of those states because the states have not adopted implementing regulations and/or appropriate license application forms. Currently, 30 states issue AMC licenses. Legislation is pending in approximately 11 states, and the rest are expected to introduce legislation in upcoming legislative sessions.
Many of the existing laws are patterned after the original Appraisal Management Company Registration and Regulation Model Act (Model Act), which was created by the Appraisal Institute, an industry trade association. Pending legislation in most states is based on the updated Model Act.
Although not yet quite as burdensome as mortgage banking licensing requirements, AMC licensing can be a difficult process to manage. One common requirement is that applicants submit substantial information regarding company management and financial structure. Other requirements include:
Designated Controlling Person (typically a licensed appraiser)
Biographical statements, criminal background investigation authorizations, and fingerprint cards for owners, partners, and officers
Organization and ownership and structure chart
Surety bonds ranging from $10,000 to $100,000