The April 9 Federal Register contains the announcement for which the appraisal management industry has been waiting for months: the federal banking and finance regulatory agencies’ proposal of minimum standards for appraisal management companies (“AMCs”). Section 1473 of the Dodd-Frank Act requires the agencies – the OCC, FRB, FDIC, NCUA, CFPB, and FHFA (the “Agencies”) -to adopt standards for states to apply in their registration and supervision of AMCs.
Mortgage loan servicers are toiling away at executing all the new servicing requirements in the CFPB’s Regulation Z and Regulation X amendments by the January 10, 2014 deadline. Given this overwhelming task, it is understandable that some servicers may not be as familiar with the CFPB’s ECOA Valuation Rule amending Regulation B. The Rule, which imposes an obligation to furnish a copy of valuations to borrowers of first-lien loans and to provide notice to borrowers of this right, may apply to a servicer’s loss mitigation efforts.
Author’s Note: In response to the publication of the below post, a representative for the Louisiana Real Estate Appraisers Board advised us that the version of the proposed rules discussed in our original post are being withdrawn. A revised version of the proposed rules, based on comments received from appraisal management companies in response to the Board’s original proposal, is scheduled for publication in the Louisiana Register on or about February 20. We will update our analysis after the revised proposed rules are published, when they will be open for further comment.
A recently proposed Louisiana Real Estate Appraisers Board (“Board”) rule has created uncertainty in the Louisiana appraisal market regarding appraiser compensation. In proposing a rule that creates obligations inconsistent with those existing under federal law and rules, the Board has ignored the intent of the federal rule, caused conflict between state and federal law, and likely increased compliance costs for appraisal management companies (“AMCs”) – costs that may be passed along to lenders and consumers.
Although Congress mandated the sunset of the Home Valuation Code of Conduct (HVCC) in the Dodd-Frank Act, Congress effectively codified many of its requirements, including the obligation to furnish a copy of an appraisal to borrowers. To implement this statutory change to ECOA, the CFPB proposes to amend Regulation B to make the furnishing of “any and all written appraisals and valuations” developed in connection with the application for a first-lien loan mandatory, rather than at the consumer’s request. Comments to the ECOA proposed rule are due on October 15, 2012.
Mandated by the Dodd-Frank Act, lenders and appraisal management companies (known as AMCs) are awaiting a series of joint rules addressing appraisal issues. While rules addressing pre-funding reviews of appraisals or evaluations is not a topic specifically required by the January 21, 2013 deadline, the FDIC’s Winter 2011 issue of Supervisory Insights hints that it may be addressed in the joint rule establishing minimum requirements for AMCs’ state registration. This may be a welcome development for regulated banking institutions subject to the revised Interagency Appraisal and Evaluation Guidelines (“Guidelines”). Those Guidelines, issued jointly by the federal banking agencies on December 2, 2010 (and effective on that date), update and replace existing guidance in response to changes in the real estate valuation industry and those mandated by the Dodd-Frank Act.
It is old news that the Dodd-Frank Act sets standards for pricing appraisals and subjects appraisal management companies, known as AMCs, to federal and state oversight. The news for 2012 is that lenders may need to contend with alternate state law requirements addressing the payment of fee appraisers, some of which may be inconsistent with federal law.
AMCs – the business entities that administer networks of independent appraisers to procure real estate appraisal assignments on behalf of lenders – are now subject to supervision by state governments through their appraisal boards. Under the Dodd-Frank Act, the federal banking agencies must jointly by rule establish minimum requirements to be applied by a state, including state registration and supervision of AMCs, and that appraisals be conducted in compliance with Section 129E of TILA. While states have three years from the date the federal agencies finalize their rules establishing minimum requirements, AMC registration laws now exist in 28 states.
Effective December 23, 2011, HUD has finally amended its rules to coincide with its existing practice of allowing only state certified appraisers to conduct appraisals of properties securing an FHA insured mortgage. This means that state licensed appraisers or those with only the certification of a “nationally recognized professional organization” are now permitted on the FHA Appraiser Roster.