Banking Regulators Get Oversight of AMCs

Federal regulators will oversee appraisal management companies that are affiliated with federally insured banks under the Dodd-Frank regulatory reform bill. Affiliated AMCs are not required to register with the states, according to the bill. The House and Senate are expected to vote on final passage of the landmark legislation before the July 4 recess. The Title Appraisal Venders Management Association wanted all independent, multi-state AMCs to come under federal regulation, but the provision was dropped during final negotiations on the bill, according to TAVMA executive director Jeff Schurman. The bill means the nation's largest lenders, all banks -- Bank of America, Citigroup, JPMorgan Chase and Wells Fargo -- with affiliated AMCs will come under federal regulation. The final bill named after its principal sponsors Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-Mass., directs banking and GSE regulators along with the new Consumer Financial Protection Agency to issue new rules to protect appraisers from lender pressure. The guidelines will replace the Fannie Mae/Freddie Mac Home Valuation Code of Conduct rule that is due to sunset November 1. Lawmakers left it to regulators to decide if the HVCC ban on loan officers and mortgage brokers selecting appraisers should be continued. Within 60 days after enactment of the bill, the regulators are expected to issue interim final regulations "defining with specificity, acts and practices that violate appraisal independence," according to a summary of the bill prepared by Canfield & Associates. In acknowledging the problems mortgage brokers have had with HVCC, lawmakers recommended that regulators try to provide for the "portability" of appraisals. This change would make it easier for brokers to use the same appraisal in shopping a loan to various lenders and save the borrower from paying for a second appraisal. But brokers are disappointed that final language does not require the regulators to ensure that lenders will accept an appraisal that was ordered by another lender.