WASHINGTON Federal regulators issued a proposal Monday that would establish standards for states that register and supervise appraisal management companies.
The plan appeared to reflect what 37 states are already doing in their oversight of such firms, which act as an intermediary between appraisers and lenders.
“I am not aware of any state that will have to modify their provisions as a result of the proposal,” said Bill Garber, director of government relations for the Appraisal Institute.
However, the plan might encourage the remaining 13 states to set up their own similar systems.
Under the Dodd-Frank Act, appraisal management companies cannot perform such services on federally related mortgages, including Fannie Mae, Freddie Mac, and other government-backed loans, in states that do not register and supervise AMCs.
Under the proposal, the states will have three years after the plan is finalized to set up systems to meet the requirements of the final rule. The proposal is open for comment for 60 days.
Federally insured depositories and their subsidiaries that operate AMCs will continue to be regulated at the federal level, according to the proposal issued by the Office of the Comptroller of Currency, Federal Reserve Board, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, Federal Housing Finance Agency and National Credit Union Administration.
Although there were fears that regulators would define appraisal management companies too broadly, the Appraisal Institute said it is pleased with the plan. The proposal defines an AMC as an entity that oversees a panel of more than 15 appraisers in a state or 25 appraisers in more than two states.
They essentially defined AMCs as brokers that rely on contractors to perform appraisals, Garber said. “We think they got it right.”