As required by the Dodd-Frank Act, the federal financial agencies (OCC, Federal Reserve System, FDIC, CFPB, FHFA) recently adopted a final rule regarding minimum requirements for state supervision of appraisal management companies (“AMCs”). An AMC is an entity that serves as an intermediary for, and provides certain services to, creditors. In some instances, creditors and loan underwriters utilize such services for expedient appraisal services throughout the course of a transaction (either during origination or during the foreclosure process).
The rule does not require states to regulate AMCs, but if they do, AMCs must register in the particular state, use only state-certified or licensed appraisers for federally-related transactions, and ensure appraisals are independent. If states do not have an AMC regulatory structure in the next three years, non-federally regulated AMCs will be prohibited from providing services for federally-related transactions in that state, such as loans backed by Fannie Mae or Freddie Mac. The federally regulated AMCs will be required to meet identical requirements as state-regulated companies (as discussed in the final rule). Creditors should be aware of the registration status of any AMCs that they utilize.
If your institution has questions about its appraisal procurement process or vendor compliance issues, please contact Spilman.