Federal Register: AMC Final Rule
AMC Regulation Rule Finally Published in the Federal Register
Appraisers and others,
On June 9, 2015, the Federal Register published the new AMC Registration and Regulation Final Rule:
The OCC, Board, FDIC, NCUA, Bureau, and FHFA (collectively, the Agencies) are adopting a final rule to implement the minimum requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) to be applied by participating States in the registration and supervision of appraisal management companies (AMCs).
Thanks to Bill Garber, Appraisal Institute Director of Governmental Affairs, for sending me this info today. I first wrote & sent info about this topic on April 22, so it’s taken 1.5 months for it to show up in the Federal Register, with the Effective Date now known.
If you want to know more about this Rule, or to have a copy of the Rule, please see attached PDF below.
DATES: Effective date. This final rule will become effective on August 10, 2015.
Compliance date: Federally regulated AMCs must comply with the minimum requirements for providing appraisal management services under 12 CFR 34.215(a) no later than 12 months from the effective date of this final rule. The participating State or States in which a State-regulated AMC operates will establish the compliance deadline for State-regulated AMCs.
Dave Towne on e-AppraisersDirectory.com
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Typical long, boring Federal Register read, but several areas stand out.
1. The Code of Federal Regulations (CFR) defines AMC agency relationships with banks, lenders, etc.
2. It more clearly defines and codifies what an AMC is.
3. It very clearly stipulates that an AMC MUST be seen as an agent for their client(s). This could have far reaching impact when it comes to recovering unpaid appraisal fees from lenders whose agents then fail to pay the appraisers for their services.
4. It also defines when & how an appraiser is considered to be an independent contractor versus an employee. Since this is also subject to IRS regulatory interpretations that can change over time this definitions remains potentially subjective or more ambiguously defined. It is also subject to potentially different applications in individuals CONFIDENTIAL tax returns. This means that two seemingly identical sets of appraisal and AMC related circumstances could have completely different individual tax return conclusions. This is on the (IRS) basis that no two tax returns are identical; and the taxpayer returns are private and protected by federal confidentiality laws. If a taxpayer ‘settles’ a disputed classification in California as having been an IC, but in Massachusetts his or her counterpart is classified as an employee, no one would ever know of the different results absent phenomenal coincidence resulted in the two appraisers comparing notes. Though separately-if offered as evidence of a legal position or claim in a State Superior Court involving disputed compensation or employee versus IC or agency claims, the outcomes could be different.
5. Though lender owned subsidiary AMCs don’t have to register with the state, they DO have to register with the ASC as I interpreted this. Double check me on this. My take is that an appraiser COULD verify whether the AMC is (apparently) legitimate. They are also subject to regulation via alternative State and federal rules for FDIC insured institutions.
6. Most changes from current practice I read are not earthshaking on the surface, but they do appear to pave the way for curtailing at least some abuses down the road. If nothing else, a HUGE distinction is that AMCs MUST be acting as agents for their clients. I suppose this could be parsed carefully, twisted around by clever attorneys, BUT it appears to corner lenders so that they wont as easily be able to escape being responsible for their AMCs failure to pay appraisers.
For interested appraisers: I’m often asked “Why should I join the American Guild of Appraisers (AGA)? I’m not in any trouble. While I’m not happy about low fees, I’m still getting by. I’m just too busy to get involved.”
Well, one response could be “Have YOU read the above article and law in its entirety, or were you too busy?” At AGA we DO pay attention to new and proposed legislation. Some we support. Some we may oppose. Some we may already have influenced. In the future we hope to influence much more. The important thing is that because we are paying attention to factors affecting our Guild-Brothers & Guild-Sisters is that we are in a position to act when abuses occur; and our members are treated unfairly. By the way, as a former anti union guy those are difficult words for me to put together, but that is exactly what and who we are. Brothers and sisters related by our profession and passion for our work.
Come join us! http://www.appraisersguild.org
Mike Ford (714) 366 9404