Recently passed legislation in New Mexico will require appraisal management companies operating in the state to post a surety bond or equivalent means of security with the Regulation and Licensing Department. The Appraisal Institute’s Rio Grande Chapter had campaigned on behalf of the bill, S.B. 138, which will be presented to Gov. Richardson, who will have 20 days to sign the bill into law.
The legislation, which builds upon a comprehensive AMC regulatory framework that was enacted in 2009, also will require that AMC employees who review appraisals are geographically competent to complete the review. Furthermore, it will prohibit AMCs from including “hold harmless” provisions in their contracts with appraisers, or from requiring appraisers to indemnify the AMC against liability.
The legislation also adopts fee disclosure requirements that are very similar to those adopted by the Federal Housing Administration in late 2009. In New Mexico, AMCs will now be required to separately state the fees paid to an appraiser for appraisal services and the fees charged by the AMC to their client for services associated with the management of the appraisal process. Further, appraisers cannot be prohibited by the AMC, a client, or other third party from disclosing the fee paid to the appraiser for the performance of the appraisal in the appraisal report.
A provision that would have required an AMC to “compensate appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised” was dropped during negotiations to ensure passage of the bill.
A final version of the legislation is not yet available. Previous versions of the legislation can be viewed at http://legis.state.nm.us/LCS/_session.aspx?chamber=S&legtype=B&legno=%20138&year=10 .