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May 06, 2015

Final Rule Released on Minimum Requirements for AMCs

The Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, the Consumer Financial Protection Bureau and the Federal Housing Finance Agency issued a final rule April 30 that implements minimum requirements for state registration and supervision of appraisal management companies.

As noted in an April 22 Appraiser News Online article, participating states will have 36 months to set up AMC registration and supervision systems consistent with the Final Rule’s minimum standards. The requirements do not explicitly require a state to establish an AMC registration and supervision program. However, after the effective date, no entity meeting the definition of an AMC could provide appraisal management services in connection with a federally related transaction in a state that has elected not to participate or in a participating state that has not implemented a compliant AMC registration and supervision system. Federally regulated AMCs would have to comply within 12 months of the effective date of the Final Rule.

Highlights of the minimum requirements for AMCs:

Independent Contractor Definition: The requirements revise the standard used to determine if an appraiser is an independent contractor based on whether or not the appraiser is treated as an independent contractor by the AMC for federal income tax purposes.

AMC/Appraisal Firm Distinction: The requirements distinguish between AMCs and appraisal firms based on their respective use of fee appraisers and employees. Each employee appraiser must pay a registration fee to the state or states where they practice. An AMC will only be subject to a registration fee once state registration and supervision regulations become effective pursuant to Dodd-Frank. The rule also provides coverage for “hybrid” firms, meaning entities that both hire appraisers as employees to perform appraisals and engage independent contractors to perform appraisals.

AMC Panel Threshold Size: The requirements clarify that when the number of appraisers is counted for the purpose of determining the size of an AMC’s panel threshold, that the count be based on the number of appraisers listed on the roster who potentially are available to perform appraisals and not on the number of appraisers actually engaged to perform appraisals.

Trainee Appraisers Not Barred: The requirements clarify that AMCs may engage appraisers who use trainee appraisers to assist on assignments.  

View a copy of the Minimum Requirements for Appraisal Management Companies.

View a copy of the Appraisal Institute’s comment letter to the federal agencies on their proposed rule addressing “Minimum Requirements for Appraisal Management Companies.” (log-in required).

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