Appraisal service bills were passed recently in the states of Indiana, Oregon and New Mexico recently. The Indiana and Oregon bills are still to be signed by Governors Mitch Daniels and Ted Kulongoski, respectively, while the New Mexico bill was already signed into law by Governor Bill Richardson.
After the Indiana and Oregon bills are passed, the two states would become the 7th and 8th states to pass legislation on how appraisal management companies should conduct their operations. In 2009, similar laws were passed by California, Nevada, Arkansas, Louisiana and Utah. More than 20 of the other states are still considering appraisal company legislation, which is mostly about the accountability, transparency and responsibility of AMCs.
The Oregon bill has a provision different from most other states ? the supervisory agency. Unlike in other states, where the implementation of AMC registration and regulation rests with the state board of appraisers, Oregon AMCs will be supervised by the Department of Consumer and Business Services.
According to Scott DiBiasio, government relations manager for the Appraisal Institute, the change was primarily due to concerns that board members, who are also registered appraisers, may conduct appraisal for AMCs. Additionally, the appraiser board has limited number of representatives from other financial institutions.
Under the appraisal service law in Indiana, all AMCs in the state are required to keep detailed records of all appraisal assignments, including fees paid by AMCs to appraisers and the amounts paid by lending institutions to the AMCs for their management services.
AMCs in Indiana will be supervised by the board of real estate appraiser certification and licensure. In addition, appraisals done for properties located in Indiana will be reviewed by appraisers licensed in Indiana.
In New Mexico, AMCs are required to post surety bonds or other forms of security with the state Department of Regulation and Licensing. All AMC employees that review appraisals should be knowledgeable about the local housing market described in the appraisal reports.
Additionally, the law requires AMCs to disclose appraisal fees and to eliminate provisions in their job contracts with appraisers that place unfair burdens on appraisers, such as appraiser indemnification of any AMC liability arising from the appraisal.
Minda McGonagle, a lobbyist for the Santa Fe chapter of the appraisal association, lauded the legislation and its role in requiring appraisal service providers to generate correct and fair appraisal reports and in requiring AMCs to be more responsible in handling appraisers and in serving consumers.
