Six federal financial regulatory agencies Thursday issued minimum requirements  for state registration and supervision of entities that provide appraisal management services to lenders, underwriters, and other principals in the secondary mortgage market.
The new rules were jointly issued by the Office of the Comptroller of the Currency , Federal Reserve , Federal Deposit Insurance Corporation , Consumer Financial Protection Bureau , Federal Housing Finance Agency , and National Credit Union Administration , according to an FHFA statement . These rules amend parts of the Financial Institution Reform, Recovery, and Enforcement Act of 1989 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to allow states to choose whether they want to register and supervise appraisal management companies, or AMCs.
According to FHFA, the new rules apply to states that elect to register and supervise AMCs, but do not compel a state to establish an AMC registration and supervision program. But while there will be no penalties for not establishing a supervisory agency, states that have not established a regulatory structure within three years will be barred from providing appraisal management services for federally related transactions. The government, however, said it would rescind any ban if a state adopted a regulatory structure for AMCs after this 36-month period.
Compliance by states that do have an AMC regulatory body begins one year from the day the new regulations go live, which would put the deadline at the beginning of Q3 2016, according to FHFA. Compliance means adopting minimum registration and supervisory protocols for AMCs, including those that are subsidiaries of federally insured depository institutions. These protocols are meant to cover procedures for recruiting, selecting, and retaining appraisers; contracting with state-certified or state-licensed appraisers; administratively managing an appraisal; and reviewing and verifying the work of appraisers.
The rules also require participating states to implement basic supervisory oversight, such as the ability to investigate complaints against AMCs and take disciplinary action against them.