Governor Quinn signed The Appraisal Management Company Registration Act Into Law.
The new law provides for registration of appraisal management companies with the Department of Financial and Professional Regulation beginning January 1, 2012. It provides that it is unlawful for a person or entity to act or assume to act as an appraisal management company, to engage in the business of appraisal management service, or to advertise or hold himself or herself out to be a registered appraisal management company without first obtaining a certificate of registration issued by the Department.
The new law provides that persons practicing as an appraisal management company in Illinois on the effective date of the Act may continue to practice until the Department has adopted rules implementing the Act. Further provides that persons shall apply for registration within 180 days after the effective date of the rules and the person may continue to practice until the Department acts to grant or deny registration. The new law will set forth the powers and duties of the Department, registration qualifications, grounds for discipline, civil and criminal penalties, and administrative procedure.
Most importantly the law contains provisions concerning standards of practice and prohibited activities. Brian Weaver will be the Coordinator for the Appraisal Management Company Registration Unit.
The law defines an AMC as:
Any corporation, limited liability company, partnership, sole proprietorship, subsidiary, unit, or other business entity that directly or indirectly performs the following appraisal management services: (1) administers networks of independent contractors or employee appraisers to perform real estate appraisal assignments for clients; (2) receives requests for real estate appraisal services from clients and, for a fee paid by the client, enters into an agreement with one or more independent appraisers to perform the real estate appraisal services contained in the request; or (3) otherwise serves as a third-party broker of appraisal management services between clients and appraisers.
The law defines an Appraisal Firm as:
An appraisal entity that is 100% owned and controlled by a person or persons licensed in Illinois as a certified general real estate appraiser or a certified residential real estate appraiser. An appraisal firm does not include an appraisal management company.
Customary and Reasonable Fees:
Appraisal management companies are required to be in compliance with the appraisal independence standards established under Section 129E of the federal Truth in Lending Act, including the requirement that fee appraisers be compensated at a customary and reasonable rate when the appraisal management company is providing services for a consumer credit transaction secured by the principal dwelling of a consumer. To the extent permitted by federal law or regulation, the Department shall formulate rules pertaining to customary and reasonable rates of compensation for fee appraisers. The appraisal management company must certify to the Department that it has policies and procedures in place to be in compliance under the Final Interim Rule of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act.
What can’t an AMC do?
No person or entity acting in the capacity of an appraisal management company shall improperly influence or attempt to improperly influence the development, reporting, result, or review of any appraisal by engaging, without limitation, in any of the following:
(1) Withholding or threatening to withhold timely payment for a completed appraisal, except where addressed in a mutually agreed upon contract.
(2) Withholding or threatening to withhold, either expressed or by implication, future business from, or demoting, or terminating, or threatening to demote or terminate an Illinois licensed or certified appraiser.
(3) Expressly or impliedly promising future business, promotions, or increased compensation for an independent appraiser.
(4) Conditioning an assignment for an appraisal service or the payment of an appraisal fee or salary or bonus on the opinion, conclusion, or valuation to be reached in an appraisal report.
(5) Requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report or provide estimated values or sales at any time prior to the appraiser’s completion of an appraisal report.
(6) Allowing or directing the removal of an appraiser from an appraisal panel without prior written notice to the appraiser.
(7) Requiring an appraiser to sign a non-compete clause when not an employee of the entity.
(8) Requiring an appraiser to sign any sort of indemnification agreement that would require the appraiser to defend and hold harmless the appraisal management company or any of its agents, employees, or independent contractors for any liability, damage, losses, or claims arising out of the services performed by the appraisal management company or its agents, employees, or independent contractors and not the services performed by the appraiser.
(9) Prohibiting or attempting to prohibit the appraiser from including or referencing the appraisal fee, the appraisal management company name or identity, or the client’s or lender’s name or identity within the body of the appraisal report.
(10) Require an appraiser to collect a fee from the borrower or occupant of the property to be appraised.
(11) Knowingly withholding any end-user client guidelines, policies, requirements, standards, assignment conditions, and special instructions from an appraiser prior to the acceptance of an appraisal assignment.
A person or entity may not structure an appraisal assignment or a contract with an independent appraiser for the purpose of evading the provisions of this Act.
No registrant or other person or entity may alter, modify, or otherwise change a completed appraisal report submitted by an independent appraiser, including without limitation, by doing either of the following:
(1) permanently or temporarily removing the appraiser’s signature or seal; or
(2) adding information to, or removing information from, the appraisal report with an intent
to change the value conclusion or the condition of the property.
No appraisal management company may require an appraiser to provide it with the appraiser’s digital signature or seal. However, nothing in this Act shall be deemed to prohibit an appraiser from voluntarily providing his or her digital signature or seal to another person on an assignment-by-assignment basis, in accordance with USPAP.
This bill also amends numerous sections of the Real Estate Appraiser Licensing Act.
The appraisal law now states the following for Customary and Reasonable Fees:
Within 12 months after the effective date of this amendatory Act of the 97th General Assembly, the Department or its designee shall conduct a survey of fees for appraisal services for single-family residences, two-family residences, three-family residences, and four-family residences. The fee survey shall exclude assignments ordered by known appraisal management companies and complex assignments.
The Department may conduct additional surveys as necessitated by rules adopted pursuant to the federal Dodd-Frank Wall Street
Click on the following link to read the full text:
The RULES are being written at this time and should be sent to the Joint Committee on Administrative Rules – JCAR for consideration and approval in the next 30 days.