Commerce, Real Estate

Rule R162-150

Appraisal Management Companies

Notice of Proposed Rule

(Amendment)

DAR File No.: 32956
Filed: 09/10/2009 07:30:38 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Four changes are proposed. The first two clarify the language in Section R162-150-2 but do not add to or change the substance of the rule. The third clarifies and expands an existing example of unprofessional conduct. The fourth adds a new example of unprofessional conduct.

Summary of the rule or change:

The first change clarifies that, for AMC (appraisal management company) registration, AMC employees who select appraisers for an AMC must have "taken and passed" the 15-hour Uniform Standards of Professional Appraisal Practice (USPAP) course, not "received" it. The second clarifies that, for AMC renewal, these employees must have "completed" the 7-hour USPAP course, not "received" it. The third change prohibits an AMC from making its fee contingent on a favorable outcome. The final change prohibits an AMC from requesting, for the purpose of a mortgage loan transaction, any estimation of price or value that does not qualify as an appraisal.

State statutory or constitutional authorization for this rule:

• Section 61-2e-103
• Section 61-2e-102
• Section 61-2e-305
• Section 61-2e-304

Anticipated cost or savings to:

the state budget:

In clarifying the language of the rule and expanding examples of unprofessional conduct, these changes will have no effect on the state budget.

local governments:

In clarifying the language of the rule and expanding examples of unprofessional conduct, these changes will have no financial effects for local governments.

small businesses:

In clarifying the language of the rule and expanding examples of unprofessional conduct, these changes will have no financial effects for small businesses.

persons other than small businesses, businesses, or local governmental entities:

In clarifying the language of the rule and expanding examples of unprofessional conduct, these changes will have no financial effects for other persons.

Compliance costs for affected persons:

To comply with the employee qualifications section, affected persons must take and pay for certain USPAP courses. These costs were imposed when the rule was originally promulgated; the change in language imposes no new compliance costs. To comply with the unprofessional conduct section, affected persons must refrain from the prohibited behavior as specified. There are no associated compliance costs.

Comments by the department head on the fiscal impact the rule may have on businesses:

This filing clarifies existing provisions and establishes an additional unprofessional conduct standard. No fiscal impact to businesses is anticipated beyond those addressed in the rule filing.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Real Estate
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/02/2009

This rule may become effective on:

11/09/2009

Authorized by:

Deanna Sabey, Director

R162. Commerce, Real Estate.

R162-150. Appraisal Management Companies.

R162-150-2. Employee Qualifications.

(1) An appraisal management company seeking registration shall demonstrate to the Division that each person who selects an appraiser or reviews an appraiser's work for the appraisal management company:

(a) is a licensed or certified appraiser in good standing; or

(b) has [received, or will receive]taken and passed, within 6 months after initial registration, the 15 hour national Uniform Standards of Professional Appraisal Practice (USPAP) course.

(2) An appraisal management company seeking renewal of the company's registration shall demonstrate to the Division that each person who selects an appraiser or reviews an appraiser's work for the appraisal management company:

(a) is a licensed or certified appraiser in good standing; or

(b) has [received]completed the seven hour national USPAP update course.

R162-150-3. Unprofessional Conduct.

(1) An appraisal management company commits unprofessional conduct if the appraisal management company:

(a) fails to disclose to the appraiser:

(i) the total compensation paid to the appraiser who performs the real estate appraisal activity, disclosed as a dollar amount; and

(ii) the total compensation retained by the appraisal management company in connection with the real estate appraisal activity, disclosed as a dollar amount;

(b) fails to require the appraiser to disclose in the body of the appraisal report:

(i) the total compensation paid to the appraiser who performs the real estate appraisal activity, disclosed as a dollar amount; and

(ii) the total compensation retained by the appraisal management company in connection with the real estate appraisal activity, disclosed as a dollar amount;

(c) requires an appraiser to modify any aspect of the appraisal report unless the modification complies with Utah Code Ann. Section 61-2e-307;

(d) requires an appraiser to prepare an appraisal report if the appraiser, in the appraiser's own professional judgment, believes the appraiser does not have the necessary expertise for the specific geographic area;

(e) requires an appraiser to prepare an appraisal report under a time frame that the appraiser, in the appraiser's own professional judgment, believes does not afford the appraiser the ability to meet all the relevant legal and professional obligations;

(f) prohibits or inhibits communication between the appraiser and:

(i) the lender;

(ii) a real estate licensee; or

(iii) any other person from whom the appraiser, in the appraiser's own professional judgment, believes information would be relevant;

(g) requires the appraiser to do anything that does not comply with:

(i) USPAP; or

(ii) any assignment conditions and certifications required by the client; [or]

(h) makes any portion of the appraiser's fee or the appraisal management company's fee contingent on a favorable outcome, including but not limited to:

(i) a loan closing; or

(ii) a specific dollar amount being achieved by the appraiser in the appraisal report[.]; or

(i) requests, for the purpose of facilitating a mortgage loan transaction,

(i) a broker price opinion; or

(ii) any other real property price or value estimation that does not qualify as an appraisal.

(2) An appraisal management company commits unprofessional conduct and creates a violation by the appraiser of R162-107.1.6 if the appraisal management company requires the appraiser to:

(a) accept full payment; and

(b) remit a portion of the full payment back to the appraisal management company.

KEY: appraisal management company regulations

Date of Enactment or Last Substantive Amendment: 2009

Authorizing, and Implemented or Interpreted Law: 61-2e-102; 61-2e-103; 61-2e-304; 61-2e-305