DAR File No. 32725

Commerce, Real Estate

R162-150

Appraisal Management Companies

NOTICE OF PROPOSED RULE

DAR File No.: 32725
Filed: 06/11/2009, 10:41
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Legislature passed H.B. 152 in the 2009 General Session that requires the Division of Real Estate and the Real Estate Appraiser Licensing and Certification Board to regulate appraisal management companies. This rule satisfies statutory rulemaking mandates for the Division and Board. (DAR NOTE: H.B. 152 (2009) is found at Chapter 269, Laws of Utah 2009, and was effective 05/12/2009.)

Summary of the rule or change:

This rule establishes standards for moral character of control persons who apply for appraisal management company registration, and establishes employee knowledge requirements for individuals who select appraisers or review appraisal reports on behalf of the appraisal management company. It also establishes unprofessional conduct guidelines for appraisal management companies that are consistent with requirements already in place for licensed appraisers.

State statutory or constitutional authorization for this rule:

Sections 61-2e-102, 61-2e-103, 61-2e-304, and 61-2e-305

Anticipated cost or savings to:

the state budget:

This filing will have no impact on the state budget. The Division of Real Estate received a small appropriation with H.B. 152. This filing implements requirements already covered by that appropriation.

local governments:

This rule filing will have no impact on local government budgets. Local governments do not create appraisal management companies and are not regulated by this rule filing. Local governments may see an indirect impact if the unprofessional conduct provisions result in more accurate appraisals taking place within their boundaries.

small businesses and persons other than businesses:

Employees of appraisal management companies will be required to pay for and complete a Uniform Standards of Professional Appraisal Practice (USPAP) course. Appraisal management companies with control persons with backgrounds that concern the Division of Real Estate will be required to appear before the Real Estate Appraiser Licensing and Certification Board. The unprofessional conduct standards could result in more accurate appraisals, which could have a positive impact on individuals and businesses.

Compliance costs for affected persons:

Employees of appraisal management companies will be required to pay for and complete a USPAP course. Appraisal management companies with control persons with backgrounds that concern the Division of Real Estate will be required to appear before the Real Estate Appraiser Licensing and Certification Board. The unprofessional conduct standards could result in more accurate appraisals, which could have a positive impact on individuals and businesses.

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

This filing implements the Appraisal Management Company Registration and Regulation Act by adopting standards for the registration of appraisal management companies and the qualification of their employees. As indicated in the rule summary, there will be no impact to businesses beyond those already addressed by the Legislature in passing the Act. 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
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY UT 84111-2316

Direct questions regarding this rule to:

Thad LeVar at the above address, by phone at 801-530-6929, by FAX at 801-530-6446, 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:

07/31/2009

This rule may become effective on:

08/07/2009

Authorized by:

Francine Giani, Executive Director

R162. Commerce, Real Estate.

R162-150. Appraisal Management Companies.

R162-150-1. Qualification for Registration or Renewal of Registration.

(1) The Division may not register or renew the registration of an appraisal management company that:

(a) fails to comply with any provision of Utah Code Title 62, Chapter 2e, "Appraisal Management Company Registration and Regulation Act";

(b) fails to comply with Sections R162-150-2 or R162-150-3; or

(c) fails to pay to the Division the fee required for registration.

(2) The Division shall schedule a hearing before the board for an appraisal management company that:

(a)(i) applies for registration or renewal of registration;

(ii) has a control person who discloses, or the Division finds through its own research, an issue that might affect the control person's moral character; and

(iii) the Division determines that the board should be aware of the issue; or

(b) fails to provide an adequate explanation for the appraisal management company's:

(i) plan to ensure the use of licensed appraisers in good standing;

(ii) plan to ensure the integrity of the appraisal review process; or

(iii) plan for record keeping.

 

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 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 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 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.

(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 regulation

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