DAR File No. 41024

Commerce, Real Estate

Rule R162-2e

Appraisal Management Company Administrative Rules

Notice of Proposed Rule

(Amendment)

DAR File No.: 41024
Filed: 11/17/2016 01:09:28 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purposes of the proposed amendment are to: 1) provide clarity and transparency in communications between an Appraisal Management Company (AMC) and an appraiser with regard to disclosures and notices from an AMC to an appraiser; 2) provide a presumption of compliance for an AMC that its appraisal fees are customary and reasonable if the AMC pays an appraiser consistent with the United States Department of Veterans Affairs fee schedule; 3) clarify the manner in which an AMC may offer an appraisal assignment to an appraiser; and 4) specify that if an AMC uses delivery time for completion of an appraisal report for a tiered panel model or when ranking an appraiser, the AMC shall only use business days in the time calculation.

Summary of the rule or change:

In Subsection R162-2e-102(3), amends the definition of business day. In Section R162-2e-304, the amendment: 1) changes and adds to the disclosures an AMC is required to disclose to an appraiser; 2) changes and adds to the notices an AMC is required to provide an appraiser; and 3) provides a presumption of compliance for an AMC that pays an appraiser compensation consistent with the United States Department of Veterans Affairs fee schedule. In Section R162-2e-306, the amendment: 1) specifies the manner in which an AMC may offer an appraisal assignment to an appraiser; and 2) specifies that if an AMC uses delivery time for completion of an appraisal report when ranking an appraiser, the AMC shall only use business days in the time calculation.

Statutory or constitutional authorization for this rule:

• Section 61-2e-103
• Section 61-2e-301
• Section 61-2e-304
• Section 61-2e-306

Anticipated cost or savings to:

the state budget:

The division has the staff and budget in place to administer this proposed amendment. It is not expected that the proposed amendment will affect those resources or result in any additional cost or savings to the state budget.

local governments:

Local governments are not required to comply with or enforce the Appraisal Management Company Administrative Rules. No fiscal impact to local government is expected from the proposed amendment.

small businesses:

The proposed amendment does not create new obligations for small businesses nor does it increase the cost associated with any existing obligation. No fiscal impact to small business is expected from the proposed amendment.

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

The proposed amendment does not create new obligations for persons other than small businesses, businesses, or local government entities nor does it increase the cost associated with any existing obligation. No fiscal impact to persons other than small businesses, businesses, or local government entities is expected from the proposed amendment.

Compliance costs for affected persons:

The proposed rule does create new obligations and sets new limitations for AMCs subject to the administrative rules. Some AMCs will likely incur compliance costs but these costs will vary among the AMCs and there is no way to determine the amount of these costs.

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

A minor amendment is made to the definition of "business day" in Section R162-2e-102. The amendment to Section R162-2e-304 changes and adds to the disclosures an appraisal management company (AMC) makes to an appraiser and provides a presumption of payment of an appraiser at a customary and reasonable rate, if the compensation is consistent with the fee schedule published by the United States Department of Veterans Affairs Denver Regional Loan Center. Section R162-2e-306 is a new section that specifies the manner in which an AMC may offer an appraisal assignment to an appraiser and the manner in which the time of completion of an appraisal report is to be computed. The changed Section R162-2e-304 and the new section do create new obligations for AMCs, resulting in some additional costs of implementation. However, these changes are minor, and there is no way to determine with precision the amount of these costs. The fiscal impact to businesses is negligible.

Francine A. Giani, Executive Director, Commerce

The full text of this rule may be inspected, during regular business hours, at the Office 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:

• Justin Barney at the above address, by phone at 801-530-6603, by FAX at , or by Internet E-mail at justinbarney@utah.gov

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:

01/17/2017

This rule may become effective on:

01/24/2017

Authorized by:

Jonathan Stewart, Director

R162. Commerce, Real Estate.

R162-2e. Appraisal Management Company Administrative Rules.

R162-2e-102. Definitions.

(1) "Affiliation" means a business association:

(a) between:

(i) two individuals registered, licensed, or certified under Section 61-2b; or

(ii) an individual registered, licensed, or certified under Section 61-2b and:

(A) an appraisal entity; or

(B) a government agency;

(b) for the purpose of providing an appraisal service; and

(c) regardless of whether an employment relationship exists between the parties.

(2) The acronym "AMC" stands for appraisal management company.

(3) [As used in Subsection R162-2e-201(3)(c)(ii), ]" Business[business] day" means a day other than:

(a) a Saturday;

(b) a Sunday; or

(c) a state or federal holiday.[; or

(d) any other day when the division is closed for business.]

(4) "Client" is defined in Section 61-2e-102(10).

(5) "Competency statement" means a statement provided by the AMC to the appraiser that, at a minimum, requires the appraiser to attest that the appraiser:

(a) is competent according to USPAP standards;

(b) recognizes and agrees to comply with:

(i) laws and regulations that apply to the appraiser and to the assignment;

(ii) assignment conditions; and

(iii) the scope of work outlined by the client; and

(c) has access, either independently or through an affiliation pursuant to Subsection (1), to the records necessary to complete a credible appraisal, including:

(i) multiple listing service data; and

(ii) county records.

(6)(a) "Employee" means an individual:

(i) whose manner and means of work performance are subject to the right of control of, or are controlled by, another person; and

(ii) whose compensation for federal income tax purposes is reported, or is required to be reported, on a W-2 form issued by the controlling person.

(b) "Employee" does not include an independent contractor who performs duties other than at the discretion of, and subject to the supervision and instruction of, another person.

(c) For purposes of applying Subsection R162-2e-401(1)(g), an appraiser who completes an assignment is considered to be an employee of the AMC that offers the assignment if:

(i) this subsection (a) describes the employment relationship between the appraiser and the AMC; or

(ii) pursuant to this subsection (a), the appraiser is an employee of a company:

(A) that is wholly owned by the AMC; or

(B) in which the AMC owns a controlling interest.

(7) "Select" means:

(a) for purposes of composing the AMC appraiser panel, to review and evaluate the qualifications of an appraiser who applies to be included on the AMC's appraiser panel; and

(b) for purposes of assigning an appraisal activity to an appraiser:

(i) to choose from the AMC's appraiser panel an individual appraiser or appraisal entity to complete an assignment; or

(ii) to compile, from among the appraisers included in the AMC's appraiser panel, an electronic distribution list of appraisers to whom an assignment will be offered through e-mail.

(8) The acronym "USPAP" stands for Uniform Standards of Professional Appraisal Practice.

 

R162-2e-304. Required Disclosure -- Customary and Reasonable Compensation.

(1) In addition to the disclosures required by Section 61-2e-304, an AMC shall:

(a) at the time an appraiser is first added to an appraiser panel, the AMC shall:

(i) notify the appraiser in writing:

(A) of the criteria the AMC uses to rank an appraiser on the panel; and,

(B) if the AMC uses a tiered panel model, the criteria the AMC uses to distinguish the various tiers.

(b) If the criteria used by an AMC to rank an appraiser changes while an appraiser is on the appraiser panel of an AMC, or if the AMC makes any changes to a tiered panel model, the AMC shall provide written notice of the changes to all appraisers affected by the changes.

(c)[(1)] at the time an assignment is offered, disclose to the appraiser:

(i) the total fee that will be collected by the AMC for the assignment;

(ii) the total amount that the AMC will retain from the fee charged, disclosed as a dollar amount;

(iii)[(a)] the total amount that the appraiser may expect to earn from the assignment:

(A)[(i)] disclosed as a dollar amount; and

(B)[(ii)] delineating any fees or costs that will be charged by the AMC to the appraiser;

(iv)(A)[(b)(i)] the property address;

(B)[(ii)] the legal description; or

(C)[(iii)] equivalent information that would allow the appraiser to determine whether the appraiser has been involved with any service regarding the subject property within the three years preceding the date on which the assignment is offered;

(v)[(c)] the assignment conditions and scope of work requirements in sufficient detail to allow the appraiser to determine whether the appraiser is competent to complete the assignment; and

(vi)[(d)] any known deadlines within which the assignment must be completed;

(d)[(2)] at or before the time the appraiser accepts an assignment, obtain the appraiser's acknowledgment as to the AMC's competency statement; and

[(3) before requiring the appraiser to submit a completed report, disclose to the appraiser:

(a) the total fee that will be collected by the AMC for the assignment; and

(b) the total amount that the AMC will retain from the fee charged, disclosed as a dollar amount; and]

(e)[(4)] direct the appraiser who performs the real estate appraisal activity to disclose in the body of the appraisal report:

(i)[(a)] the total compensation, stated as a dollar amount, paid to the appraiser or, if the appraiser is employed by an appraisal company, to the appraiser's employer; and

(ii)[(b)] the total compensation retained by the AMC in connection with the real estate appraisal activity, stated as a dollar amount.

(2) Within 10 business days of receiving a written request from an appraiser as to why the AMC has decreased the number of assignments offered to the appraiser or has ceased offering the appraiser assignments, an AMC shall notify the appraiser in writing as follows;

(a) if the AMC has determined to decrease the number of assignments it will offer to the appraiser, the reason why the AMC has made this decision;

(b) if the AMC has determined to cease offering assignments to the appraiser, the reason why the AMC has made this decision; and

(c) if the AMC has determined to remove the appraiser from an appraiser panel, the AMC shall provide the appraiser notice as required by Utah Code Section 61-2e-306.

(3) An AMC is presumed to be in compliance with the requirement that the AMC compensate an appraiser at a rate that is customary and reasonable for an appraisal assignment in Utah if the AMC pays compensation consistent with the fee schedule for the state of Utah as published by the United States Department of Veterans Affairs Denver Regional Loan Center Appraisal Fee Schedule, as the fee schedule is updated from time-to-time.

 

R162-2e-306. Offering an Appraisal Assignment.

(1) An AMC shall not offer an appraisal assignment to a group of two or more appraisers by broadcasting a simultaneous electronic communication by:

(a) email;

(b) text;

(c) placing the assignment on a web page;

(d) recorded telephone message; or

(e) using any other electronic means of communication.

(2) When offering an appraisal assignment to an individual appraiser by means of any electronic communication;

(a) if the appraisal assignment is offered to the appraiser on a business day, an AMC shall allow the appraiser a minimum of 60 minutes to respond to the communication and accept the assignment;

(b) if the appraisal assignment is offered on a day other than a business day, an AMC shall allow the appraiser until 9:00 A.M. Mountain Time on the next business day to respond to the communication and accept the assignment.

(3) If the appraiser declines an assignment or does not respond within the time allotted in Subsection (2) for response, the AMC may offer the assignment to another appraiser.

(4) If an AMC uses delivery time of the completed appraisal report to the AMC in ranking an appraiser or in a tiered panel model, the AMC shall use only business days in the time calculation.

 

KEY: administrative proceedings, appraisal management company, conduct, registration

Date of Enactment or Last Substantive Amendment: [January 28, 2015]2017

Notice of Continuation: April 17, 2015

Authorizing, and Implemented or Interpreted Law: 61-2e-102(4); 61-2e-103; 61-2e-307; 61-2e-305; 61-2e-402(1)