By Jim Baumberger, CEO, at First Choice Appraisal Management and Certified Residential Appraiser
Last week in Part 1, we summarized news from the AARO Spring Conference where state and federal appraisal regulators met in Seattle on May 4-6, 2018 to exchange information on the latest developments affecting the appraisal industry. Much of Part 1 focused on news and upcoming changes from the Appraisal Subcommittee (ASC), The Appraisal Foundation (TAF), the Appraiser Qualifications Board (AQB), and the Appraisal Standards Board (ASB). Summaries of the AMC National Registry, along with the upcoming AMC National Registry Fees, were deferred to today’s post – Part 2.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act included amendments to the Truth In Lending Act (TILA) – including the Appraisal Independence Requirements, which are familiar to many Appraisers – and amendments to the 1989 Federal Institutions Reform, Recovery, and Enforcement Act (FIRREA) – including the establishment of an AMC National Registry, financed via AMC National Registry Fees, which are not as familiar to many Appraisers.
Basically, there will be a national registry with a listing of all the licensed Appraisal Management Companies (AMC’s) operating in the fifty states, Washington DC, and the four territories. This will be similar in function, albeit with different information, to the ASC’s National Registry (of Appraisers):
If you have never searched for yourself, or have not reviewed your registry information lately, it is always a good idea to do so periodically to ensure your information is accurate. This is where your Clients go to verify that you have a valid state credential before they assign any orders to you. The AMC National Registry will serve a similar function by providing the licensing information for AMC’s.
The ASC reported that on 03/05/2018 it finalized three additional Policy Statements regarding the AMC National Registry and the AMC National Registry Fees. ASC Policy Statements establish the minimum standards for the state licensing agencies or boards, which oversee Appraisers and AMC’s. The AMC National Registry will be open by 07/16/2018. It will not be until 06/04/20 that the ASC will review each state’s participation in the program. The ASC also cautioned that many AMC’s will not actually appear on the AMC National Registry until sometime in the year 2020.
This is important because validly licensed AMC’s are fully authorized to operate legally, even though Appraisers and Clients may not find them listed on the registry during 2018 and 2019. ASC Bulletin 2017-01, Footnote 2, informs readers of this fact. Even though an AMC may not show on the registry until sometime in 2020, the AMC is authorized to operate if the AMC has a valid license in the state or jurisdiction where the appraisal assignment is performed. The delay in a complete listing of AMC’s is due to the various timelines accorded to the states and jurisdictions to establish laws and rules to implement the program.
The AMC National Registry Fees are to be paid by AMC’s, based on an annual fee of $25 for every Appraiser on their panels who have completed an assignment in the previous twelve months. Each state or jurisdiction is required to collect these monies and forward them to the ASC. Essentially for the states, these are pass-through monies, which they simply collect and forward to the ASC.
There are some costs in administration, handling, and staffing for the states and jurisdictions to act as an agent collecting these fees for the ASC. The states and jurisdictions are also still grappling with how to establish processes and systems to implement the AMC National Registry Fee program. Some are still deciding whether to collect the AMC fees annually, since they are required by the ACS to levy annual fees, or to collect the AMC fees every two years in coordination with many of their AMC licensing cycles.
The $25 per Appraiser fee levied against AMCs’ active panelists will result in millions of dollars being collected by the ASC. They acknowledge that the total amount of AMC fees collected will far surpass what is actually needed to operate the AMC registry. The windfall of money left over will be sent back to the states and jurisdictions in the form of block grants to supplement the funding each state or jurisdiction receives to operate its Appraiser and AMC licensing and enforcement programs.
Even though many Appraisers are not particularly fans of AMC’s, it is worth understanding that the AMC fees will represent a significant new cost for AMC’s. A few states have already prohibited AMC’s from passing these fees along to their Appraisers. Either AMC’s will absorb these costs, or somehow pass them along to Appraisers (lower appraisal fees or disguised as technology fees, etc.), or pass them along to their Clients. Many believe that ultimately these fees will be passed along to Consumers in some form or fashion.
All of us at First Choice Appraisal Management, which operates on a Cost-Plus ethical business model, believe adamantly that Appraisers should receive a full Appraiser Fee. We have no plans to pass this new significant cost along to Appraisers. Thank-you for reading our blog and please let us know if you have any questions.