No. 34704 (Amendment): Rule R162-2e. Appraisal Management Company Administrative Rules

(Amendment)

DAR File No.: 34704
Filed: 04/14/2011 05:08:28 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this amendment is: 1) to require an appraisal management company to register with the Utah Division of Corporations prior to registering with the Division of Real Estate; and 2) to require disclosure of, and to impose certain restrictions regarding, fees and costs that will be charged by an appraisal management company to an appraiser.

Summary of the rule or change:

In order to obtain an appraisal management company registration from the Division, an entity must provide a certificate of existence from the Utah Division of Corporations. If an appraisal management company charges a cost or fee to an appraiser in conjunction with an appraisal assignment, the cost or fee must be disclosed at the time the assignment is offered, or it may not be charged. An appraisal management company may not charge to an appraiser a cost or fee that is inflated above the actual cost of a service provided by a third party or that is charged for a service not actually performed.

State statutory or constitutional authorization for this rule:

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

Anticipated cost or savings to:

the state budget:

These rule amendments do not create a new program for the Division to implement or administer. Any budget needed for enforcing the specific requirements proposed in these amendments is minimal and is already in place. Therefore, no impact to the state budget is anticipated.

local governments:

Local governments are required neither to comply with nor to enforce these rule amendments. Therefore, no fiscal impact to local government is anticipated.

small businesses:

A small appraisal management business will be required to register with the Utah Division of Corporations and pay the associated registration fees. The Division considers that this registration is already mandated by statute (see Section 16-10a-1501); this amendment is proposed simply to state that the Division will not issue a registration absent compliance with that statute. In addition, under the fee restrictions proposed, a small appraisal management business that realizes revenue by charging appraisers inflated or unearned fees will lose that revenue. The Division considers this regulation to be reasonable, as it parallels federal restrictions applicable to the mortgage industry.

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

The proposed amendments apply specifically to appraisal management businesses. It is anticipated that no other persons will be affected or will experience a fiscal impact.

Compliance costs for affected persons:

Affected persons will pay the costs of registration with the Utah Division of Corporations and will lose any revenues associated with the charging of unearned or inflated fees to appraisers.

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

No fiscal impact to businesses is anticipated from this rule filing, which clarifies for licensees that a business registration is required to conduct business as an appraiser management business, and that charging for services not rendered or inflating charges is not permitted.

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 [e-mail]

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:

05/31/2011

This rule may become effective on:

06/07/2011

Authorized by:

Deanna Sabey, Director

RULE TEXT

R162. Commerce, Real Estate.

R162-2e. Appraisal Management Company Administrative Rules.

R162-2e-201. Registration Required - Qualification for Registration.

(1) The division may not register or renew the registration of an AMC that fails to:

(a) comply with any provision of Utah Code Title 61, Chapter 2e, "Appraisal Management Company Registration and Regulation Act";[or]

(b) register with the Utah Division of Corporations and Commercial Code and provide to the division its certificate of existence; or

[(b)](c) comply with any provision of these rules.

(2) The division shall schedule a hearing before the board for an AMC 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 AMC'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.

(3)(a) An AMC shall register with the division in the name of the legal entity under which it is registered with the Utah Division of Corporations and Commercial Code and conducts the business of appraisal management in Utah and in other states.

(b) An AMC shall notify the division of a dba, trade name, or assumed business name under which the registered legal entity operates in Utah:

(i) at the time of registration; or

(ii) if applicable, immediately upon beginning to operate under such dba, trade name, or assumed business name.

(c) If an AMC changes its registered name, a dba, a trade name, or an assumed business name, the AMC shall notify the division:

(i) in writing; and

(ii) within ten business days of making the change.

 

R162-2e-304. Required Disclosure.

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

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

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

(i) disclosed as a dollar amount; and

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

(b)(i) the property address;

(ii) the legal description; or

(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;

(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

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

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

(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

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

(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

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

 

R162-2e-401. Unprofessional Conduct.

(1) An AMC commits unprofessional conduct if the AMC:

(a) requires an appraiser to modify any aspect of the appraisal report, unless the modification complies with Section 61-2e-307;

(b) unless first prohibited by the client or applicable law, prohibits or inhibits an appraiser from contacting:

(i) the client;

(ii) a person licensed under Section 61-2c or Section 61-2f; or

(iii) any other person with whom the appraiser reasonably needs to communicate in order to obtain information necessary to complete a credible appraisal report;

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

(i) USPAP; or

(ii) assignment conditions and certifications required by the client;

(d) makes any portion of the appraiser's fee or the AMC'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]

(e) 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[.]; or

(f) charges an appraiser:

(i) for a service not actually performed; or

(ii) for a fee or cost that:

(A) is not accurately disclosed pursuant to Subsection R162-2e-304(1)(a)(ii); or

(B) exceeds the actual cost of a service provided by a third party.

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

(a) accept full payment; and

(b) remit a portion of the full payment back to the AMC.

 

KEY: appraisal management company, conduct, registration

Date of Enactment or Last Substantive Amendment: [November 10, 2010]2011

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

 

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