AI Connecticut Chapter
Testifies Before
Legislature on AMC Bill
On Feb. 5, the Connecticut Chapter of
the Appraisal Institute testified before the
state legislature’s Joint Committee on General Law regarding a bill that would prohibit the payment of a fee for an appraisal
to anyone other than a licensed or certified
appraiser. While not explicitly stated in the
legislation, the impact of the bill would
be to prohibit an appraisal management
company from taking any portion of a fee
that is paid by a lender or a borrower for a
real estate appraisal.
In his testimony before the committee,
Ralph Biondi, MAI, Chair of the Connecticut Chapter’s Government Relations
Committee, said that the Appraisal Institute
supports the overall intent of the bill, but
proposed “more comprehensive legislation”
to regulate AMCs operating in the state. To
that end, Biondi proposed that the General
Law Committee insert into the existing bill
the language of the model legislation that
has been jointly prepared by the Appraisal
Institute and its partners.
Meanwhile, the Appraisal Institute sent a
joint letter to the co-chairs of the committee warning against “the widespread
‘cramdown’ of appraisal fees” resulting
from the proliferation of AMCs, who force
appraisers “to accept significant reductions
in market appraisal fees, while a large
percentage of a borrower’s application fee
goes to the AMC as a management fee.”
The joint letter further stated that,
“AMCs are not required to register with
any government agency, and are not subject to any state or federal regulation. Because of this, we have found that no one is
protected from unscrupulous participants.
In fact, there has been at least one instance
where a disbarred appraiser has formed
an AMC outside the reach of any state
regulatory agency, much to the dismay of
his state appraiser board.”
The amended bill had a possibility of
being considered at press time. To read a
copy of Senate Bill 303 as originally proposed, visit www.cga.ct.gov/2009/TOB/s/
pdf/2009SB-00303-R00-SB.pdf.
Appraisal Institute Continues to
Speak Out Against AMC Loopholes
In the continuing saga of appraisal regulation, a new development has
appraisers worried: the rise of appraisal management companies. In a Feb. 5
Business Week article, “Housing Appraisals: Still
Blowing Bubbles?” several appraisers, including the Appraisal Institute’s Director of
Government and External Relations, Bill
Garber, weigh in on how the soon-to-be-implemented Home Valuation Code
of Conduct may actually prove counterproductive to the goals of appraiser
independence and improved appraisal
quality. As Garber warns in the article
about improper influence on appraisers, “[The new industry-wide rules]
have transferred the problem to these
appraisal management companies,
which are not regulated by anybody.”
To read the full article, visit www.
businessweek.com/magazine and search
for “Still Blowing Bubbles?”
AI Offers New Seminar for Bankers, Appraisers
Designed for lenders and appraisers, Commercial Appraisal Engagement and
Review explores how appraisal work will fit into a financial institution’s current regulatory scheme and what happens to an appraisal once it leaves the
appraiser’s hands. The seminar, developed and taught by Nikki Griffith, MAI,
addresses the elements of an assignment necessary to order an appraisal and
how an appraisal is used in the underwriting process. The program presents
current issues in appraisal regulatory compliance and will also explore the type
of data when using the three approaches to value important to bankers and
the requisite support needed to justify an appraisal.
“The operating procedures and regulations that govern the financial industry
have changed dramatically in recent months,” explains Jim Amorin, MAI, SRA,
2009 president of the Appraisal Institute. “Therefore, it is vital that both bankers and appraisers familiarize themselves with the current regulatory environment within which financial institutions will be working and find out how to
effectively review commercial appraisal reports using updated guidelines.”
Commercial Appraisal Engagement and Review is approved for seven hours
of Appraisal Institute continuing education hours. Cost is $139 for members,
$239 for non-members. The new seminar premiered in six locales nationwide
in March and is now slated for wider release throughout the year.
For more information and to register, visit www.appraisalinstitute.org/
education/seminar_descrb/ Default.aspx?sem_nbr=807&key_type=S.
