Calif. Business and Professions Code §§11302, 11320.5, 11321, 11323, 11324, 11345, 11345.2, 11345.3, 11345.5, 11345.6, 11345.8, 11422
Added and amended by S.B. 547
Effective date: January 1, 2018
An appraisal management company is now redefined as a person or entity that:
- provides appraisal management services to lenders or secondary mortgage market participants;
- provides these services in connection with a principal dwelling securing a mortgage; and
- oversees an appraiser panel of more than 15 state-certified or state-licensed appraisers in a single state, or 25 or more in multiple states within a 12-month period.
Previously, an appraisal management company was defined as a person or entity that employs 11 or more appraisers, receives requests for appraisal services and delegates appraisal assignments.
An appraisal management company excludes a department of an entity that provides appraisal management services only to that entity.
Appraisal management services are defined as any of the following:
- recruiting, selecting and retaining appraisers;
- contracting with state-certified or state-licensed appraisers to perform appraisals;
- managing the appraisal process, including administrative services such as receiving orders and reports, submitting appraisal reports to lenders, collecting fees for appraisal services and paying appraisers; and
- reviewing and verifying appraisal work.
A person or entity is prohibited from representing themselves to the public as an appraisal management company without a certificate of registration from the Office of Real Estate Appraisers.
An unlicensed person may assist in the preparation of an appraisal in a federally related transaction when:
- they are supervised by a licensed appraiser; and
- the final appraisal is approved and signed by the supervising licensed appraiser and identifies the scope of the work performed by the unlicensed person.
Unlicensed persons, including appraisal trainees, are prohibited from being the sole signee on an appraisal in a federally related transaction.
Appraisal management companies are now required to:
- ensure all appraisal panel members possess the required licenses and certificates;
- establish a process to ensure an appraiser is not associated with a transaction they are assigned to and confirm the appraiser has the required license and expertise to complete an appraisal for a particular market or property type;
- direct appraisers to perform in accordance with the Uniform Standards of Professional Appraisal Practice;
- ensure all appraisal management services conform to requirements of the federal Truth in Lending Act (TILA);
- provide appraisal engagement letters that include the terms of payment; and
- maintain records of each service request.
All federally regulated appraisal management companies in California are also required to report to the Bureau of Real Estate Appraisers any information required to be submitted to the Appraisal Subcommittee, subject to fees for processing and submission.