The OCC has issued a bulletin (2019-43) reminding banks of the registration requirements for Appraisal Management Companies (AMC), which was effective August 10, 2019. The Dodd-Frank Act and implementing federal regulations provides minimum requirements to be applied by states in the registration and supervision of AMCs. As a result, AMCs (overseeing more than 15 appraisers in a single state or 25 or more appraisers nationally) must be registered in the state(s) in which they do business before providing appraisal management services to financial institutions for consumer credit transactions secured by a consumer’s principal dwelling that are federally related transactions (FRT). Federally regulated AMCs – those owned and controlled by an insured depository institutions – are not subject to the registration requirements.
States are not required to establish an AMC registration and supervision program. If a state does not establish a registration and regulatory process, an AMC cannot provide appraisal management services for federally related transactions in that state. However, there are alternative options to utilizing an AMC for obtaining appraisals for covered FRTs if a state is not registering AMCs. Alternatives include use of an individual appraiser, a staff appraiser employed by the bank, a smaller AMC (i.e. does not meet the 15/25 appraiser panel threshold), or a federally regulated AMC.
The OCC bulletin emphasizes the importance of a strong vendor risk management process by noting, “[a] bank’s use of third parties, including AMCs, does not diminish the bank’s responsibility to confirm that the activity is performed in a safe and sound manner and in compliance with applicable laws and regulations. Bank management should conduct sufficient due diligence to confirm that the bank’s third-party AMCs are registered as required.” Financial institutions can confirm registration by: 1) Checking the Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC) national AMC registry; 2) Checking the state’s AMC registry; or 3) Request proof of registration directly from the AMC.
On October 15, Eric Collinsworth will be doing a webinar on the topic of Identifying Common Mistakes during the Appraisal Compliance Review. During this program he will provide a brief discuss on an institution’s responsibility to confirm the AMC is operating in compliance. For more information on Eric’s webinar or to register click here.
OCC Bulletin 2019 -43