Bill Summary – FastDemocracy

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                                                                                    Chairman Phil Mendelson

                                                         A BILL.

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                               IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

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     To require the Department ofInsurance, Securities, and Banking to provide forthe licensing of

            certain entities providing appraisal management services in the District of Columbia and

            to require an annual registration fee to be paid by those entities.

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            BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this

            act may be cited as the Appraisal Management Company Regulation Act of 2019

                   TITLE L. APPRAISAL MANAGEMENT COMPANY REGULATIONS

                   Sec. 101. Definitions.

                   For purposes of this act, the term:

                           (1) Affiliate means any company that controls, is controlled by, or is under

            common controlofanother company.

                           (2) AMC National Registry means the registryof state-registered appraisal

            management companies and federally regulated appraisal management companies maintained by

            the Appraisal Subcommittee.

                     (3) Appraisal Foundation means the Appraisal Foundation established on.

      November 30, 1987, as a not-for-profit corporation under the laws of Illinois.

                 (4) Appraisal management company means a person, not including a

 department or division of an entity that provides appraisal management services only to that

 entity, that:

                        (A)(i) Provides appraisal management services to creditors or to

 secondary mortgage market participants, including affiliates; or

                                (ii) Provides appraisal management services in connection with

 valuing a consumer's principal dwelling as security for a consumer credit transaction or

 incorporating such transactions into securitizations; and

                        (B) At any time in a 12-calendar month period oversees an appraiser

 panel of more than 15 state-certified or state-licensed appraisers in a state or 25 or more state

 certified or state-licensed appraisers in 2 or more states, as described in section 103.

                 (5) Appraisal management services means one or moreofthe following:

                        (A) Recruiting, selecting, and retaining appraisers;

                        (B) Contracting with state-certified or state-licensed appraisers to

 perform appraisal assignments;

                        (C) Managing the process of having an appraisal performed, including

 providing administrative services such as receiving appraisal orders and appraisal reports,

 submitting completed appraisal reports to creditors and secondary market participants, collecting

 fees from creditors and secondary market participants for services provided, and paying

sl   appraisers for services performed; and

                        (D) Reviewing and verifying the work of appraisers.

                   (6) Appraisal panel means a network, list, or rosteroflicensed or certified

 appraisers approved by an appraisal management company to perform appraisals as independent

 contractors for the appraisal management company. Appraisers on an appraiser panel include

 both appraisers accepted by the appraisal management company for consideration for future

 appraisal assignments in covered transactions or for secondary mortgage market participants in

     connection with covered transactions, and appraisers engaged by the appraisal management

 company to perform one or more appraisals in covered transactions or for secondary mortgage

 market participants in connection with covered transactions. An appraiser is an independent

 contractor if the appraiser is treated as an independent contractor by the appraisal management

 company for purposes of federal income taxation.

                   (7) Appraisal review means the act or processofdeveloping and

     communicating an opinion about the quality of another appraiser's work that was performed as

 part ofan appraisal assignment and is related to the appraiser's data collection, analysis,

 opinions, conclusions, estimate of value, or compliance with the uniform standards of

 professional appraisal practice. This term does not include:

                          (A) A general examination for grammatical, typographical, or other

 similar errors;

                          (B) A general examination for completeness, including regulatory and/or

 client requirements as specified in the agreement process that does not communicate an opinion

n    of value.

B                      (8) Appraisal Subcommittee means the Appraisal Subcommittee of the Federal

 Financial Institutions Examination Council.

                 (9) Consumer credit means credit offered or extended to a consumer primarily

  for personal, family, or household purposes.

                 (10) Controlling person means:

                        (A) An officer, director, or owner of greater than a 10 percent interest of

  a corporation, partnership, or other business entity seeking to act as an appraisal management

  company;

                        (B) An individual employed, appointed or authorized by an appraisal

  management company that has the authority to enter a contractual relationship with other persons

  for the performanceof services requiring registration as an appraisal management company and

  has the authority to enter agreements with appraisers for the performance ofappraisals; or

                        (C) An individual who possesses, directlyorindirectly, the power to

  direct or cause the direction of the managementofpolicies ofan appraisal management

 company.                                                             :

                 (11) Covered transaction means any consumer credit transaction secured by

  the consumer's principal dwelling.

                 (12) Creditor means a person who regularly extends consumer credit that is

  subject to a finance charge or is payable by written agreement in more than four installments (not

  including a down payment), and to whom the obligation is initially payable, either on the face of

  the note or contract, or by agreement when there is no note or contract. A person regularly

  extends consumer credit if, in any 12-month period, the person originates more than one credit

  extension for transactions secured by a dwelling.

                 (13) Department means the Departmentof Insurance, Securities, and Banking.

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                  (14) District means the District ofColumbia.

                (15) Dwelling means a residential structure that contains one to four units,

 regardless of whether that structure is attached to real property. The term includes an individual

 condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.

                (16) Federal financial institutions regulatory agency includes the Consumer

 Financial Protection Bureau, the Federal Housing Finance Agency, the Board of Governors of

 the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the

 Comptrollerof the Currency, and the National Credit Union Administration.

                (17) Federally regulated appraisal management company means an appraisal

 management company that is owned and controlled by an insured depository institution, as

 defined in section 3(c)(2)ofthe Federal Deposit Insurance Act, approvedSeptember 21, 1950

 (64 Stat. 873; 12 U.S.C.  1813(c)(2)), and regulated by the Office of the Comptrollerofthe

 Currency, the Board of Governorsof the Federal Reserve System, or the Federal Deposit

 Insurance Corporation, or National Credit Union Administration.

aa                   (18) Federally regulated transaction regulations means regulations established

 by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve

 System, the Federal Deposit Insurance Corporation, or the National Credit Union

 Administration, pursuant to sections 1112, 1113, and 1114of the Financial Institutions Reform,

11S   Recovery, and Enforcement Act of 1989, approved August 9, 1989 (103 Stat. 183; 12 U.S.C. 

 3341-3343).

                  (19) Federally related transaction means any real-estate-related financial

 transaction that involves an insured depository institution regulated by the Officeof the

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  Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal

  Deposit Insurance Corporation, or National Credit Union Administration and that requires the

  servicesofan appraiser under the interagency appraisal rules.

                 (20) Person means a natural person or an organization, including a

  corporation, partnership, proprietorship, association, cooperative, estate, trust, or government

  unit.

                 (21) Principal dwelling means the primary residence ofa consumer. For

  purposesofthis act, a consumer may only have one principal dwelling. A vacation or other

  second home shall not be considered a principal dwelling. However, if a consumer buys or

  builds a new dwelling that will become the consumers primary residence within a year or upon

  completionofthe construction, the new residence is considered the principal dwelling for

  purposesof this act.

                 (22) Real-estate-related financial transaction means any transaction involving

  the sale, lease, purchase, investment in, or exchange of real property, including interests in

  property or the financing thereof; the refinancing of real property or interests in real property; or

  the use of real property or interests in property as security for a loan or investment, including

135,   mortgage-backed securities.

                 (23) Secondary mortgage market participant means a guarantor or insurer of

  mortgage-backed securities, or an underwriter or issuer of mortgage-backed securities. The term

  includes an individual investor in a mortgage-backed security onlyif that investor also serves in

  the capacity of

                     a guarantor, insurer, underwriter, or issuer for the mortgage-backed security.

                 (24) State includes the District of Columbia.

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                 (25) Uniform Standards of Professional Appraisal Practice or USPAP means

 the appraisal standards as promulgated by the Appraisal Standards Boardofthe Appraisal

 Foundation.

         Sec. 102. Administration.

         (a) The Department shall have the authority to adopt rules that are reasonably necessary

 to establish an appraisal management company licensing program and implement, administer,

 and enforce the provisions set forth under this act.

         (b) The Department shall charge appraisal management companies operating in the

 District reasonable fees to administer this act. The Department's fees shall be established by

      tule.

              (c) The Department shall perform the following functions:

                      (1) Review and approve or deny an appraisal management companys

 application for initial registration in the District;

                 (2) Periodically review and renew or review and deny an appraisal management

 companys registration;

                 (3) Examine the books and recordsofan appraisal management company

 operating in the District and require the appraisal management company to submit reports,

 information, and documents;

                 (4) Verify that the appraisers on the appraiser panel of an appraisal management

 company operating in the District hold valid District certifications or licenses, as applicable;

                (5) Conduct investigations of appraisal management companies operating in the

 District to assess potential violationsofapplicable appraisal-related laws, regulations, or orders;

 and

                (6) Report an appraisal management company's violationof applicable appraisal-

 related laws, regulations, or orders, as well as disciplinary and enforcement actions and other

 relevant information about the operations of an appraisal management company operating in the

 District.

         (d) The Department shall impose requirements on appraisal management companies

 operating in the District that are not owned and controlled by an insured depository institution

 and not regulated by a federal financial institutions regulatory agency to:

                (1) Register with and be subject to supervision by the Department;

                (2) Engage only state-certified or state-licensed appraisers for federally related

 transactions in conformity with any federally regulated transaction regulations;

                (3) Establish and comply with processes and controls reasonably designed to

 ensure that the appraisal management company, in engaging an appraiser, selects an appraiser

 who is independentof the transaction and who has the requisite education, expertise, and

 experience necessary to competently complete the appraisal assignment for the particular market

 and property type;

                (4) Direct appraisers to perform assignments in accordance with Uniform

 Standards of Professional Appraisal Practices; and

                (5) Establish and comply with processes and controls reasonably designed to

 ensure that the appraisal management company conducts its appraisal management services in

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  accordance with the requirements of section 129E(a)-(i) of the Truth in Lending Act, approved

  July 21, 2010 (124 Stat. 2187; 15 U.S.C.  1639e(a)-(i)), and regulations thereunder.

185,           (e) The Department shall maintain a list of the appraisal management companies that are

  registered in the District

          (f) The Department shall issue a unique registration number to each appraisal

  management company that is registered in the District pursuant to regulations or guidance

  promulgated by the Department.

          (g) The Department shall require an appraisal management company registered in the

  District to place its registration number on engagement documents utilized by the appraisal

  management company to procure appraisal services in the District.

          Sec. 103. Appraisal panel size and calculation.

          (a) For purposesofdetermining whether a person is an appraisal management company

  within the meaning of section 101(4), an appraiser is deemed partofan appraiser panel asofthe

  earliest date on which the person overseeing the appraisal panel:

                  (1) Accepts the appraiser for consideration for future appraisal assignments in

  covered transactions or for secondary mortgage market participants in connection with covered

  transactions; or

                  (2) Engages the appraiser to perform one or more appraisals onbehalf of a

  creditor for covered transactions or secondary mortgage market participant in connection with

  covered transactions,

          (b) An appraiser who is deemed partofan appraiser panel pursuant to

  subsection (a)of this section is deemed to remain on the panel until the date on which the person

  overseeing the appraisal panel:

                  (1) Sends written notice to the appraiser removing the appraiser from the

  appraiser panel, with an explanation of its action; or

                  (2) Receives written notice from the appraiser asking to be removed from the

  appraiser panel or notice of the death or incapacity of the appraiser.

          (c) Ifan appraiser is removed from an appraiser panel pursuant to subsection (b)(2) of

    this section, but the person overseeing the appraisal panel subsequently accepts the appraiser for

  consideration for future assignments or engages the appraiser at any time during the 12 months

  after the appraiser's removal, the removal will be deemed not to have occurred, and the appraiser

  will be deemed to have been part of the appraiser panel without interruption.

          Sec. 104. Registration.

          (a) It shall be unlawful for a person to directly or indirectly engage or to attempt to

  engage in business as an appraisal management company in the District, or to advertise or hold

 itself out as engaging in or conducting business as an appraisal management company in the

  District without first obtaining a registration issued by the Department.

          (b) An applicant for registration as an appraisal management company in the District

  shall submit to the Department an application on forms prescribed by the Department and pay a

  fee established by the Department. The forms shall require information necessary to determine

  eligibility for registration.

          (c) Upon registrationofan appraisal management company in the District, the

  Department may require a surety bondof not more than $25,000.

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        Sec. 105. Reporting requirements.

        (a) The Department shall collect from each appraisal management company registered

 or seeking to be registered in the District the information and fees that the Department requires to

 be submitted to it pursuant to regulations or guidance promulgated by the Department.

        (b) A federally regulated appraisal management company operating in the District must

 report to the Department the information required to be submitted by the District to the Appraisal

 Subcommittee, pursuant to the Appraisal Subcommittees policies regarding the determination of

 the appraisal management company National Registry fee. These reporting requirements will be

 set forth by the Department by rule,-and will include:

                (1) A report to the Department on a form prescribed by the Departmentofintent

 to operate in the District of Columbia;

                (2) Information related to whether the appraisal management company is owned

 in whole or in part, directly or indirectly, by any person who has had an appraiser license or

 certificate refused, denied, canceled, surrendered in lieu of revocation, or revoked in any state for

 a substantive cause, as determined by the Appraisal Subcommittee; and

                (3) If such a person has had such action taken on his or her appraisal license,

 information related to whether the license was revoked for a substantive cause and whether it has

 been reinstated by the state or states in which the appraiser was licensed or certified.

        Sec. 106. Appraisal management company requirements.

        (a) An appraisal management company operating in the District shall meet the following

 requirements at all times:

                 (1) At the timeofapplying for registration or r