AB533: Bill Text

Federal law; Dodd-Frank Act; federal regulations

“Appraisal management company” is defined under the act as “in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction secured by a consumer's principal dwelling or by an underwriter of or other principal in the secondary mortgage markets, that oversees a network or panel of more than 15 certified or licensed appraisers in a State or 25 or more nationally within a given year a) to recruit, select, and retain appraisers; b) to contract with licensed and certified appraisers to perform appraisal assignments; c) to manage the process of having an appraisal performed ... ; or d) to review and verify the work of appraisers.”

Under the act, a number of federal agencies are required, by rule, to jointly establish minimum requirements to be applied by a state in the registration of AMCs. The minimum requirements include that an AMC must a) register with and be subject to supervision by a state appraiser certifying and licensing agency in each state in which the AMC operates; b) verify that only licensed or certified appraisers are used for federally related transactions; c) require that appraisals coordinated by an AMC comply with the Uniform Standards of Professional Appraisal Practice; and d) require that appraisals are conducted independently and free from inappropriate influence and coercion pursuant to standards established under the Truth in Lending Act. Under the act, an AMC that is owned and controlled by a financial institution and regulated by a federal financial institution regulatory agency is not required to be registered with the state, but is otherwise required to comply with the requirements described above.

Also under the act, an AMC may not be registered by a state if the AMC is owned by any person who has had an appraiser license or certificate refused, denied, cancelled, surrendered in lieu of revocation, or revoked in any state. In addition, each person that owns more than 10 percent of an AMC must be of good moral character, as determined by the state appraiser certifying and licensing agency, and must submit to a background investigation carried out by the state appraiser certifying and licensing agency. Finally, under the act, a national registry must be maintained of AMCs that either are registered with and subject to supervision of a state appraiser certifying and licensing agency or are operating subsidiaries of a federally regulated financial institution. A state with an appraiser certifying and licensing agency must collect an annual registry fee from an AMC that has registered with a state or that operates as a subsidiary of a federally related financial institution.

The act prohibits an AMC from performing services related to a federally related transaction in a state after the date that is 36 months after the date on which the federal regulations described above are finalized unless the AMC is registered with the state or subject to oversight by a federal financial institutions regulatory agency, subject to an additional 12-month extension that may be granted if certain conditions are met. The final federal regulations became effective on August 10, 2015, meaning that an AMC cannot perform services related to a federally related transaction in a state after August 10, 2018, unless the AMC is registered with the state.

The bill

The bill implements the provisions in the Act described above and establishes provisions for the licensure of AMCs, described in further detail as follows:

1. The bill prohibits the performance of appraisal management services for compensation, or the use of the title “appraisal management company” or “licensed appraisal management company” by any person unless the person is licensed by DSPS. The bill requires DSPS to grant and issue a license to an AMC if the AMC a) submits certain information; b) pays a fee; and c) meets any other applicable requirements. Certain persons, including persons who own more than 10 percent of the AMC, must submit to background investigations prior to the AMC's licensure, and the applicant must be determined by DSPS to have good moral character in order for the AMC to be licensed. As provided in the act, federally regulated AMCs are not required to be licensed, but must comply with other provisions in the bill.

2. The bill creates prohibitions on AMCs and establishes ownership limitations for AMCs.

3. The bill requires applicants for an AMC license to designate a controlling individual to be the primary contact for all communications between DSPS and the AMC. Such a controlling individual must meet certain criteria in order to be so designated.

4. The bill requires AMCs that perform appraisal management services in federally related transactions to pay the annual registry fee to DSPS, pursuant to the act as described above. The bill requires DSPS to transmit the fees to the Federal Financial Institutions Examination Council.

5. The bill establishes requirements that an AMC must satisfy before assigning appraisal services to an AMC, adding appraisers to an appraiser panel, or assigning appraisal reviews. The bill also requires AMCs to regularly review the work of appraisers performing appraisal services for the AMC to ensure they comply with the Uniform Standards of Professional Appraisal Practice.

6. The bill requires AMCs to compensate appraisers at a rate that is reasonable and customary, and establishes other requirements with respect to the payment and statement of fees by AMCs.

7. The bill establishes record-keeping requirements for AMCs and allows DSPS to audit those records.

8. The bill establishes requirements and prohibitions to ensure appraiser independence, consistent with federal law. The bill also establishes limitations on the removal of appraisers from AMC appraiser panels and allows DSPS to order reinstatement of an appraiser to an appraiser panel in certain cases.

9. The bill provides for discipline of AMCs by DSPS and the board, and requires DSPS to report violations of applicable laws to the federal Appraisal Subcommittee of the Federal Financial Institutions Examination Council.

10. The bill makes a violation of provisions established in the bill subject to a fine of not more than $10,000.

The bill also modifies provisions in current law pertaining to the regulation of appraisers to also reference AMCs. Finally, the bill removes from the Real Estate Appraisers Board one public member and replaces it with a controlling individual of an AMC.

The bill provides that the provisions in the bill do not apply if federal law is amended or repealed so as to allow AMCs that are not federally regulated AMCs to perform services related to a federally related transaction without being required to register with and be subject to supervision by a state appraiser certifying and licensing agency as required under the act.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB533,1 Section 1. 15.405 (10r) (a) 1m. of the statutes is created to read:

AB533,4,3 15.405 (10r) (a) 1m. One controlling individual, as defined in s. 458.31 (6). This subdivision does not apply if s. 458.48 applies.

AB533,2 Section 2. 15.405 (10r) (a) 3. of the statutes is amended to read:

AB533,4,6 15.405 (10r) (a) 3. Three Two public members or, if s. 458.48 applies, 3 public members.

AB533,3 Section 3. 20.165 (1) (g) of the statutes is amended to read:

AB533,5,2 20.165 (1) (g) General program operations. The amounts in the schedule for the licensing, rule making, and regulatory functions of the department, other than the licensing, rule-making, and credentialing functions of the medical examining board and the affiliated credentialing boards attached to the medical examining board and except for preparing, administering, and grading examinations. Ninety percent of all moneys received under chs. 440 to 480, except ch. 448 and ss. 440.03 (13), 440.05 (1) (b), 458.21, and 458.365, less $10 of each renewal fee received under s. 452.12 (5); all moneys transferred from the appropriation under par. (i); and all moneys received under s. 440.055 (2), shall be credited to this appropriation.

AB533,4 Section 4. 440.03 (9) (a) (intro.) of the statutes is amended to read:

AB533,5,7 440.03 (9) (a) (intro.) Subject to pars. (b) and (c) and s. 458.33 (2) (b) and (5), the department shall, biennially, determine each fee for an initial credential for which no examination is required, for a reciprocal credential, and for a credential renewal by doing all of the following:

AB533,5 Section 5. 440.03 (13) (b) 5s. of the statutes is created to read:

AB533,5,9 440.03 (13) (b) 5s. Appraisal management company.

AB533,6 Section 6. 440.08 (2) (a) 10m. of the statutes is created to read:

AB533,5,12 440.08 (2) (a) 10m. Appraisal management company: December 15 of each odd-numbered year.

AB533,7 Section 7. Subchapter I (title) of chapter 458 [precedes 458.01] of the statutes is created to read:

AB533,5,15 chapter 458

AB533,5,16 subchapter I

AB533,5,17 general provisions

AB533,8 Section 8. 458.01 (2m) of the statutes is created to read:

AB533,5,20 458.01 (2m) “Appraisal management company" has the meaning given in 12 CFR 34.211 (c).

AB533,9 Section 9 . 458.01 (3m) of the statutes is created to read:

AB533,5,23 458.01 (3m) “Appraisal subcommittee" has the meaning given in 12 USC 3350 (2).

AB533,10 Section 10. 458.03 (1) (c) of the statutes is amended to read:

AB533,6,3 458.03 (1) (c) Submit to the board a copy of any legislation proposed by the department relating to appraisers or appraisal management companies or to the board, prior to introduction in the legislature.

AB533,11 Section 11. 458.03 (1) (dm) of the statutes is created to read:

AB533,6,7 458.03 (1) (dm) Transmit the annual registry fees paid to the department under s. 458.365 to the federal financial institutions examination council or its successor agency.

AB533,12 Section 12. 458.03 (2) of the statutes is amended to read:

AB533,6,11 458.03 (2) The department may prepare letters and bulletins and conduct clinics disseminating information to appraisers and appraisal management companies.

AB533,13 Section 13. 458.03 (3) (a) of the statutes is amended to read:

AB533,6,14 458.03 (3) (a) Advise the secretary on matters relating to appraisers or appraisal management companies or to the board.

AB533,14 Section 14. 458.03 (3) (b) of the statutes is amended to read:

AB533,6,19 458.03 (3) (b) At least once each year, transmit to the appraisal subcommittee of the federal financial institutions examination council, or its successor agency, a roster listing the names and addresses of certified appraisers and licensed appraisers.

AB533,15 Section 15. 458.03 (3) (c) of the statutes is created to read:

AB533,6,24 458.03 (3) (c) Transmit reports to the appraisal subcommittee on a timely basis of supervisory activities involving appraisal management companies or other 3rd-party providers of appraisals and appraisal management services, as defined in s. 458.31 (2), including investigations initiated and disciplinary actions taken.

AB533,16 Section 16. 458.04 (3) of the statutes is created to read:

AB533,7,4 458.04 (3) (a) If the secretary creates an advisory committee under s. 15.04 (1) (c), other than an advisory committee under sub. (1), to provide advice to the department on matters relating to appraisal management companies, the advisory committee shall consist of the following members:

AB533,7,5 1. One controlling individual, as defined in s. 458.31 (6).

AB533,7,6 2. One public member.

AB533,7,8 3. One member of the board who is an appraiser, who shall serve as chairperson of the advisory committee.

AB533,7,10 (b) An advisory committee under par. (a) shall report to the secretary and the board.

AB533,17 Section 17. Subchapter II (title) of chapter 458 [precedes 458.055] of the statutes is created to read:

AB533,7,13 chapter 458

AB533,7,14 subchapter II

AB533,7,15 real estate appraisers

AB533,18 Section 18. 458.085 (1) of the statutes is amended to read:

AB533,7,18 458.085 (1) Educational requirements for general and residential appraiser certification and for appraiser licensure under this chapter subchapter.

AB533,19 Section 19. 458.085 (2) of the statutes is amended to read:

AB533,7,21 458.085 (2) Experience requirements for general and residential appraiser certification and for appraiser licensure under this chapter subchapter.

AB533,20 Section 20. 458.085 (3) of the statutes is amended to read:

AB533,7,24 458.085 (3) Continuing education requirements for renewal of certificates issued under this chapter subchapter.

AB533,21 Section 21. 458.095 (intro.) of the statutes is amended to read:

AB533,8,4 458.095 Temporary use of titles; appraisers certified or licensed in other states. (intro.) A certificate under this chapter subchapter is not required for an appraiser who holds a current appraiser certificate in another state if all of the following apply:

AB533,22 Section 22. 458.105 of the statutes is amended to read:

AB533,8,8 458.105 Certificate number. The department shall assign a certificate number to each individual who is certified or licensed under this chapter subchapter and shall place the number upon each certificate prior to its issuance.

AB533,23 Section 23. 458.13 of the statutes is amended to read:

AB533,8,14 458.13 Continuing education requirements. At the time of renewal of a certificate issued under this chapter subchapter, each applicant shall submit proof that, within the 2 years immediately preceding the date on which the renewal application is submitted, he or she has satisfied the continuing education requirements specified in the rules promulgated under s. 458.085 (3).

AB533,24 Section 24. 458.21 of the statutes is amended to read:

AB533,8,20 458.21 Appraisals in federally related transactions; annual registry fee required. Each certified appraiser or licensed appraiser who performs or desires to perform an appraisal in a federally related transaction shall pay to the department the annual registry fee required by the federal financial institutions examination council appraisal subcommittee or its successor agency.

AB533,25 Section 25. 458.26 (2) of the statutes is amended to read:

AB533,9,2 458.26 (2) The department shall present the findings of any investigation of an appraiser or an applicant for a certificate under this chapter subchapter to the board for its consideration. The department shall, upon motion of the board, and may, upon its own determination, commence disciplinary proceedings on any matter under investigation concerning a certified appraiser, licensed appraiser or applicant.

AB533,26 Section 26. 458.26 (3) (intro.) of the statutes is amended to read:

AB533,9,10 458.26 (3) (intro.) Disciplinary proceedings shall be conducted by the board according to the rules promulgated under s. 440.03 (1). The department may deny any certificate under this chapter subchapter, and the board may limit, suspend or revoke any certificate under this chapter subchapter or reprimand or impose additional continuing education requirements on the holder of a certificate under this chapter subchapter, if the department or board finds that the applicant for or holder of the certificate has done any of the following:

AB533,27 Section 27. 458.26 (3) (i) of the statutes is amended to read:

AB533,9,13 458.26 (3) (i) Violated this chapter subchapter or any rule promulgated under this chapter subchapter.

AB533,28 Section 28. 458.26 (4) of the statutes is amended to read:

AB533,9,19 458.26 (4) In addition to or in lieu of a reprimand or denial, limitation, suspension or revocation of a certificate under sub. (3), the board may assess against a certified appraiser, licensed appraiser or applicant for a certificate under this chapter subchapter a forfeiture of not less than $100 nor more than $1,000 for each violation enumerated under sub. (3).

AB533,29 Section 29. 458.30 of the statutes is amended to read:

AB533,9,23 458.30 Penalties. Any person who violates this chapter subchapter or any rule promulgated under this chapter subchapter may be fined not more than $1,000 or imprisoned for not more than 6 months or both.