Standards of Practice for Appraisal Management Companies - Florida Rule

The regulation of Appraisal Management Companies became law in Florida July 1, 2011. There were efforts to delay implementation of the law, and additional amendments enacted in 2012 clarified a few points and definitions related to Appraisal Management Companies. The most important 2012 amendments covered Discipline of Appraisal Management Companies. Those became law October 1, 2012.

Shortly after October 1, 2012, the Florida Real Estate Appraisal Board started drafting a rule to implement the new amendments. The effort was spearheaded by FREAB member Mike Rogers. The meetings, attended by individuals representing appraisers and appraisal management companies, were often contentious. Although there was give and take, the appraiser members of FREAB stood fast, and some important provisions were included in the new rule, 61J1-9.002 - Standards of practice for Appraisal Management Companies; Development and Communication of Real Estate Appraisals.

There are over 180 AMCs registered in Florida. The rule is effective June 26, 2013. The full text of the rule is at the link above, and after the jump in this post. Here are a few highlights:

(1) Upon issuance of a registration number by the Department, an appraisal management company shall disclose its issued registration number on each solicitation for engagement and each engagement letter utilized in assigning an appraisal request for real estate appraisal assignments in Florida.

(3) Before or at the time an appraiser accepts an assignment, the appraisal management company shall require the appraiser to declare in writing or via electronic means that the appraiser receiving the assignment is a competent appraiser for the performance of the appraisal being assigned.

(4) An appraisal management company must include instructions to appraisers in letters of engagement to decline the assignment in the event the appraiser is not geographically competent or the assignment falls outside the appraiser’s scope of practice restrictions.

(5) An appraisal management company cannot:

 (a) Require that an appraiser prepare an appraisal if the appraiser, in the appraiser’s own independent professional judgment believes that she or he does not have the necessary expertise for the assignment or for the specific geographic area and has notified the appraisal management company and declined the assignment;

(b) Require that an appraiser prepare an appraisal within a time frame that the appraiser, in the appraiser’s own professional judgment believes does not afford he or she the ability to meet all the relevant legal and professional obligations, and the appraiser has notified the appraisal management company and declined the assignment; or

(c) Require that an appraiser provide the appraisal management company with the appraiser’s digital signature or seal.

(9) Each solicitation for engagement by an appraisal management company for an appraiser’s services must include the following items:

 (a) The name of the AMC; (b) Appraisal management company’s registration number; (c) If the assignment is retrospective the effective date must be provided; (d) The specific intended use; (e) Type of value; (f) A description of the reporting level expected; (g) The identification of the subject to include the property address, county, property type and property rights as requested by the client; (h) Point of contact for discussion of conditions and scope of work; (i) Other assignment conditions; (j) The expected delivery date; and (k) The terms of payment to the appraiser unless otherwise in a contract.

Full text after the jump.

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Florida Appraisers - Rule Amendment: Supervision and Training or Trainee Appraisers

For the past several meetings the Florida Real Estate Appraisal Board has been discussing amendments to rules, and language for new rules to implement the sections of Chapter 475, Part II relating to Appraisal Management Companies. The AMC rules are still in the works, but the FREAB has finalized their language for 61J1-4.010 Supervision and Training of Registered Trainee Appraisers. The new language has an effective date of June 3, 2013.

Some of the changes are significant, and Florida Appraisers involved in the supervision of Registered Trainee Appraisers should be aware of some new responsibilities.

1. Licensed Appraisers are no longer permitted to supervise Registered Trainee Appraisers. Only Certified Residential Appraisers and Certified General Appraisers may supervise.
2. Supervisory Appraisers must accept "full and complete" responsibility for "any research, data collection, development, analysis, or communication of any appraisal review or the appraisal report by signing and certifying the report is in compliance with USPAP."
3. The Supervisory Appraiser must personally inspect each appraised property with the trainee "for a minimum of the first twelve months of the registered trainee's initial registration, and thereafter" until the trainee is competent in accordance with the Competency Rule of USPAP.
4. A Registered Trainee Appraiser "may not sign an appraisal certification within the first twelve months of his or her registration as a trainee appraiser."
5. A Supervisory Appraiser must included the following statement in any report in which the registered trainee appraiser contributed to the development of the appraisal or the writing of the appraisal report:

I, the supervisory appraiser of a registered appraiser trainee who contributed to the development or communication of this appraisal, hereby accepts full and complete responsibility for any work performed by the registered appraise trainee named in this report as if it were my own work.

Many Supervisory Appraisers must make some drastic changes to their practice to assure compliance with the requirements of the rule. At the very least, each and every appraisal completed with the assistance of a Registered Trainee Appraiser must have the paragraph above to acknowledge responsibility for the work of the trainee.

By all means, take the time necessary to read, understand, and implement the rule.

Full version at this LINK.

AMC - Proposed FREAB Rules

The Florida Real Estate Appraisal Board met February 4th and 5th, 2013. Their agenda included a number of items of interest, including the docket of cases to be considered by the board, licensee counts, proposals for new rules and amendments to existing rules.

Two are extremely important to Florida appraisers:

61J1-4.010 - Supervision and Training of Registered Trainee Appraisers

61J1-9.002 - Standards of Professional Practice for Appraisal Management Companies; Development and Communications of Real Estate Appraisals

61J1 - 9.002 is a brand new rule, and is being proposed to implement amendments made to Chapter 475 Part II related to the regulation of Appraisal Management Companies. This rule is a work in progress and IS NOT final. The PRELIMINARY text is reproduced after the jump. Although changes were made to the document below during the meeting, it's important to take a look at what they're working on.

The photograph accompanying this post is of Michael J. Rogers, MAI, SRA. Mike is a past Chairman and current member of the Florida Real Estate Appraisal Board. He is a State-Certified General Appraiser, and the principal of Rogers Valuation and Acquisition, Inc. in Pensacola, Florida. Although Mike is not involved with appraisal management companies, he has taken the lead to develop and fine tune the Standards of Practice for Appraisal Management Companies. It's his goal to ensure appraiser independence is preserved and that appraisal management companies comply with clearly  defined standards of practice.

Although others on the board support these initiatives, Mike could use some support and suggestions to ensure the standards of practice are meaningful, and actually make it through the rules making process. 

See the proposal after the jump.

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Florida Real Estate Appraisal Board - New Rule to Regulate Signatures

Effective as of December 20, 2011, there is a new Rule that updates signature requirements on an appraisal report and certification. This new rule, 61J1-7.0065 Signatures on Appraisal Report and Certification, was adopted by the Florida Real Estate Appraisal Board (FREAB) to comply with a recent amendment to Chapter 475, Part II. The amendment, adding 475.614(2) requires the FREAB to adopt to include requirements for protecting the security of an appraiser’s signature and prohibiting practices that may discredit the use of an appraiser’s signature to authenticate the work performed by the appraiser.

Here's the way it reads:

61J1-7.0065 Signatures on Appraisal Report and Certification.



(1) Each appraiser signing a certification of an appraisal report must sign the certification with the name that the licensee has registered with the Department. A signature may be represented by a handwritten mark or a digitized image controlled by a personal identification number, password, or other security feature. A facsimile signature may be either affixed by hand or electronically by computer software. An appraiser shall at all times maintain direct control of the appraiser’s signature.

(2) An appraiser shall develop and maintain a written method by which his or her signature shall be affixed, for its security protection and the prohibition of practices that might discredit its use.

(3) An appraiser shall not grant blanket authority to another to affix the appraiser’s signature to an appraisal report or other work performed by the appraiser. Any grant of permission to another to affix an appraiser’s signature to an appraisal report or other work performed by the appraiser shall meet the following requirements:

(a) Be in writing;

(b) Extend only to one specific appraisal report; and

(c) Be maintained in the appraiser’s work file.

Rulemaking Authority 475.614 FS. Law Implemented 475.613(2), 475.614 FS. History–New 12-4-06, Amended 12-20-11.

It might be wise to keep this rule in mind and ready for quick reference when some folks (like those mentioned in THIS post) attempt to require you to upload a copy of your digital signature.

Ken Harney Weighs in on the FRB Interim Final Rule (TILA Section of Dodd-Frank)

If there is one national columnist with his ear close to the ground and regularly checking the pulse of the real estate and real estate appraisal professions, it's Ken Harney, of the Washington Post. In his latest column, Ken examines the Interim Final Rule released by the Board of Governors of the Federal Reserve System. The rule provides the implementation language for Appraiser Independence standards and Customary and Reasonable Fee requirements included in the Dodd-Frank Act amendments to the Truth in Lending Act (TILA).

Ken interviews a few appraisers, including Pat Turner (VA), Leslie Sellers (President of the Appraisal Institute) and yours truly. Although none of us talked with each other prior to the interview, it looks like we share the same concerns. Consumers, borrowers, and real estate agents should be concerned as well.

So what sort of changes are you likely to see? Experienced appraisers say probably not enough, at least in the proposal's current form.

"It's just a rehash of the [code]," says Pat Turner, a Richmond area appraiser and critic of the Fannie-Freddie rules.

Leslie Sellers, president of the 26,000-member Appraisal Institute, a professional group based in Chicago, says the Fed's proposals include important core principles of freedom from coercion and outside influence on valuations but don't lessen the current system's tilt toward cut-rate fees and short turnaround times over appraisal quality.

Frank Gregoire, past chairman of the Florida Real Estate Appraisal Board and incoming chairman of the National Association of Realtors' appraisal committee, says that "until the federal banking agencies decide to enforce some of the words they're putting on paper, the public can expect business as usual."

There's more, so please CLICK HERE and read the whole thing.

I've got more to say, but it's Friday night, and my wife, Fran, and I are headed out for some seafood ;-)

Appraisal Associations Comment on Dodd-Frank Rulemaking

Back in August, shortly after the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, Appraiser Active commented on the rule making. Quite a few individuals have commented, along with some associations, like TAVMA.

Here is a copy of the comment letter submitted by the appraiser professional associations. It's certainly comprehensive, and provides some ideas for your comments.

Joint Letter to Federal Reserve TILA Appraisal Provisions

Dodd-Frank Wall Street Reform and Consumer Protection Act - Now, the Rules

In support of one of my observations about H.R. 4173, Dodd-Frank Wall Street Reform and Consumer Protection Act, the following quote from an editorial in today's New York Times is offered:

Read the whole thing.

The Federal Reserve must now translate the legislative language into rules that will govern how brokers, lenders, appraisers and investors behave from now on. Given the Fed’s long history of putting the financial industry first and consumer protection second, Congress will need to keep a close eye on the rule-making process.

The expectation that Congress will "keep a close eye" on anything is a stretch, however. WE must keep a close eye on the rule-making.

Although the FED will be writing the interim rules, all the Federal Banking Regulatory Agencies will be participating in the final rules. The FDIC has issued a statement announcing an "Open Door Policy for Regulatory Reform Rule-making." Time to subscribe to their emails and notices.