SENATE JUDICIARY COMMITTEE SUBSTITUTE FOR
SENATE BILL 138
49th legislature - STATE OF NEW MEXICO - second session, 2010
AN ACT
RELATING TO APPRAISAL MANAGEMENT COMPANIES; AMENDING PROCEDURES FOR DISCIPLINARY PROCEEDINGS; CLARIFYING THE RIGHTS AND OBLIGATIONS OF APPRAISERS AND APPRAISAL MANAGEMENT COMPANIES WITH REGARD TO LIABILITY, FEES AND DISCLOSURE; REQUIRING SURETY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 47-14-1 NMSA 1978 (being Laws 2009, Chapter 214, Section 1) is amended to read:
"47-14-1. SHORT TITLE.--[Sections 1 through 23 of this act] Chapter 47, Article 14 NMSA 1978 may be cited as the "Appraisal Management Company Registration Act"."
Section 2. Section 47-14-3 NMSA 1978 (being Laws 2009, Chapter 214, Section 3) is amended to read:
"47-14-3. REGISTRATION REQUIRED.--
A. It is unlawful for a person, corporation, partnership, sole proprietorship, subsidiary, limited liability company or any other business entity to directly or indirectly engage or attempt to engage in business as an appraisal management company, to directly or indirectly engage or attempt to perform appraisal management services or to advertise or hold itself out as engaging in or conducting business as an appraisal management company without first obtaining a certificate of registration issued by the board under the provisions of the Appraisal Management Company Registration Act, regardless of the entity's use of the term "appraisal management company", "mortgage technology company" or any other name.
B. The registration required by Subsection A of this section shall include:
(1) the name of the entity seeking registration;
(2) the business address of the entity seeking registration;
(3) telephone contact information of the entity seeking registration;
(4) if the entity seeking registration is not a corporation that is domiciled in this state, the name and contact information for the company's agent for service of process in this state;
(5) the name, address and contact information for any individual or any corporation, partnership or other business entity that owns ten percent or more of the appraisal management company;
(6) the name, address and contact information for a controlling person;
(7) a certification that the entity seeking registration has a system and process in place to verify that a person being added to the appraiser panel of the appraisal management company holds a license or certification in good standing in this state pursuant to the Real Estate Appraisers Act;
(8) a certification that the entity seeking registration has a system in place to review the work of all independent appraisers that are performing real estate appraisal services for the appraisal management company on a periodic basis to ensure that the real estate appraisal services are being conducted in accordance with uniform standards of professional appraisal practice;
(9) a certification that the entity maintains a detailed record of each service request that it receives and the independent appraiser that performs the real estate appraisal services for the appraisal management company;
(10) an irrevocable consent to service of process; [and]
(11) a bond or other equivalent means of security as required by the Appraisal Management Company Registration Act; and
[(11)] (12) any other information required by the board."
Section 3. Section 47-14-12 NMSA 1978 (being Laws 2009, Chapter 214, Section 12) is amended to read:
"47-14-12. EMPLOYEE REQUIREMENTS.--
A. Any employee of the appraisal management company, or any person working on behalf of the appraisal management company, that has the responsibility of selecting independent appraisers for the performance of real estate appraisal services for the appraisal management company or the responsibility of reviewing completed appraisals shall have geographic and product competence and be appropriately trained and qualified in the performance of real estate appraisals as determined by the board by rule.
B. Any employee of the appraisal management company that has the responsibility to review the work of independent appraisers shall have demonstrated knowledge of the uniform standards of professional appraisal practice, as determined by the board by rule."
Section 4. Section 47-14-13 NMSA 1978 (being Laws 2009, Chapter 214, Section 13) is amended to read:
"47-14-13. [LIMITATIONS] REQUIREMENTS--LIABILITY.--
A. An appraisal management company registered in this state pursuant to the Appraisal Management Company Registration Act [may] shall not enter into contracts or agreements with an independent appraiser for the performance of real estate appraisal services unless that person is licensed or certified in good standing pursuant to the Real Estate Appraisers Act.
B. An appraisal management company shall not include a hold harmless provision in a contract with an appraiser or require the appraiser to indemnify the appraisal management company against liability."
Section 5. Section 47-14-18 NMSA 1978 (being Laws 2009, Chapter 214, Section 18) is amended to read:
"47-14-18. PAYMENT--LIMITS--DISCLOSURE--NONTAXABLE TRANSACTION CERTIFICATE.--
A. An appraisal management company shall compensate appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.
B. The fees paid to an appraiser for completion of the appraisal shall not include a fee for management of the appraisal process or any activity other than the performance of the appraisal.
C. An appraisal management company shall separately state the fees paid to an appraiser for appraisal services and the fees charged by the appraisal management company for services associated with the management of the appraisal process, including procurement of the appraiser's services to the client, borrower and any other payor.
D. Appraisers shall not be prohibited by the appraisal management company, client or other third party from disclosing the fee paid to the appraiser for the performance of the appraisal in the appraisal report.
E. As used in this section:
(1) "payor" means any person or entity who is responsible for making payment for the appraisal; and
(2) "customary and reasonable" means a rate that is most consistent with that of appraisers for a given category of appraisal charged by the majority of appraisers with similar training and experience providing services within the same geographical area.
[A. Each] F. An appraisal management company shall, except in cases of breach of contract or substandard performance of services, make payment to an independent appraiser for the completion of an appraisal or valuation assignment within sixty days of the date on which the independent appraiser transmits or otherwise provides the completed appraisal or valuation study to the appraisal management company or its assignee.
[B.] G. An appraisal management company shall provide an appraiser with the appropriate nontaxable transaction certificate pursuant to Section 7-9-48 NMSA 1978."
Section 6. Section 47-14-22 NMSA 1978 (being Laws 2009, Chapter 214, Section 22) is amended to read:
"47-14-22. DISCIPLINARY HEARINGS.--The board [may] shall conduct adjudicatory proceedings in accordance with the [Administrative Procedures] Uniform Licensing Act; provided that:
[A. before censuring any registrant, or suspending or revoking any registration, the board shall notify the registrant in writing of any charges made at least twenty days prior to the date set for the hearing and shall afford the registrant an opportunity to be heard in person or by counsel;
B. the] A. a written notice shall be satisfied by personal service on the controlling person of the registrant or the registrant's agent for service of process in this state or by sending the notice by certified mail, return receipt requested, to the controlling person of the registrant to the registrant's address on file with the board; and
[C. the] B. a hearing on the charges shall be at a time and place prescribed by the board [and
D. the board may make findings of fact and shall deliver or mail such findings to the registrant charged with an offense under the Appraisal Management Company Registration Act]."
Section 7. A new section of the Appraisal Management Company Registration Act is enacted to read:
"[NEW MATERIAL] BONDING REQUIREMENTS.--
A. In order to qualify for registration or renewal of registration, an appraisal management company shall maintain a bond underwritten by a corporate surety authorized to transact business in New Mexico, or other equivalent means of security. The board shall set by rule the amount and conditions of the surety bond or other equivalent means of security required by this section, provided that the amount of the bond or security required shall not exceed twenty-five thousand dollars ($25,000).
B. The bond or other equivalent means of surety shall secure payment for any administrative or judicial penalties that may be imposed by the board or the state and for any penalties or costs required by a board disciplinary action, and also as indemnity for any loss sustained by any person damaged as a result of a violation by the appraisal management company, of any provision of the Appraisal Management Company Registration Act or of any rule of the board adopted pursuant to that act. Consumer claims shall be given priority in recovering from the bond or equivalent surety.
C. An appraisal management company shall notify the board in writing of any claim made on the appraisal management company's bond or equivalent surety.
D. A deposit of cash or security may be accepted in lieu of the surety bond."
Section 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2010.
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