SENATE BILL 55
50th legislature - STATE OF NEW MEXICO - first session, 2011
INTRODUCED BY
Carlos R. Cisneros
AN ACT
RELATING TO REAL PROPERTY; AMENDING THE APPRAISAL MANAGEMENT COMPANY REGISTRATION ACT; AMENDING DEFINITIONS; ADDRESSING APPRAISER INDEPENDENCE; ADDRESSING EXEMPTIONS; CHANGING EMPLOYEE REQUIREMENTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 47-14-2 NMSA 1978 (being Laws 2009, Chapter 214, Section 2) is amended to read:
"47-14-2. DEFINITIONS.--As used in the Appraisal Management Company Registration Act:
A. "appraisal" means the act or process of developing an opinion of the value of real property in conformance with the uniform standards for professional appraisal practice [published] as developed by the appraisal foundation [B. "appraisal foundation" means the appraisal foundation incorporated as an Illinois], a not-for-profit corporation [on November 30, 1987 and] to which reference is made in the federal Financial Institutions [Examination Council Act of 1978, as amended by Title 11, Real Estate Appraisal Reform Amendments] Reform, Recovery, and Enforcement Act of 1989;
[C.] B. "appraisal management company" means [a corporation, partnership, sole proprietorship, subsidiary, limited liability company or other business entity that:
(1) contracts with independent appraisers to perform real estate appraisal services for clients;
(2) receives requests for real estate appraisal services from clients and, for a fee paid by the client, enters into an agreement with one or more independent appraisers to perform the real estate appraisal services contained in the request; or
(3) otherwise serves as a third-party broker of appraisal management services between clients and appraisers] an external third party that, within a calendar year and in connection with valuing properties that collateralize mortgage loans or mortgages incorporated into a securitization, oversees a network or panel of fifteen or more certified or licensed appraisers in New Mexico, or twenty-five or more certified or licensed appraisers nationally, and that is authorized either by the creditor in a consumer credit transaction secured by the consumer's principal dwelling or by an underwriter of or other principal in the secondary mortgage markets, to perform the following services:
(1) recruit, select and retain appraisers;
(2) contract with licensed and certified appraisers to perform appraisal assignments;
(3) manage the process of having an appraisal performed, including providing administrative duties such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for services provided and reimbursing appraisers for services performed; or
(4) review and verify the work of appraisers; [D.] C. "appraisal [management services" means the process of receiving a request for the performance of real estate appraisal services from a client, and for a fee paid by the client, entering into an agreement with one or more independent appraisers to perform the real estate appraisal services contained in the request] review" means the act or process of developing and communicating an opinion about the quality of another appraiser's work that was performed as part of an appraisal assignment, provided that a quality control examination of an appraisal that examines for compliance and completeness, or a review only for clerical errors, is not an "appraisal review";
[E.] D. "appraiser" means [a person who provides an opinion of the market value of real property] an individual who holds a license or certification as an appraiser and is expected to perform valuation services competently and in a manner that is independent, impartial and objective;
[F.] E. "appraiser panel" means a group of licensed or certified independent appraisers that [have] has been selected [by an appraisal management company] to perform real estate appraisal services for [the appraisal management company] a third party;
[G.] F. "board" means the real estate appraisers board created pursuant to the Real Estate Appraisers Act;
[H. "client" means a person or entity that contracts with, or otherwise enters into an agreement with, an appraisal management company for the performance of real estate appraisal services;
I.] G. "controlling person" means:
(1) an owner of more than a ten percent interest in, or an officer or director of, a corporation, partnership, limited liability company or other business entity seeking to [offer] act as an appraisal management [services] company in this state;
(2) an individual employed, appointed or authorized by an appraisal management company, [that] who has the authority to enter into a contractual relationship with [clients] other persons for the performance of [appraisal management] services required to be performed by a registered appraisal management company and that has the authority to enter into agreements with [independent] appraisers for the performance of [real estate appraisal services] appraisals; or
(3) an individual who possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of an appraisal management company;
[J. "real estate appraisal services" means the practice of developing an opinion of the value of real property in conformance with the uniform standards of professional appraisal practice published by the appraisal foundation;] and
[K.] H. "uniform standards of professional appraisal practice" means the [uniform standards of professional appraisal practice promulgated by the appraisal foundation and adopted by rule pursuant to the Real Estate Appraisers Act] current standards of the appraisal profession developed for appraisers and users of appraisal services by the appraisal standards board of the appraisal foundation, a not-for-profit corporation to which reference is made in the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989."
SECTION 2. Section 47-14-3 NMSA 1978 (being Laws 2009, Chapter 214, Section 3, as amended) 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 in 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 of the independent appraiser that performs the real estate appraisal services for the appraisal management company;
(10) an irrevocable consent to service of process;
(11) a bond or other equivalent means of security as required by the Appraisal Management Company Registration Act; [and]
(12) a certification that the entity has a system in place to require that appraisals are conducted independently and free from inappropriate influence and coercion, as required by the appraisal independence standards established in Section 129E of the federal Truth in Lending Act (2010), including the requirements for payment of a reasonable and customary fee to appraisers when the appraisal management company is providing services for a consumer credit transaction secured by the principal dwelling of a consumer; and
[(12)] (13) any other information required by the board."
SECTION 3. Section 47-14-4 NMSA 1978 (being Laws 2009, Chapter 214, Section 4) is amended to read:
"47-14-4. EXEMPTIONS.--The Appraisal Management Company Registration Act is not applicable to:
A. a corporation, partnership, sole proprietorship, subsidiary, limited liability company or other business entity that employs persons on an employer and employee basis exclusively for the performance of real estate appraisal services in the normal course of its business and [the entity is responsible for ensuring] that maintains a bond in an amount equal to the bond required for a registered appraisal management company to ensure that the real estate appraisal services being performed by its employees are being performed in accordance with uniform standards of professional appraisal practice. The bond shall be provided to the board on an annual basis with a form attesting to the compliance with this section and exemption from the Appraisal Management Company Registration Act;
[B. an individual who in the normal course of the individual's business enters into an agreement, whether written or otherwise, with another independent contractor appraiser for the performance of real estate appraisal services that the hiring or contracting appraiser cannot complete for any reason, including competency, work load, schedule or geographic location; or
C.] B. an individual, corporation, partnership, sole proprietorship, subsidiary, limited liability company or other business entity that in the normal course of business enters into an agreement, whether written or otherwise, with an independent contractor appraiser for the performance of real estate appraisal services and upon the completion of the appraisal, the report of the appraiser performing the real estate appraisal services is co-signed by the appraiser who [subcontracted] entered into the agreement with the independent appraiser for the performance of the real estate appraisal services; or
C. an appraisal management company that is owned and controlled by a federally regulated lender."
SECTION 4. Section 47-14-12 NMSA 1978 (being Laws 2009, Chapter 214, Section 12, as amended) is amended to read:
"47-14-12. EMPLOYEE REQUIREMENTS.--
A. [Any] An employee of [the] an appraisal management company or [any] a person working on behalf of [the] an 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] who has 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] An employee of the appraisal management company [that] who has the responsibility to [review] conduct appraisal reviews of 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 5. Section 47-14-17 NMSA 1978 (being Laws 2009, Chapter 214, Section 17) is amended to read:
"47-14-17. APPRAISER INDEPENDENCE--PROHIBITIONS.--
A. It is unlawful for any employee, director, officer or agent of an appraisal management company registered pursuant to the Appraisal Management Company Registration Act to influence or attempt to influence the development, reporting or review of an appraisal through coercion, extortion, collusion, [compensation, instruction] inducement, intimidation, bribery or in any other manner, including:
(1) withholding or threatening to withhold timely payment for an appraisal, unless that appraisal is found to be substandard or not complying with the conditions of engagement;
(2) withholding or threatening to withhold future business for an independent appraiser or demoting or terminating, or threatening to demote or terminate, an independent appraiser;
(3) expressly or [impliedly] implicitly promising future business, promotions or increased compensation for an independent appraiser;
(4) conditioning the request for an appraisal service or the payment of an appraisal fee or salary or bonus on the opinion, conclusion or valuation to be reached or on a preliminary estimate or opinion requested from an independent appraiser;
(5) requesting that an independent appraiser provide an estimated, predetermined or desired valuation in an appraisal report or provide estimated values of comparable sales at any time prior to the independent appraiser's completion of an appraisal service;
(6) providing to an independent appraiser an anticipated, estimated, encouraged or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided;
(7) providing to an independent appraiser, or any entity or person related to the appraiser, stock or other financial or non-financial benefits;
(8) allowing the removal of an independent appraiser from an appraiser panel, without prior written notice to such appraiser;
[(9) obtaining, using or paying for a second or subsequent appraisal or ordering an automated valuation model in connection with a mortgage financing transaction unless there is a reasonable basis to believe that the initial appraisal was flawed or tainted and such basis is clearly and appropriately noted in the loan file, or unless such appraisal or automated valuation model is done pursuant to a bona fide pre- or post-funding appraisal review or quality control process;] or
[(10)] (9) engaging in any other act or practice that impairs or attempts to impair an appraiser's independence, objectivity or impartiality.
B. Nothing in Subsection A of this section shall be construed as prohibiting the appraisal management company from requesting that an independent appraiser:
(1) provide additional information about the basis for a valuation; or
(2) correct objective factual errors in an appraisal report."
SECTION 6. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2011.
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