Cal. Code Regs. Tit. 10, § 3577 - Minimum Standards of Practice for Appraisal Management Companies

All Appraisal Management Companies must ensure that they adhere to the following business practices when performing appraisal management services for properties located within the State of California:

(a) Appraisal Management Companies must adopt reasonable procedures designed to ensure that all appraisal assignments completed by its independent contractor or employee appraisers are performed in accordance with the Uniform Standards of Professional Appraisal Practice.

(b) Appraisal Management Companies must maintain records of each of the following for each service request for at least five years:

(1) Date of the receipt of the request;

(2) The name of the person from whom the request was received;

(3) The name of the client for whom the request was made, if different from the name of the person from whom the request was received;

(4) The name of the appraiser or appraisers assigned to perform the contracted service;

(5) The date of delivery of the appraisal product to the client;

(6) Client contract;

(7) Engagement letter; and

(8) The appraisal report.

(c) Appraisal Management Companies must maintain records of all appraisal fees dispersed to contracted appraisers and the final fee charged to the lender/client for at least five years.

(d) An Appraisal Management Company cannot prohibit a contracted appraiser/client from disclosing the fee paid to the appraiser/client for an appraisal assignment in the body of the appraisal report.

(e) No Appraisal Management Company shall improperly influence or attempt to improperly influence the development, reporting, result, or review of an appraisal report or review by engaging in coercion, extortion, inducement, collusion, bribery, intimidation, compensation, or instruction. In addition to the acts set forth in Business and Professions Code section 11345.4, prohibited acts include, but are not limited to, the following:

(1) Withholding or threatening to withhold the timely payment for a contracted appraisal assignment that is completed in accordance with the Uniform Standards of Professional Appraisal Practice and with contractual provisions as agreed to by the Appraisal Management Company and the appraisal contractor;

(2) Withholding or threatening to withhold future business with an appraisal contractor solely based on an appraisal result;

(3) Basing the appraisal fee for an appraisal assignment on a pre-determined value;

(4) Providing an appraiser with an anticipated, estimated, encouraged, or desired valuation before or after the completion of the appraisal report;

(5) Expressly or impliedly promising future business, promotions, or increased compensation for a contracted appraiser based on certain business practices not in compliance with the Uniform Standards of Professional Appraisal Practice.

(f) The Appraisal Management Company shall not base the payment of an appraisal fee on a mortgage-related event occurring subsequent to completion of the appraisal, i.e. close of escrow.

(g) The appraiser shall not be required to provide the Appraisal Management Company with the appraiser's digital signature.

(h) The Appraisal Management Company shall not alter, amend, or change an appraisal report submitted by a licensed or certified appraiser by removing the appraiser's signature or seal or by adding information to or removing information from the appraisal report.

(i) The Appraisal Management Company shall not remove an appraiser from their panel of approved appraisers without prior written notice. The notice shall state the reason(s) for the appraiser's removal.

(j) An Appraisal Management Company shall not be registered if the Appraisal Management Company, in whole or in part, directly or indirectly, 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 for a substantive cause. As used in this section, substantive cause is any cause included in section 372 l(a).

(k) An Appraisal Management Company is not barred by paragraph (j) of this section from being registered if the license or certificate of the appraiser with an ownership interest was not revoked for a substantive cause and has been reinstated by the State or States in which the appraiser was licensed or certified.

(l) All Appraisal Management Companies shall submit to the Bureau the Appraisal Management Company National Registry form REA 5030 (Rev. 1/1/19), which is hereby incorporated by reference, with payment of the national registry fee as determined by 12 C.F.R. section 1102.402 (Rev. 11/24/17) which is hereby incorporated by reference, and the Bureau's state processing fee. The form is due twelve months after the issue date of the initial registration or renewal on or after June 1, 2020, and every twelve months thereafter. Failure to submit form REA 5030 (Rev. 1/1/19) with payment to the Bureau within thirty days of the due date shall result in automatic suspension until the form REA 5030 (Rev. 1/1/19) is submitted with payment to the Bureau. Additionally, if an Appraisal Management Company fails to renew its registration before it expires and then seeks an initial registration, the Bureau cannot issue the registration until the Appraisal Management Company submits form REA 5030 (Rev. 1/1/19) with payment for the most recent 12 months the Appraisal Management Company was registered.

Notes

Cal. Code Regs. Tit. 10, § 3577

1. New section filed 1-21-2010 as an emergency; operative 1-21-2010 (Register 2010, No. 4). A Certificate of Compliance must be transmitted to OAL by 7-20-2010 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 7-21-2010 as an emergency; operative 7-21-2010 (Register 2010, No. 30). A Certificate of Compliance must be transmitted to OAL by 10-19-2010 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 10-18-2010 as an emergency; operative 10-18-2010 (Register 2010, No. 43). A Certificate of Compliance must be transmitted to OAL by 1-18-2011 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 10-18-2010 order, including amendment of section, transmitted to OAL 12-17-2010 and filed 1-31-2011 (Register 2011, No. 5).
5. Change without regulatory effect amending subsections (a) and (k) filed 2-11-2014 pursuant to section 100, title 1, California Code of Regulations (Register 2014, No. 7).
6. Amendment of subsection (f)(1) filed 9-29-2016; operative 9-29-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 40).
7. Amendment of section and NOTE filed 2-20-2019; operative 4-1-2019 (Register 2019, No. 8).
8. New subsections (j)-(l) and amendment of NOTE filed 11-18-2020; operative 11-18-2020 pursuant to Government Code section 11343.4(b)(3) (Register 2020, No. 47). (Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-66-20.)

Note: Authority cited: Sections 11313 and 11314, Business and Professions Code. Reference: Sections 11345.3, 11345.4, 11345.45, 11345.6 and 11345.8, Business and Professions Code; Section 1090.5, Civil Code; and 12 C.F.R. Sections 1102.402 and 1102.403.

1. New section filed 1-21-2010 as an emergency; operative 1-21-2010 (Register 2010, No. 4). A Certificate of Compliance must be transmitted to OAL by 7-20-2010 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 7-21-2010 as an emergency; operative 7-21-2010 (Register 2010, No. 30). A Certificate of Compliance must be transmitted to OAL by 10-19-2010 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 10-18-2010 as an emergency; operative 10-18-2010 (Register 2010, No. 43). A Certificate of Compliance must be transmitted to OAL by 1-18-2011 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 10-18-2010 order, including amendment of section, transmitted to OAL 12-17-2010 and filed 1-31-2011 (Register 2011, No. 5).
5. Change without regulatory effect amending subsections (a) and (k) filed 2-11-2014 pursuant to section 100, title 1, California Code of Regulations (Register 2014, No. 7).
6. Amendment of subsection (f)(1) filed 9-29-2016; operative 9/29/2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 40).
7. Amendment of section and Note filed 2-20-2019; operative 4/1/2019 (Register 2019, No. 8).
8. New subsections (j)-(l) and amendment of Note filed 11-18-2020; operative 11/18/2020 pursuant to Government Code section 11343.4(b)(3) (Register 2020, No. 47). (Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-66-20.)