The appraisal management industry has been waiting for months and now they are here: the federal banking and finance regulatory agencies’ proposal of minimum standards for home appraisers and appraisal management companies.
The Dodd-Frank Act requires the just a few agencies – the Office Comptroller of the Currency, the Federal Reserve Bank, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau and the Federal Housing Finance Agency – to adopt standards for states to apply in their registration and supervision of home appraisers.
States have already adopted their own standards over the past four years, but this is national.
Some AMCs are welcoming of these new standards.
“The past three to four years have been very interesting, watching regulation percolate into our industry. The unfortunate fact is our industry deserves what we’ve gotten – we need this oversight,” says Roger Beane, CEO of LRES, a national residential and commercial financial services provider offering property valuations, asset management and technology solutions.
Beane said his company has spent a great deal of time and money on preparing for compliance. They’ve hired compliance monitors internally and have engaged a neutral, third-party company to monitor both changes in the rules and LRES’ compliance.
“We’ve taken this very seriously; we are very proactive to ensure we are endorsed,” Beane said.
The changes in regulations and the new federal standards will likely price some smaller AMCs out of the market, and the new education and experience requirements will make bringing in a new generation of AMCs a challenge, Beane said.
“I think it will be extremely difficult for smaller AMCs if they don’t have the infrastructure to know they are in compliance. It’s so new to our industry it’s vitally important to stay in compliance,” he said. “We recommend to all our peers that they have to do this. It’s the law now.”
“We’re still focused on making sure we are in compliance – it is expensive but it is necessary,” Beane said.
UPDATE: Headline has been changed from "Fed standards for AMCs will squeeze smaller appraisers" to "Fed standards will squeeze smaller AMCs"