FINAL BILL REPORT

ESHB 3040

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

C 179 L 10

Synopsis as Enacted

Brief Description: Regarding the licensing of appraisal management companies.

Sponsors: House Committee on Commerce & Labor (originally sponsored by Representatives Conway, Wood, Appleton, Rolfes, Sells, Sullivan and Finn).

House Committee on Commerce & Labor

House Committee on General Government Appropriations

Senate Committee on Labor, Commerce & Consumer Protection

Background:

An appraisal management company (AMC) is a business entity that administers a panel of appraisers to complete real estate appraisal assignments on behalf of other entities. An AMC's functions include recruiting appraisers, negotiating fees, and administering appraisal orders.

Real estate appraisers evaluate the value of real property. The Department of Licensing (Department) certifies and licenses real estate appraisers.

The Department regulates many businesses and professions under specific licensing laws. Each business and profession is under either the disciplinary authority of the Director of the Department, or a board or commission charged with regulating that particular profession. The Uniform Regulation of Business and Professions Act (URBPA) provides consolidated disciplinary procedures for these licensed businesses and professions.

Summary:

Licensing.

A person in business as an AMC or engaging in appraisal management services must obtain a license from the Department. The Department must adopt rules, adopt fees, carry out these provisions, and investigate violations.

"Appraisal management services" means to perform any of the following functions on behalf of a lender, financial institution, mortgage broker, loan originator, or any other person:

An "appraiser panel" is defined as a network of licensed or certified appraisers who are independent contractors of an AMC who perform appraisals through the AMC.

An application for licensure must include certain information about the entity and controlling persons, and certification that the entity:

Applicants must also maintain a surety bond of $25,000 with Washington as obligee. The AMC must include names under which it does business on any engagement document issued.

Owners.

A person that owns more than 10 percent of an AMC must be of good moral character and submit to a background investigation. An AMC may not be more than 10 percent owned by: a person who has had an appraiser's license or certificate denied, canceled, or revoked; or an entity that is more than 10 percent owned and directly controlled by a person who has had an appraiser's license or certificate denied, canceled, or revoked.

Controlling Persons.

An AMC is required to designate one controlling person to be the main contact for all communication with the Department and the AMC. A controlling person must be of good moral character and submit to a background investigation. A controlling person must never have been subject to an appraisal license or certificate denial or revocation or any other disciplinary action related to the license or certificate.

Appraisers.

An AMC may not employ or contract with an appraiser who has been:

Exemptions.

The provisions regulating an AMC do not apply to units within a financial institution that assign appraisal requests or to an appraiser that enters into an agreement with another appraiser for the performance of an appraisal.

Adjudication of Disputes Between an AMC and an Appraiser.

An AMC may not remove an appraiser from an appraiser panel without following certain procedures. The AMC must notify the appraiser of the reasons why the appraiser is being removed from the appraiser panel, including if the appraiser is being removed from the panel for illegal conduct, a violation of state licensing standards, substandard performance, or administrative purposes. If the appraiser is removed for alleged illegal conduct or a violation of state licensing provisions, the appraiser may file a complaint with the Department for a review of the decision. The Department may investigate the complaint. During the investigation, the appraiser remains removed from the appraiser panel.

If, after an opportunity for hearing and review, the Department determines that an appraiser did not commit a violation of law, the Department must order that an appraiser be restored to the appraiser panel without prejudice. Following such an order, an AMC may not refuse to make assignments to an appraiser, reduce the number of assignments, or otherwise penalize the appraiser in relation to the adjudicated complaint.

The Department may not make any determination regarding the nature of the business relationship between the appraiser and the AMC.

Disciplinary Actions.

In addition to unprofessional conduct described in the URBPA, the Department may take disciplinary action against an AMC for the following:

The URBPA also applies to regulation of the AMCs.

Votes on Final Passage:

House

98

0

Senate

45

2

(Senate amended)

House

94

0

(House concurred)

Effective:

July 1, 2011