HF 1439

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:50am

A bill for an act
relating to commerce; providing for the registration and regulation of appraisal
management companies; proposing coding for new law as Minnesota Statutes,
chapter 82C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [82C.01] TITLE.
new text end

new text begin This chapter shall be known as the Minnesota Appraisal Management Company
Registration and Regulation Act.
new text end

Sec. 2.

new text begin [82C.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin As used in this chapter, the terms in this section have the
meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Appraisal. new text end

new text begin "Appraisal" means the act or process of developing an opinion
of value of real property in conformance with the Uniform Standards of Professional
Appraisal Practice.
new text end

new text begin Subd. 3. new text end

new text begin Appraisal management company. new text end

new text begin "Appraisal management company"
means any corporation, partnership, sole proprietorship, subsidiary, unit, or other business
entity that:
new text end

new text begin (1) administers networks of independent contract appraisers to perform residential
real estate appraisal services for clients;
new text end

new text begin (2) receives requests for residential 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
new text end

new text begin (3) otherwise serves as a third-party broker of appraisal management services
between clients and appraisers.
new text end

new text begin Subd. 4. new text end

new text begin Appraisal management services. new text end

new text begin new text end new text begin "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.
new text end

new text begin Subd. 5. new text end

new text begin Appraiser. new text end

new text begin "Appraiser" means a person who provides an opinion of the
market value of real property.
new text end

new text begin Subd. 6. new text end

new text begin Appraiser fee schedule. new text end

new text begin "Appraiser fee schedule" means a list of the
various real estate appraisal services requested by an appraisal management company in
this state from independent appraisers and the amount that the appraisal management
company is willing to pay to an independent appraiser for the performance of each of the
listed real estate appraisal services.
new text end

new text begin Subd. 7. new text end

new text begin Appraiser panel. new text end

new text begin "Appraiser panel" means a group on independent
appraisers that have been selected by an appraisal management company to perform
residential real estate appraisal services for the appraisal management company.
new text end

new text begin Subd. 8. new text end

new text begin Client. new text end

new text begin "Client" means any person or entity that contracts with, or
otherwise enters into an agreement with, an appraisal management company for the
performance of residential real estate appraisal services.
new text end

new text begin Subd. 9. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 10. new text end

new text begin Controlling person. new text end

new text begin "Controlling person" means:
new text end

new text begin (1) an owner, officer, or director of a corporation, partnership, or other business
entity seeking to offer appraisal management services in this state;
new text end

new text begin (2) an individual employed, appointed, or authorized by an appraisal management
company that has the authority to enter into:
new text end

new text begin (i) a contractual relationship with clients for the performance of appraisal
management services; and
new text end

new text begin (ii) agreements with independent appraisers for the performance of residential real
estate appraisal services; or
new text end

new text begin (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.
new text end

Sec. 3.

new text begin [82C.03] REGISTRATION.
new text end

new text begin Subdivision 1. new text end

new text begin Requirement. new text end

new text begin It is unlawful for a person, corporation, partnership,
sole proprietorship, subsidiary, unit, 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 registration issued by the commissioner under the
provisions of this chapter, regardless of the entity's use of the term "appraisal management
company," "mortgage technology company," or any other name.
new text end

new text begin Subd. 2. new text end

new text begin Minimum information. new text end

new text begin The registration must, at a minimum, include
the following information:
new text end

new text begin (1) the name of the entity seeking registration;
new text end

new text begin (2) the business address of the entity seeking registration;
new text end

new text begin (3) phone contact information of the entity seeking registration;
new text end

new text begin (4) if the entity 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;
new text end

new text begin (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;
new text end

new text begin (6) the name, address, and contact information for a controlling person;
new text end

new text begin (7) a certification that the entity 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 in good standing in this state pursuant to chapter 82B if a license or certification is
required to perform appraisals pursuant to section 82C.13;
new text end

new text begin (8) a certification that the entity 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 the Uniform Standards of Professional Appraisal
Practice, pursuant to section 82C.14;
new text end

new text begin (9) a certification that the entity maintains a detailed record of each service request
that it receives and the independent appraiser that performs the residential real estate
appraisal services for the appraisal management company, pursuant to section 82C.15;
new text end

new text begin (10) an irrevocable Uniform Consent to Service of Process, pursuant to section
82C.07; and
new text end

new text begin (11) any other information required by the commissioner.
new text end

Sec. 4.

new text begin [82C.04] EXEMPTIONS.
new text end

new text begin This chapter does not apply to:
new text end

new text begin (1) a corporation, partnership, sole proprietorship, subsidiary, unit, or other business
entity that exclusively employes persons on an employer and employee basis for the
performance of residential real estate appraisal services in the normal course of its
business and the entity is responsible for ensuring that the residential real estate appraisal
services being performed by its employees are being performed in accordance with
Uniform Standards of Professional Appraisal Practice;
new text end

new text begin (2) an individual, corporation, partnership, sole proprietorship, subsidiary, unit, or
other business entity who in the normal course of business enters into an agreement,
whether written or otherwise, with another independent contractor appraiser for the
performance of residential real estate appraisal services that the hiring or contracting
appraiser cannot complete for any reason, including but not limited to competency, work
load, schedule, or geographic location;
new text end

new text begin (3) an individual, corporation, partnership, sole proprietorship, subsidiary, unit, or
other business entity who in the normal course of business enters into an agreement,
whether written or otherwise, with an independent contractor appraiser for the performance
of residential real estate appraisal services and upon the completion of the appraisal, the
report of the appraiser performing the residential real estate appraisal services is cosigned
by the appraiser who subcontracted with the independent appraiser for the performance of
the residential real estate appraisal services; and
new text end

new text begin (4) an appraisal management company that contracts with independent appraisers
for the performance of less than ten appraisals in this state in a calendar year.
new text end

Sec. 5.

new text begin [82C.05] FORMS.
new text end

new text begin An applicant for a registration as an appraisal management company in this state
shall submit to the commissioner an application on a form prescribed by the commissioner.
new text end

Sec. 6.

new text begin [82C.06] EXPIRATION OF REGISTRATION.
new text end

new text begin A registration granted by the commissioner pursuant to this chapter is valid for one
year from the date on which it is issued.
new text end

Sec. 7.

new text begin [82C.07] CONSENT TO SERVICE OF PROCESS.
new text end

new text begin Each entity applying for a registration as an appraisal management company in this
state shall complete an irrevocable Uniform Consent to Service of Process as prescribed
by the commissioner.
new text end

Sec. 8.

new text begin [82C.08] FEE.
new text end

new text begin The commissioner shall establish by rule the fee to be paid by each appraisal
management company seeking registration under this chapter, such that the sum of the
fees paid by all appraisal management companies seeking registration under this chapter is
sufficient for the administration of this chapter.
new text end

new text begin The fees shall be retained by the commissioner for managing this registration
program.
new text end

Sec. 9.

new text begin [82C.09] OWNER REQUIREMENTS.
new text end

new text begin (a) An appraisal management company applying for registration in this state may
not be more than ten percent owned by any person that has had a certificate or license
to act as an appraiser refused, denied, canceled, suspended, or revoked in this state or
in any other state.
new text end

new text begin (b) A person that owns more than ten percent of an appraisal management company
in this state shall:
new text end

new text begin (1) be of good moral character, as determined by the commissioner;
new text end

new text begin (2) submit to a background investigation, as determined by the commissioner; and
new text end

new text begin (3) certify to the commissioner that the person has never had a certificate or license
to act as an appraiser refused, denied, canceled, suspended, or revoked in this state or
in any other state.
new text end

Sec. 10.

new text begin [82C.10] CONTROLLING PERSON.
new text end

new text begin Subdivision 1. new text end

new text begin Designation. new text end

new text begin Each appraisal management company applying to
the commissioner for a registration in this state shall designate one controlling person
that will be the main contact for all communication between the commissioner and the
appraisal management company.
new text end

new text begin Subd. 2. new text end

new text begin Requirements. new text end

new text begin In order to serve as a controlling person of an appraisal
management company, a person must:
new text end

new text begin (1) certify to the commissioner that the person has never had a certificate or license
issued by the commissioner, or the commissioner of any other state, to act as an appraiser
refused, denied, canceled, or revoked;
new text end

new text begin (2) be of good moral character, as determined by the commissioner; and
new text end

new text begin (3) submit to a background investigation, as determined by the commissioner.
new text end

Sec. 11.

new text begin [82C.11] EMPLOYEE REQUIREMENTS.
new text end

new text begin (a) An employee of the appraisal management company, or a person working on
behalf of the appraisal management company, that has the responsibility of selecting
independent appraisers for the performance of residential real estate appraisal services
for the appraisal management company or to review completed appraisals must be
appropriately trained and qualified in the performance of residential real estate appraisals
as determined by the commissioner's rules.
new text end

new text begin (b) An employee of the appraisal management company that has the responsibility
to review the work of independent appraisers must have demonstrated knowledge
of the Uniform Standards of Professional Appraisal Practice, as determined by the
commissioner's rules.
new text end

Sec. 12.

new text begin [82C.12] LIMITATIONS.
new text end

new text begin An appraisal management company registered in this state pursuant to this chapter
may not enter into contracts or agreements with an independent appraiser for the
performance of residential real estate appraisal services unless that person is certified or
licensed in good standing pursuant to chapter 82B.
new text end

Sec. 13.

new text begin [82C.13] PRE-ENGAGEMENT CERTIFICATION.
new text end

new text begin An appraisal management company seeking to be registered in this state shall certify
to the commissioner on an annual basis on a form prescribed by the commissioner that the
appraisal management company 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
in good standing in this state pursuant to chapter 82B.
new text end

Sec. 14.

new text begin [82C.14] ADHERENCE TO STANDARDS.
new text end

new text begin An appraisal management company seeking to be registered in this state shall certify
to the commissioner on an annual basis that it 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 the Uniform Standards of Professional
Appraisal Practice.
new text end

Sec. 15.

new text begin [82C.15] RECORD KEEPING.
new text end

new text begin An appraisal management company seeking to be registered in this state shall certify
to the commissioner on an annual basis that it maintains a detailed record of each service
request that it receives and the independent appraiser that performs the residential real
estate appraisal services for the appraisal management company.
new text end

Sec. 16.

new text begin [82C.16] APPRAISER FEE SCHEDULE.
new text end

new text begin (a) An appraisal management company that applies for registration in this state shall
disclose to the commissioner as part of the registration process if it has developed or
used an appraiser fee schedule.
new text end

new text begin (b) An appraisal management company that applies for registration in this state and
which uses an appraiser fee schedule shall develop the appraiser fee schedule through one
or more surveys of the market rates being paid to independent fee appraisers in this state
for the performance of real estate appraisal services.
new text end

new text begin (c) The surveys performed pursuant to paragraph (b) must be performed using
statistically valid methodologies, techniques, and reliable data sources including
representative samples of independent fee appraisers.
new text end

new text begin (d) The commissioner may, in the commissioner's discretion, review any appraiser
fee schedule developed by an appraisal management company registered in this state to
ensure that the fee schedule was developed pursuant to the requirements of paragraphs
(b) and (c).
new text end

new text begin (e) Upon a formal request of the commissioner, an appraisal management company
that uses an appraiser fee schedule shall disclose to the commissioner the methodologies,
techniques, and data sources that were utilized to determine the amounts listed on the
schedules.
new text end

new text begin (f) Following a review of any fee schedule conducted pursuant to paragraphs (d)
and (e), the commissioner shall make the substantive results of the review available to
the public.
new text end

Sec. 17.

new text begin [82C.17] APPRAISER INDEPENDENCE; PROHIBITIONS.
new text end

new text begin (a) It is unlawful for any employee, director, officer, or agent of an appraisal
management company registered in this state pursuant to this chapter 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 but not limited to:
new text end

new text begin (1) withholding or threatening to withhold timely payment for an appraisal;
new text end

new text begin (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;
new text end

new text begin (3) expressly or impliedly promising future business, promotions, or increased
compensation for an independent appraiser;
new text end

new text begin (4) conditioning the request for an appraisal service of 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;
new text end

new text begin (5) requesting that an independent appraiser provide an estimated, predetermined, or
desired valuation in an appraisal report, or provide estimated values or comparable sales at
any time prior to the independent appraiser's completion of an appraisal service;
new text end

new text begin (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;
new text end

new text begin (7) providing to an independent appraiser, or any entity or person related to the
appraiser, stock or other financial or nonfinancial benefits;
new text end

new text begin (8) allowing the removal of an independent appraiser from an appraiser panel,
without prior written notice to the appraiser;
new text end

new text begin (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
the basis is clearly and appropriately noted in the loan file, or unless the appraisal or
automated valuation model is done pursuant to a bona fide prefunding or postfunding
appraisal review or quality control process; or
new text end

new text begin (10) any other act or practice that impairs or attempts to impair an appraiser's
independence, objectivity, or impartiality.
new text end

new text begin (b) Nothing in paragraph (a) prohibits the appraisal management company from
requesting that an independent appraiser:
new text end

new text begin (1) provide additional information about the basis for a valuation; or
new text end

new text begin (2) correct objective factual errors in an appraisal report.
new text end

Sec. 18.

new text begin [82C.18] GUARANTY OF PAYMENT.
new text end

new text begin An appraisal management company operating in this state 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
60 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.
new text end

Sec. 19.

new text begin [82C.19] ALTERATION OF APPRAISAL REPORTS.
new text end

new text begin An appraisal management company may not alter, modify, or otherwise change a
completed appraisal report submitted by an independent appraiser.
new text end

Sec. 20.

new text begin [82C.20] ADJUDICATION OF DISPUTES BETWEEN AN APPRAISAL
MANAGEMENT COMPANY AND AN INDEPENDENT APPRAISER.
new text end

new text begin (a) Except within the first 30 days after an independent appraiser is first added
to the appraiser panel of an appraisal management company, an appraisal management
company may not remove an appraiser from its appraiser panel, or otherwise refuse to
assign requests for real estate appraisal services to an independent appraiser without:
new text end

new text begin (1) notifying the appraiser in writing of the reasons why the appraiser is being
removed from the appraiser panel of the appraisal management company;
new text end

new text begin (2) if the appraiser is being removed from the panel for illegal conduct, violation of
the Uniform Standards of Professional Appraisal Practice, or a violation of state regulatory
standards, the nature of the alleged conduct or violation; and
new text end

new text begin (3) providing an opportunity for the appraiser to respond to the notification of the
appraisal management company.
new text end

new text begin (b) An appraiser that is removed from the appraiser panel of an appraisal
management company for alleged illegal conduct, violation of the Uniform Standards of
Professional Appraisal Practice, or violation of state regulatory standards, may file a
complaint with the commissioner for a review of the decision of the appraisal management
company, except that in no case shall the commissioner make any determination regarding
the nature of the business relationship between the appraiser and the appraisal management
company which is unrelated to the actions specified in paragraph (a).
new text end

new text begin (c) If an appraiser files a complaint against an appraisal management company
pursuant to paragraph (b), the commissioner shall adjudicate the complaint within 180
days.
new text end

new text begin (d) If, after an opportunity for hearing and review, the commissioner determines that
an appraiser did not commit a violation of law, a violation of the Uniform Standards
of Professional Appraisal Practice, or a violation of state regulatory standards, the
commissioner shall order that an appraiser be added to the appraiser panel of the appraisal
management company that was the subject of the complaint without prejudice.
new text end

new text begin (e) Following the adjudication of a complaint to the commissioner by an appraiser
against an appraisal management company, an appraisal management company may not
refuse to make assignments for real estate appraisal services to an appraiser, or reduce
the number of assignments, or otherwise penalize the appraiser, if the commissioner has
found that the appraisal management company acted improperly in removing the appraiser
from the appraiser panel.
new text end

Sec. 21.

new text begin [82C.21] ENFORCEMENT.
new text end

new text begin The commissioner may censure an appraisal management company, conditionally or
unconditionally suspend or revoke any registration issued under this chapter, levy fines, or
impose civil penalties not to exceed $25,000, if in the opinion of the commissioner an
appraisal management company is attempting to perform, has performed, or has attempted
to perform any of the following acts:
new text end

new text begin (1) committed any act in violation of this chapter;
new text end

new text begin (2) violated any rule adopted by the commissioner in the interest of the public and
consistent with the provision of this chapter; or
new text end

new text begin (3) procured a certificate or license for himself or herself or anyone else by fraud,
misrepresentation, or deceit.
new text end

Sec. 22.

new text begin [82C.22] DISCIPLINARY HEARINGS.
new text end

new text begin The conduct of adjudicatory proceedings in accordance with chapter 14 for
violations of this chapter is vested in the commissioner, such that:
new text end

new text begin (1) before censuring a registrant, or suspending or revoking a registration, the
commissioner shall notify the registrant in writing of any charges made at least 20 days
before the date set for the hearing and shall afford the registrant an opportunity to be heard
in person or by counsel;
new text end

new text begin (2) the written notice is 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
at the registrant's address on file with the commissioner;
new text end

new text begin (3) the hearing on the charges must be at a time and place prescribed by the
commissioner and in accordance with chapter 14; and
new text end

new text begin (4) the commissioner may make findings of fact and shall deliver or mail the findings
to the registrant charged with an offense under this chapter.
new text end

Sec. 23.

new text begin [82C.23] RULEMAKING AUTHORITY.
new text end

new text begin The commissioner may adopt rules consistent with the provisions of this chapter
which may be reasonably necessary to implement, administer, and enforce the provisions
of this chapter.
new text end