Monday, July 18, 2011

Emergency Legislature passes!!!!

The appraisal industry has been in turmoil since 2008 and the sub-prime mortgage meltdown.  It’s literally been every 6-12 months some new legislature has been coming down the pike that has not always been in the best interest of the industry.  Let’s recap.

2008 saw a change in the testing procedure that appraisers get their certification through, which had not changed since 1991, making it even more difficult for new blood to enter the industry.  Then in 2009 we saw the abominable Home Valuation Code of Conduct (HVCC) policy rammed down the industry’s throat by the Attorney General of NY (who has ties to the AMC industry).  What was so bad about the HVCC was that lenders panicked and opened the door for Appraisal Management Companies (AMC) to run unchecked for the next two years.  Rock bottom fees for appraisers, increased rates to customers, poor quality control, extended underwriting times and black-listing were just some of the issues we have dealt with since this virus has infected our industry. 

Just imagine the entire building industry being cut off from its customer base so the builders don’t experience pressure from their clients to throw in an extra pantry or build a deck for free.  Not only that, but imaging the builders now having to go through a 3rd party company to access customers, and not be able to charge what their marginal cost is.  Now they are told they will build the house for “X” because if they don’t they will be black-listed.  Yes, there are appraisers who violated the foundation of appraising by not being independent, impartial and unbiased.  The answer is deal with the problem, and let the industry correct itself. 
2010 saw some light with states starting to pass legislature that regulated AMC’s, but nothing changed in KY as an attempt was made to pass a bill, but stalled.  We did see however the passage of the Frank-Dodd Legislature, which is the largest sweeping change in the financial industry since the Great Depression.  In a nutshell, the legislature creates new regulatory agencies to hopefully prevent taxpayer bailouts and the collapse of the financial industry.  Fortunately, a small part of this legislation addresses AMC’s and appraisal fees.  In 2011, we now have legislature passed in the Commonwealth that puts muscle behind the KY Real Estate Appraiser Board (KREAB) in relation to regulating the AMC’s that plan on doing business in Kentucky. 
More regulatory power is expected to be granted to the KREAB in late 2011 to further shore up the appraisal industry in our state.  Items such as: fees, mandatory payment periods, proper notification of removal from rosters, allowed communications to certain parties in the mortgage transaction, disclosed appraisal fees and no indemnification clauses are just a few of the items that are possibly coming. 
I enjoy being an appraiser, and the past few years have been hell, but those who stick it out, band together and do what is right will prevail. I have literally had to overhaul my customer base every year for the past 3 years, but hopefully the tide is turning.  As a member of the Kentucky Association of Real Estate Appraisers (KAREA) I want to thank all the folks in the background making this happen. 

On July 15, 2011 Kentucky Governor Steven L. Beshear signed a Statement of Emergency for 
administrative regulations 201 KAR 30:310 to collect the AMC Company registration fee, 30:320 require 
the surety bond for AMC company registration, and 30:330 complete the AMC company registration form.
The Executive Order grants the Kentucky Real Estate Appraisers Board only the authority referenced 
above, for purposes of beginning the registration of Appraisal Management Companies desiring to do business 
within the Commonwealth of Kentucky. 
All regulations, including those referenced above, must be presented to the Legislative Research Commission 
for review, and there must be a hearing before final approval is binding.     
The three administrative regulations does grant the Board the authority to immediately begin accepting registration, 
collect the fee of $3,500, and require acknowledgement of a surety bond secured by each company in the 
amount of $500,000. 
Registration will require the completion of each of the attached forms, and the forms with payment must be 
completed and returned to the Kentucky Real Estate Appraisers Board office at the address identified on each form. 

Although the statute requires renewal prior to October 1, registration from July 18, 2011 through 
September 30, 2012 shall not require renewal prior to October 1, 2012.
If anyone has questions, please contact:
Larry Disney
Executive Director
Kentucky Real Estate Appraisers Board

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