§ 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 will delegate appraisal assignments for completion only to independent contractor or employee appraisers that possess the licenses and certificates required by the Bureau.

(b) 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.

(c) Appraisal Management Companies must maintain records of each of the following for each service request:

(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; and

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

(d) Appraisal Management Companies must maintain records of all appraisal fees dispersed to contracted appraisers and the final fee charged to the lender/client.

(e) 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.

(f)(1) No Appraisal Management Company shall improperly influence or attempt to improperly influence the development of an appraisal report, review or consulting assignment by engaging in, without limitation, any of the following actions:

(A) 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;

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

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

(D) Attempting to influence the development of an appraisal assignment through coercion, extortion or bribery;

(E) 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;

(2) Subdivision (f)(1) of this Section does not prohibit an Appraisal Management Company or an individual with an interest in a real estate transaction from requesting an appraiser to:

(A) Consider additional appropriate property information including relevant sales comparables not considered in the initial appraisal report;

(B) Provide further detail, substantiation or explanation of the appraiser's conclusion of value; or

(C) Correct errors in the appraisal report.

(g) 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.

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

(i) 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 with an intent to change the value conclusion.

(j) The Appraisal Management Company shall not remove an independent appraiser from their panel of approved appraisers without prior written notice that includes evidence which supports the basis of fact that the appraiser has violated the Uniform Standards of Professional Appraisal Practice or other applicable appraisal regulations or state statutes, or evidence which demonstrates substandard performance, improper or unprofessional behavior, or other substantive deficiencies.

(k) An Appraisal Management Company shall notify the Bureau within 10 business days of any change to or addition of a Controlling Person of the company.

HISTORY

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).

Note

Note: Authority cited: Sections 11313 and 11314, Business and Professions Code. Reference: Sections 11345.4, 11345.45 and 11345.6, Business and Professions Code; and Section 1090.5, Civil Code.