South Carolina Enacts Appraisal Management Company Registration Act
On May 11, 2017, the Governor of South Carolina signed into law the South Carolina Appraisal Management Company Registration Act (“Act”) which requires appraisal management companies (“AMCs”) to register with the South Carolina Real Estate Appraisers Board. The Act became effective once it was approved by the Governor, but AMCs already conducting business in South Carolina may continue to conduct business until 120 days after a registration process becomes available.
The Act defines AMC to mean “an external third party, in connection with valuing properties, collateralizing mortgage loans, or incorporating mortgages into a securitization. The third party must be authorized either by a creditor of a consumer credit transaction secured by a consumer’s principal dwelling or by an underwriter or by other principal in the secondary mortgage markets that oversees a network or panel of more than 15 certified or licensed appraisers in a state or 25 or more nationally within a given year in order to: (a) require, select, and retain appraisers; (b) contract with licensed and certified appraisers to perform appraisal assignments; (c) manage the process of having an appraisal performed, including providing administrative duties such as receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for services provided, and reimbursing appraisers for services performed; or (d) review and verify the work of appraisers.”
The following do not have to register as an AMC under the Act: (1) an entity that exclusively employs appraisers; (2) a department within a supervised financial institution; (3) a person that enters into an agreement, whether written or otherwise, with an appraiser for the performance of an appraisal, and upon the completion of the appraisal, the report of the appraiser performing the appraisal is signed by both the appraiser who completed the appraisal and the appraiser who requested the appraisal; (4) an AMC with 15 or fewer appraisers within South Carolina or 24 or fewer appraisers who are independent contractors in two or more states; and (5) a subsidiary of a supervised financial institution.
An AMC applying for registration in South Carolina may not: (1) be owned by an appraiser who has had a license refused, denied, cancelled or surrendered in lieu of revocation by South Carolina or any other state unless the license was subsequently granted; or (2) be more than 10% owned by a person who is not of good moral character.
The Act requires AMCs to pay appraisers a “customary and reasonable” fee. Further, the Act deems influencing or attempting to influence the development, reporting, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, or bribery, among other things, unprofessional conduct.
