North Providence, RI (PRWEB) March 12, 2013
George Panichas (Chairman and CEO of Lincoln Appraisal) and George K. Demopulos, RA, SRA (President and Chief Valuations Officer of Lincoln Appraisal) offered testimony in their capacities as President and Vice President of the National Association of Appraisal Management Companies (NAAMC) before the House Committee on Insurance and Real Estate for the State of Connecticut last month on two proposed amendments to Appraisal Management Company regulations.
Specific proposed changes to AMC regulation addressed before the House Committee were: 1) increasing the surety bond requirement for AMCs to $1,000,000, and, 2) a reduction from 60 days to a 30-day payment cycle for payments from AMCs to their independent contractor appraiser partners.
1) $1,000,000 SURETY BOND REQUIREMENT
The proposed amendment in (HB 5637) regarding an AMC’s surety bond states, “...that the general statutes be amended to require appraisal management companies engaged in business in this state to post a bond payable to the Department of Consumer Protection of not less than one million dollars to reimburse certified or licensed appraisers for services rendered to but not paid by such companies...” NAAMC argued that the $1,000,000 surety bond requirement was unfair compared to other states’ bond requirements, which average $20,000 to $25,000. NAAMC respectfully suggested that the bond requirement of $1,000,000 proposed by the State of Connecticut would result in higher costs for mortgages which would be passed on to the Connecticut consumer.
Panichas and Demopulos pointed out that a business typically pays 1 to 3 percent of the face value of the bond to obtain a bond, and that as there are currently 141 licensed AMCs in the State of Connecticut, that the proposed legislation would mean at least $1.4 million in increased costs for AMCs doing business in Connecticut. NAAMC’s comments focused on the unintended consequence of fewer AMCs doing business in Connecticut and the Connecticut consumer having restricted access to mortgage providers, as well as their having to pay more for an appraisal report.
NAAMC respectfully requested that the Bond amount for the State of Connecticut remain unchanged in an amount not to exceed $25,000.
2) REDUCTION FROM A 60-DAY PAYMENT CYCLE TO A 30-DAY PAYMENT CYCLE FOR INDEPENDENT CONTRACTOR APPRAISERS
NAAMC offered testimony regarding a second proposed regulatory amendment contained in (HB 5638) regarding payment schedules from an AMC to their independent fee appraiser partner “...that chapter 400g of the general statute be amended to decrease the time frame for payment by an appraisal management company to an appraiser for an appraisal or valuation assignment from sixty days to thirty days...” It was noted that work agreements between AMCs and Independent Contractors are contractually defined, and that the AMC and Independent Contractor Appraiser enter into a Service Level Agreement (SLA) which contractually obligates both the Appraiser and the AMC to meet fee for service obligations. The proposed legislation offered no protections to an AMC regarding receipt of payments from their lender clients. Under the proposed legislation, NAAMC pointed out that an AMC would be forced to pay an Independent Appraiser within 30 days, while an AMC does not typically receive payment for 60 days or more.
NAAMC executives George Panichas and George K. Demopulos, RA, SRA of Lincoln Appraisal stated that the proposed payment cycle reduction will make it more difficult for AMCs to work in the State of Connecticut. They predicted that a reduction in the number of AMCs who can afford to work in Connecticut would decrease availability of business partners to those institutions who use AMCs to insure consumer protections in the form of appraiser independence which were mandated by Dodd-Frank.
It was therefore respectfully suggested that a reduction to a 30-day payment cycle would be unduly burdensome to the AMC industry and that the payment schedule should be retained at 60 days.
ABOUT THE NATIONAL ASSOCIATION OF APPRAISAL MANAGEMENT COMPANIES (NAAMC)
The first Trade Organization devoted to the Appraisal Management Industry and its related sectors, the National Association of Appraisal Management Companies (NAAMC) is a vehicle that benefits all of its members through cooperative efforts in areas of governmental affairs, ensuring a united voice with individual concern. NAAMC combines various levels of education, experience and business segments working towards a common goal of conducting business with integrity, acting as mentors and insuring all entities receive equal benefits. Membership in NAAMC is open to all entities involved in the Valuation Industry including; but not limited to, Appraisers, Lenders, and Vendor partners. For more information about NAAMC visit http://www.naamc.org.
ABOUT LINCOLN APPRAISAL & SETTLEMENT SERVICES
Founded in 1998, Lincoln Appraisal & Settlement Services is a national Appraisal Management (AMC) and Settlement Services Company. Lincoln Appraisal provides a full suite of residential, commercial, and specialized appraisal services to the real estate industry throughout the United States and Puerto Rico. Additional information can be obtained by visiting http://www.LincolnAppraisal.com.