Bill Text: NY S08050 | 2017-2018 | General Assembly | Amended


Bill Title: Relates to the registration of real estate appraisal management companies or an individual or business entity that provides appraisal management services to creditors or to secondary mortgage market participants including affiliates by the department of state.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2018-06-08 - PRINT NUMBER 8050A [S08050 Detail]

Download: New_York-2017-S08050-Amended.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                         8050--A
                    IN SENATE
                                     March 22, 2018
                                       ___________
        Introduced by Sens. HAMILTON, LITTLE -- (at request of the Department of
          State)  --  read  twice  and  ordered  printed, and when printed to be
          committed to the Committee on Finance --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee
        AN ACT to amend the executive law, in relation to registration  of  real
          estate appraisal management companies by the department of state
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. The executive law is amended by adding a new article 6-H to
     2  read as follows:
     3                                 ARTICLE 6-H
     4                 REAL ESTATE APPRAISAL MANAGEMENT COMPANIES
     5  Section 160-aaaa. Definitions.
     6          160-bbbb. Registration required.
     7          160-cccc. Exemptions.
     8          160-dddd. Forms.
     9          160-eeee. Denial of registration.
    10          160-ffff. Expiration of license.
    11          160-gggg. Fees.
    12          160-hhhh. Owner requirements.
    13          160-iiii. Controlling persons.
    14          160-jjjj. Employee requirements.
    15          160-kkkk. Restrictions.
    16          160-llll. Recordkeeping.
    17          160-mmmm. Appraiser independence; unlawful acts.
    18          160-nnnn. Mandatory reporting.
    19          160-oooo. Unprofessional conduct.
    20          160-pppp. Alteration of appraisal reports.
    21          160-qqqq. Enforcement.
    22          160-rrrr. Disciplinary hearings.
    23          160-ssss. Power to suspend a license.
    24          160-tttt. Investigation.
    25          160-uuuu. Rule-making authority.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14549-04-8

        S. 8050--A                          2
     1          160-vvvv. Violations.
     2          160-wwww. Severability.
     3          160-xxxx. Judicial review.
     4    §  160-aaaa. Definitions. As used in this article, the following terms
     5  shall have the following meanings:
     6    1. "Appraisal" or "real estate appraisal" means an  analysis,  opinion
     7  or conclusion relating to the nature, quality, value or utility of spec-
     8  ified  interests in, or aspects of, identified real estate. An appraisal
     9  may be classified by subject matter into either a valuation or an analy-
    10  sis.
    11    2. "Appraisal management company" or  "AMC"  means  an  individual  or
    12  business entity that:
    13    (a)  provides appraisal management services to creditors or to second-
    14  ary mortgage market participants, including affiliates;
    15    (b) provides such services in connection  with  valuing  a  consumer's
    16  real  property as security for consumer credit transactions secured by a
    17  consumer's principal dwelling; and
    18    (c) within a given year, oversees an  appraisal  panel  of  more  than
    19  fifteen  appraisers  working  in  New  York state or twenty-five or more
    20  appraisers working in two or more states.  An AMC shall  not  include  a
    21  department  or  division of an entity that provides appraisal management
    22  services only to that entity.
    23    3. "Appraisal management services" means to, directly  or  indirectly,
    24  provide  any  of the following services on behalf of a lender, financial
    25  institution, client, or any other person in connection  with  valuing  a
    26  consumer's  principal  dwelling as security for a consumer credit trans-
    27  action or incorporating such transactions into securitizations:
    28    (a) administer an appraiser panel;
    29    (b) recruit, retain or select appraisers;
    30    (c) qualify or verify licensing or certification  and  negotiate  fees
    31  and service level expectations with persons who are part of an appraiser
    32  panel;
    33    (d) contract with appraisers to perform appraisal assignments;
    34    (e) receive an order for an appraisal from one person, and deliver the
    35  order  for  the  appraisal  to an appraiser that is part of an appraiser
    36  panel for completion;
    37    (f) manage the process of having  an  appraisal  performed,  including
    38  providing  administrative duties, such as receiving appraisal orders and
    39  reports, submitting completed appraisal reports to creditors and  under-
    40  writers  for  services provided, and reimbursing appraisers for services
    41  performed;
    42    (g) track and determine the status of orders for appraisals;
    43    (h) conduct quality control of a  completed  appraisal  prior  to  the
    44  delivery of the appraisal to the person that ordered the appraisal;
    45    (i)  provide a completed appraisal performed by an appraiser to one or
    46  more clients; or
    47    (j) compensate appraisers for services rendered.
    48    An individual who hires  an  appraiser  solely  for  his  or  her  own
    49  purposes, shall not be deemed an appraisal management company.
    50    4.  "Appraiser" means a person licensed or certified pursuant to arti-
    51  cle six-E of this chapter.
    52    5. "Appraiser panel" means a network, list or roster  of  licensed  or
    53  certified  appraisers  approved  by  the appraisal management company to
    54  perform appraisals as independent contractors of the  appraisal  manage-
    55  ment company.

        S. 8050--A                          3
     1    6.  "Appraisal  review"  means  the  act  or process of developing and
     2  communicating an opinion about the quality of another  appraiser's  work
     3  that was performed as part of an appraisal assignment. Appraisal reviews
     4  must  be  performed  by  a  person  who  is  certified  as a real estate
     5  appraiser pursuant to article six-E of this chapter.
     6    7.  "Board" means the state board of real estate appraisal which shall
     7  advise the department, as necessary, on implementation of, and  enforce-
     8  ment of this article.
     9    8.  "Competent  appraiser"  means  an  appraiser  that  satisfies each
    10  provision of the competency rule of the  uniform  standards  of  profes-
    11  sional  appraisal  practice for a specific appraisal assignment or valu-
    12  ation service that the appraiser has received, or may receive,  from  an
    13  appraisal management company.
    14    9. "Controlling person" means:
    15    (a)  an owner, officer or director of an appraisal management company,
    16  or an individual who holds an ownership interest of ten percent or  more
    17  of such company;
    18    (b)  an  individual  employed, appointed or authorized by an appraisal
    19  management company that has the authority to enter  into  a  contractual
    20  relationship with other persons for the performance of appraisal manage-
    21  ment  services  and  has  the  authority  to  enter into agreements with
    22  appraisers for the performance of appraisals; or
    23    (c) an individual who possesses, directly or indirectly, the power  to
    24  direct  or  cause  the  direction  of  the  management or policies of an
    25  appraisal management company.
    26    10. "Department" means the New York state department of state.
    27    11. "Hybrid firm or entity" means  an  entity  that  hires  both  real
    28  estate  appraisers  as employees to perform appraisals of real property,
    29  and engage independent contractors to perform such appraisals. A  hybrid
    30  firm  or  entity shall be treated as an AMC for purposes of state regis-
    31  tration if it oversees more than fifteen real estate appraisers complet-
    32  ing valuation services in an individual state  or  twenty-five  or  more
    33  real  estate  appraisers  in two or more states within a given year. The
    34  numerical calculation for a hybrid firm or entity  should  only  include
    35  real estate appraisers engaged as independent contractors.
    36    12.  "Person"  means  an  individual, partnership, corporation, or any
    37  other entity recognized under New York state law.
    38    13. "Real estate" means an identified parcel or tract of land, includ-
    39  ing improvements, if any.
    40    14. "Real property" means the interest, benefits, and rights  inherent
    41  in the ownership of real estate.
    42    15.  "Uniform standards of professional appraisal practice" or "USPAP"
    43  means the appraisal standards promulgated  by  the  appraisal  standards
    44  board of the appraisal foundation.
    45    16.  "Secondary  mortgage  market  participant"  means  a guarantor or
    46  insurer of mortgage-backed securities, or an underwriter  or  issuer  of
    47  mortgage-backed  securities.  Secondary mortgage market participant only
    48  includes an individual investor in a mortgage-backed  security  if  that
    49  investor also serves in the capacity of a guarantor, insurer, underwrit-
    50  er, or issuer for such mortgage-backed security.
    51    §  160-bbbb.  Registration required. It shall be unlawful for a person
    52  to, directly or indirectly, engage or attempt to engage in  business  as
    53  an  appraisal management company, or to advertise or hold oneself out as
    54  engaging in or conducting business as an  appraisal  management  company
    55  without  first  obtaining  a  certificate  of registration issued by the
    56  department under the provisions of this article.

        S. 8050--A                          4
     1    § 160-cccc. Exemptions. The provisions of this article shall not apply
     2  to any person that exclusively employs appraisers for the performance of
     3  appraisals or to any appraisal management company that is a wholly-owned
     4  subsidiary of a financial institution, which is regulated by the federal
     5  financial  institution regulatory agency. The registration provisions of
     6  this article shall not apply to the state, any state agency or  authori-
     7  ty, or any political subdivision of the state that employs appraisers.
     8    §  160-dddd.  Forms. An applicant for a certificate of registration as
     9  an appraisal management company shall  submit  an  application  on  such
    10  forms as prescribed by the department.
    11    § 160-eeee. Denial of registration. The department may investigate the
    12  good  character  of  applicants  for a certificate of registration under
    13  this article and may deny the issuance of such certificate of  registra-
    14  tion  based  upon  lack  of good character which may include, but is not
    15  limited to, any of the grounds enumerated in this article.
    16    § 160-ffff. Expiration  of  license.  A  certificate  of  registration
    17  granted  by the department pursuant to this article shall be valid for a
    18  period of two years from the date upon which it is issued.
    19    § 160-gggg. Fees. 1. The department shall collect a fee of two hundred
    20  fifty dollars for a certificate of registration issued or reissued under
    21  the provisions of  this  article.  Additionally,  the  department  shall
    22  assess  twenty-five  dollars  for  each  appraiser added to an appraisal
    23  management company's appraiser panel.
    24    2. The department shall collect from each appraisal management company
    25  seeking to be registered, the amount determined by the appraisal subcom-
    26  mittee to be a national registry fee for each appraiser,  that  performs
    27  appraisal  services  within  New  York  on  the  appraiser  panel  of an
    28  appraisal management company  pursuant  to  Section  1109(a)(4)  of  the
    29  federal  Financial Institutions Reform, Recovery, and Enforcement Act of
    30  1989 as amended by  the  Dodd-Frank  Wall  Street  Reform  and  Consumer
    31  Protection  Act of 2010. The department may transmit the annual registry
    32  fee to the appraisal subcommittee.  The  department  shall  provide  its
    33  roster  of appraisal management companies to the appraisal subcommittee.
    34  These transmittals shall occur at least annually.
    35    3. Except for changes made on a renewal application, appraisal manage-
    36  ment companies shall provide the department with notice of a  change  in
    37  the  appraisal management's principal address. Change of address notifi-
    38  cations shall be accompanied by a fee of ten dollars.
    39    4. Except for changes made on a renewal  application,  the  department
    40  shall  collect a fee of ten dollars for changing a name on a certificate
    41  of registration.
    42    5. In lieu of the fee set forth in subdivision one  of  this  section,
    43  the  department  shall  collect  a fee of three hundred fifty dollars to
    44  reissue a certificate of  registration  under  this  article  which  was
    45  submitted after the expiration of the immediately preceding registration
    46  term.
    47    § 160-hhhh. Owner requirements. An appraisal management company apply-
    48  ing  for a certificate of registration shall not be owned in whole or in
    49  part, directly or indirectly, by a person who has had a license,  regis-
    50  tration  or  certificate  to  act  as  a  real  estate appraiser denied,
    51  revoked, or surrendered in lieu of pending discipline in any state or by
    52  a person holding ten percent or more of the company  where  that  person
    53  has  had  a license, registration or certificate to act as a real estate
    54  appraiser denied, revoked, or surrendered in lieu of possible discipline
    55  in any state.   For the purposes  of  this  section,  a  non-substantive

        S. 8050--A                          5
     1  ground  for  denial,  revocation, or surrender of an appraiser's license
     2  should not be construed as an automatic prohibition.
     3    §  160-iiii. Controlling persons. 1. Each appraisal management company
     4  applying for a certificate of registration shall designate one  control-
     5  ling  person who shall be the main contact for all communication between
     6  the department and the appraisal  management  company.  Such  designated
     7  controlling  person shall never have had a license or certificate to act
     8  as an appraiser denied, revoked, or  surrendered  in  lieu  of  possible
     9  discipline  in any state and shall be of good moral character, as deter-
    10  mined by the department. Applicants shall cooperate with any such  back-
    11  ground investigation conducted by the department.
    12    2. Each person that owns more than ten percent of an appraisal manage-
    13  ment  company  shall  be  of  good moral character, as determined by the
    14  department.  Applicants shall cooperate with any such background  inves-
    15  tigation conducted by the department.
    16    3.  Each  appraisal  management  company applying for a certificate of
    17  registration shall certify to the department that it has  reviewed  each
    18  entity  that  owns  more  than  ten  percent of the appraisal management
    19  company and that no entity that  owns  more  than  ten  percent  of  the
    20  appraisal  management  company  is  more  than  ten percent owned by any
    21  person that has had a license or certificate  to  act  as  an  appraiser
    22  refused, denied, cancelled, revoked, or surrendered in lieu of a pending
    23  revocation.
    24    §  160-jjjj. Employee requirements. 1. An appraisal management company
    25  that applies for a  certificate  of  registration  shall  not  knowingly
    26  employ,  utilize,  or  engage,  for any real estate appraisal, valuation
    27  service or appraisal review assignment, a person who has had  a  license
    28  or  certificate  to  act  as  an appraiser in this state or in any other
    29  state denied, revoked, or surrendered in lieu  of  possible  discipline,
    30  unless such license has been reinstated.
    31    2.  Prior  to  placing  an  assignment  for  an appraisal or valuation
    32  service with an appraiser on the appraiser panel of an appraisal manage-
    33  ment company, the appraisal management company  shall  verify  that  the
    34  appraiser  receiving  the assignment is a competent appraiser as defined
    35  by the USPAP Competency Rule with regards to  geographic  area  and  the
    36  type  of  property  being  appraised.  An appraiser is deemed part of an
    37  appraisal management company panel as of the earliest date on which: (a)
    38  the appraisal management company accepts the appraiser for consideration
    39  for future appraisal assignments in covered transactions or for  second-
    40  ary  mortgage  market  participants  in  connection  with covered trans-
    41  actions; or (b) engages the appraiser to perform one or more  appraisals
    42  on  behalf of a creditor for a covered transaction or secondary mortgage
    43  market participant in connection with covered transactions.
    44    3. An appraisal management company may not hire, employ or engage,  or
    45  in  any  way contract with or pay a person who is not licensed or certi-
    46  fied as a real estate appraiser by the department  pursuant  to  article
    47  six-E  of this chapter, unless the work being performed is a comparative
    48  market analysis for the purpose of or intention to  list  or  sell  real
    49  estate.
    50    4.  An  appraiser  shall be considered part of an appraisal management
    51  company's appraiser panel until: (a) the  appraisal  management  company
    52  sends a written notice to such appraiser removing such appraiser with an
    53  explanation; or (b) receives a written notice from such appraiser asking
    54  to be removed or of the death or incapacity of such appraiser.
    55    § 160-kkkk. Restrictions. An appraisal management company that applies
    56  for a certificate of registration shall not knowingly:

        S. 8050--A                          6
     1    1. Employ any person in a position in which the person has the respon-
     2  sibility  to  order  appraisals  or  valuation  services  or  to  review
     3  completed appraisals who has had a license, registration or  certificate
     4  to  act  as  an  appraiser in this state or in any other state, refused,
     5  denied,  cancelled, revoked, or surrendered in lieu of a pending revoca-
     6  tion, unless such license has been reinstated;
     7    2. Enter into  any  independent  contractor  arrangement,  whether  in
     8  verbal,  written,  or  by  other  form,  with  any  person who has had a
     9  license, registration or certificate to act  as  an  appraiser  in  this
    10  state  or  in  any  other state, refused, denied, cancelled, revoked, or
    11  surrendered in lieu of a pending revocation,  unless  such  license  has
    12  been reinstated; and
    13    3. Enter into any contract, agreement, or other business relationship,
    14  whether in verbal, written, or other form, with any entity that employs,
    15  has  entered  into  an  independent contract arrangement, or has entered
    16  into any contract, agreement, or other business relationship, whether in
    17  verbal, written, or any other form, with any person who has ever  had  a
    18  license,  registration  or  certificate  to  act as an appraiser in this
    19  state or in any other state, refused,  denied,  cancelled,  revoked,  or
    20  surrendered  in  lieu  of  a pending revocation, unless such license has
    21  been reinstated.
    22    § 160-llll. Recordkeeping. Each  appraisal  management  company  shall
    23  maintain  a detailed record of each service request that it receives and
    24  the real estate appraiser that performs such appraisal for the appraisal
    25  management company. Records shall be maintained for a period of at least
    26  five years after such appraisal is completed or two  years  after  final
    27  disposition  of a judicial proceeding related to such assignment, which-
    28  ever period expires later.   Appraisal management companies  shall  make
    29  records  available to the department upon request.  Appraisal management
    30  companies shall also allow the  department  to  examine  the  books  and
    31  records  of  the  appraisal  management company and require it to submit
    32  reports, information and documents upon request.   Appraisal  management
    33  companies  shall also allow the department to verify that the appraisers
    34  on such panel hold a valid license or certification.
    35    § 160-mmmm. Appraiser  independence;  unlawful  acts.  Each  appraisal
    36  management   company  shall  ensure  that  real  estate  appraisals  are
    37  conducted independently and free from inappropriate influence and  coer-
    38  cion.  Notwithstanding  any other provision of this article, it shall be
    39  unlawful for any employee, director, officer, or agent of  an  appraisal
    40  management company registered in this state pursuant to this article to:
    41    1.  Compensate,  coerce,  extort, collude, instruct, induce, bribe, or
    42  intimidate, or attempt to compensate, coerce, extort, collude, instruct,
    43  induce, bribe, or intimidate a person, firm or other  entity  conducting
    44  or  involved  in  an  appraisal for the purpose of causing the appraised
    45  value assigned under the appraisal or other valuation  services  to  the
    46  property  to  be based on any factor other than the independent judgment
    47  of the appraiser;
    48    2. Mischaracterize the appraised value of a  property  in  conjunction
    49  with a consumer credit transaction;
    50    3. Seek to influence an appraiser or otherwise to encourage a targeted
    51  value  in order to facilitate the making or pricing of a consumer credit
    52  transaction;
    53    4. Act without just cause to withhold or threaten to  withhold  timely
    54  payment for an appraisal report or for other valuation services rendered
    55  with  such  appraisal report or services provided in accordance with the
    56  contract between parties;

        S. 8050--A                          7
     1    5. Act without just cause to withhold or threaten to  withhold  future
     2  business, or to demote or terminate an appraiser without just cause;
     3    6.  Expressly  or  implicitly  promise future business, promotions, or
     4  increased compensation for an appraiser in exchange for the real  estate
     5  appraiser  inflating  or  deflating  his  or her appraised value of real
     6  property;
     7    7. Require a real estate appraiser to indemnify an  appraisal  manage-
     8  ment  company  or  hold an appraisal management company harmless for any
     9  liability, damage,  losses,  or  claims  arising  out  of  the  services
    10  performed  by  such  appraisal  management company, and not the services
    11  performed by the appraiser;
    12    8. Condition the request for an appraisal or the payment of an  earned
    13  fee,  salary  or  bonus,  on the opinion, conclusion, or valuation to be
    14  reached, or on a preliminary  estimate  or  opinion  requested  from  an
    15  appraiser;
    16    9.  Request  that an appraiser provide an estimated, predetermined, or
    17  desired valuation in an appraisal report, or provide estimated values or
    18  comparable sales at any time prior to the appraiser's completion  of  an
    19  appraisal;
    20    10.  Provide to an appraiser an anticipated, estimated, encouraged, or
    21  desired value for a subject property or a proposed or target  amount  to
    22  be  loaned to the borrower, except that a copy of the sales contract for
    23  purchase transactions may be provided; or
    24    11. Provide to an appraiser, or any entity or person  related  to  the
    25  appraiser,  stock  or  any  other financial or non-financial benefits in
    26  exchange for appraising property in a manner other than  that  which  is
    27  within the independent opinion of the appraiser.
    28    Nothing  in  this  section  shall  be  construed  as  prohibiting  the
    29  appraisal management company from asking an appraiser to consider  addi-
    30  tional,  appropriate property information, including:  additional compa-
    31  rable properties to  make  or  support  an  appraisal;  provide  further
    32  detail, substantiation, or explanation for the appraiser's value conclu-
    33  sion; or correct errors in the appraisal report.
    34    §  160-nnnn. Mandatory reporting. An appraisal management company that
    35  has a reasonable basis to believe  an  appraiser  within  the  appraisal
    36  management  company's  appraisal  panel  is  failing  to comply with the
    37  uniform standards  of  professional  appraisal  practice,  is  violating
    38  applicable laws, or is otherwise engaging in unethical or unprofessional
    39  conduct shall immediately refer such matter to the department.
    40    §  160-oooo. Unprofessional conduct. 1. Appraisal management companies
    41  shall not engage in unprofessional conduct including, but not limited to
    42  the following:
    43    (a) Requiring an appraiser to modify any aspect of an appraisal report
    44  or valuation service report, unless such modifications  are  appropriate
    45  according to USPAP;
    46    (b) Requiring an appraiser to prepare an appraisal report or valuation
    47  service  report  if  such  appraiser,  in  their  professional judgment,
    48  believes they don't  have  the  necessary  expertise  for  the  specific
    49  geographic and or specific area type;
    50    (c) Requiring an appraiser to prepare an appraisal report or valuation
    51  service  under  a  time  frame  that  such  appraiser believes, in their
    52  professional judgment, does not afford such  appraiser  the  ability  to
    53  meet all the relevant legal and professional obligations including USPAP
    54  requirements.  Notwithstanding  the  foregoing  provisions of this para-
    55  graph, all appraisal reports should be  completed  within  a  reasonable

        S. 8050--A                          8
     1  timeframe   and   appraisers  may  not  unnecessarily  delay  completing
     2  appraisal assignments;
     3    (d)  Prohibiting or inhibiting communication between the appraiser and
     4  the lender, a real estate licensee, or any other person from  whom  such
     5  appraiser, in their professional judgment is relevant;
     6    (e)  Requiring  the appraiser to do anything that does not comply with
     7  USPAP, or any assignment conditions and certifications required  by  the
     8  client;
     9    (f) Making any portion of the appraiser's fee or the appraisal manage-
    10  ment  company's  fee contingent upon a favorable outcome, including, but
    11  not limited to, the closing of  a  loan,  requiring  a  specific  dollar
    12  amount  be  achieved  by  such appraiser in the appraisal report, making
    13  requests for the purpose of facilitating a  mortgage  loan  transaction,
    14  setting a broker price opinion, or setting any other real property price
    15  or value estimation that does not qualify as an appraisal; or
    16    (g)  Each  appraisal  management company operating in this state shall
    17  make payment to an appraiser for the completion of an appraisal or valu-
    18  ation assignment within thirty days of the date on which such  appraiser
    19  transmits  or  otherwise  provides  the completed appraisal or valuation
    20  services to the appraisal management company or its assignee;
    21    2. It shall be unlawful for an appraisal management company to:
    22    (a) Knowingly fail to compensate  an  appraiser  at  a  rate  that  is
    23  reasonable and customary for appraisal or other valuation services being
    24  performed in the market area of the property being appraised without the
    25  services  of  an appraisal management company in a manner that is either
    26  inconsistent with, or would violate section 1639(e) of the federal Truth
    27  in Lending Act (15 USC §1639(e));
    28    (b) Knowingly include any fees for appraisal management services  that
    29  are  performed by the appraisal management company for a lender, client,
    30  or other person in the amount that it charges  the  lender,  client,  or
    31  other  person  for  the  actual  completion of an appraisal or valuation
    32  service by an appraiser that is part  of  the  appraiser  panel  of  the
    33  appraisal management company;
    34    (c) Knowingly fail to separate any and all fees charged to a client by
    35  the  appraisal  management  company  for  the  actual  completion  of an
    36  appraisal by an appraiser from the fees charged to a lender, client,  or
    37  any  other  person  by  an  appraisal  management  company for appraisal
    38  management services;
    39    (d) Knowingly prohibit an appraiser from recording the fee  that  such
    40  appraiser  was paid by the appraisal management company for the perform-
    41  ance of the appraisal within the appraisal report that is  submitted  by
    42  such appraiser to the appraisal management company;
    43    (e)  Knowingly  fail to separately state the fees paid to an appraiser
    44  for appraisal services and the fees charged by the appraisal  management
    45  company  for  services  associated  with the management of the appraisal
    46  process to the client, borrower and any other payer.  Appraisal  manage-
    47  ment  companies  shall  provide a copy of the appraiser's invoice with a
    48  copy of any appraisal report submitted to a client or a client's  repre-
    49  sentative;
    50    (f)  Allow the removal from rotation of an appraiser from an appraiser
    51  panel, without prior written notice to such appraiser with  just  cause;
    52  or
    53    (g)  Obtain,  use,  or pay for a second or subsequent appraisal or the
    54  ordering of an automated valuation model or any other valuation  service
    55  in  connection  with  a mortgage financing transaction unless there is a
    56  reasonable basis to believe that the initial  appraisal  was  flawed  or

        S. 8050--A                          9
     1  tainted  and  such  basis is clearly and appropriately noted in the loan
     2  file, or unless such appraisal or  automated  valuation  model  is  done
     3  pursuant to a bona fide pre- or post-funding appraisal review or quality
     4  control  process.  Nothing  in this paragraph shall prohibit an AMC from
     5  obtaining additional appraisals if required by a lending program, or  if
     6  such  additional  appraisals are required by applicable local, state, or
     7  federal law.
     8    § 160-pppp. Alteration of appraisal reports. An  appraisal  management
     9  company  shall  not  alter,  modify,  or  otherwise  change  a completed
    10  appraisal or valuation service  report  submitted  by  an  appraiser  by
    11  removing such appraiser's signature or seal or by adding information to,
    12  or removing information from such report with intent to change the valu-
    13  ation  conclusion.  An appraisal management company shall not require an
    14  appraiser  to  provide  such  appraisal  management  company  with  such
    15  appraiser's digital signature or seal.
    16    §  160-qqqq.  Enforcement.  The  department  may revoke or suspend the
    17  license of an appraisal management  company,  or  in  lieu  thereof  may
    18  impose a fine, per violation, not to exceed twenty-five thousand dollars
    19  if  the department finds that the licensee has violated any provision of
    20  this article, or for a material misstatement in the application for such
    21  license, or if such licensee has been found guilty of fraud  or  fraudu-
    22  lent  practices,  or  for  dishonest  or  misleading advertising, or has
    23  demonstrated untrustworthiness or incompetency to act  as  an  appraisal
    24  management  company,  or has violated any provision of this article or a
    25  regulation promulgated thereunder. The department shall report any  such
    26  violations by appraisal management companies to the appraisal subcommit-
    27  tee.
    28    § 160-rrrr. Disciplinary hearings. The department shall, before revok-
    29  ing  or  suspending any license or imposing any fine or reprimand on the
    30  holder thereof, and at least twenty days prior to the date set  for  the
    31  hearing,  notify,  in writing, the holder of such license of any charges
    32  made and shall afford such licensee an opportunity to be heard in person
    33  or by counsel in reference thereto.  Such written notice may  be  served
    34  by  personal  delivery to the licensee, or by certified mail to the last
    35  known business address of such licensee or unlicensed person, or by  any
    36  method  authorized  by  the civil practice law and rules. The hearing on
    37  such charges shall be at such time and place  as  the  department  shall
    38  prescribe.
    39    §  160-ssss.  Power  to  suspend a license. In cases where the health,
    40  safety, or welfare of the public is  endangered,  the  department  shall
    41  have  the  authority  to immediately suspend a license pending a hearing
    42  before an administrative law judge.
    43    § 160-tttt. Investigation. The department  shall  have  the  power  to
    44  enforce the provisions of this article and upon complaint of any person,
    45  or  on  its  own  initiative, to investigate any violation thereof or to
    46  investigate the business, business practices and business methods of  an
    47  appraisal  management  company, if in the opinion of the department such
    48  investigation is warranted. Each such applicant  or  licensee  shall  be
    49  obliged, on request of the department, to supply such information as may
    50  be  required concerning his or its business, business practices or busi-
    51  ness methods, or proposed business practices or methods.
    52    For the purpose of enforcing the provisions of this  article,  and  in
    53  making  investigations  relating  to  any violation thereof, and for the
    54  purpose of investigating the character, competency and integrity of  the
    55  applicants  or licensees hereunder, and for the purpose of investigating
    56  the business, business practices and business methods of  any  applicant

        S. 8050--A                         10
     1  or  licensee,  or  of  the  officers  or agents thereof, the department,
     2  acting by such officer or person in the department as the  secretary  of
     3  state  may  designate, shall have the power to subpoena and bring before
     4  the officer or person so designated any person in this state and require
     5  the  production  of any books, records or papers which he deems relevant
     6  to the inquiry and administer an oath  to  and  take  testimony  of  any
     7  person  or  cause  his  or  her  deposition to be taken, except that any
     8  applicant or licensee or officer or agent thereof shall not be  entitled
     9  to  fees  and/or  mileage. A subpoena issued under this section shall be
    10  regulated by the civil practice law and rules. Any person, duly  subpoe-
    11  naed,  who fails to obey such subpoena without reasonable cause or with-
    12  out such cause refuses to be examined or to answer any legal  or  perti-
    13  nent  question as to the character or qualification of such applicant or
    14  licensee or such applicant's or licensee's business, business  practices
    15  and  methods  or  such violations, shall be guilty of a misdemeanor. The
    16  testimony of witnesses in any investigative proceeding  shall  be  under
    17  oath, which the secretary of state or one of his deputies, or a subordi-
    18  nate  of the department designated by the secretary of state, may admin-
    19  ister, and willful false swearing in any such proceeding shall be perju-
    20  ry.
    21    § 160-uuuu. Rule-making authority. The department may adopt rules  not
    22  inconsistent with the provisions of this chapter which may be reasonably
    23  necessary  to  implement, administer, and enforce the provisions of this
    24  chapter.
    25    § 160-vvvv. Violations. 1. Any person or company who fails to obtain a
    26  certificate of registration required pursuant to this article  shall  be
    27  guilty of a misdemeanor.
    28    2.  Criminal  actions for failure to obtain a certificate of registra-
    29  tion shall be prosecuted by the attorney general, or his deputy, in  the
    30  name  of the people of the state, and in any such prosecution the attor-
    31  ney general, or his deputy, shall exercise all the  powers  and  perform
    32  all  the  duties  the district attorney would otherwise be authorized to
    33  exercise or to perform therein.
    34    § 160-wwww. Severability. Should the courts of this state declare  any
    35  provision  of  this  article  unconstitutional,  or  unauthorized, or in
    36  conflict with any other section or provision of this article, such deci-
    37  sion shall affect only such section  or  provision  so  declared  to  be
    38  unconstitutional  or unauthorized and shall not affect any other section
    39  or part of this article.
    40    § 160-xxxx. Judicial review. The actions of the department in granting
    41  or refusing to grant or to renew a license  under  this  article  or  in
    42  revoking  or suspending such a license or imposing any fine or reprimand
    43  on the holder thereof or refusing to revoke or suspend such a license or
    44  impose any fine or reprimand shall be subject to review by a  proceeding
    45  brought  under  and pursuant to article seventy-eight of the civil prac-
    46  tice law and rules at the instance of the applicant  for  such  license,
    47  the  holder of a license so revoked, suspended, fined, or reprimanded or
    48  the person aggrieved.
    49    § 2. This act shall take effect on the one hundred twentieth day after
    50  it shall have become a law; provided, however, that  the  department  of
    51  state  is  authorized to propose, adopt, amend and/or repeal any rule or
    52  regulation necessary for the implementation of this act immediately.
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