HB-4975, As Passed House, March 29, 2012

SUBSTITUTE FOR

HOUSE BILL NO. 4975

A bill to amend 1980 PA 299, entitled

"Occupational code,"

(MCL 339.101 to 339.2919) by adding article 26A.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

ARTICLE 26A

Sec. 2661. As used in this act:

(a) "Appraisal" means that term as defined in section 2601.

(b) "Appraisal management company" means a person that

provides appraisal management services.

the following functions for a client or clients:

(i) Administering a network of independent contract appraisers

to perform real estate appraisal services.

(ii) Receiving requests for real estate appraisal services and,

for a fee paid by the client, entering into agreements with 1 or

more independent appraisers to perform the real estate appraisal

services described in the request.

(iii) Acting as a third-party broker or intermediary between

persons requesting real estate appraisal services and independent

appraisers who agree to provide those services.

(d) "Appraiser" means that term as defined in section 2601.

(e) "Appraiser panel" means a group of independent appraisers

who are selected by an appraisal management company to perform real

estate appraisal services for the appraisal management company.

(f) "Certified appraiser" means a certified general real

estate appraiser, as defined in section 2601, or a certified

residential real estate appraiser, as defined in section 2601.

(g) "Client" means a person that contracts with, or otherwise

enters into an agreement with, an appraisal management company for

the performance of real estate appraisal services.

(h) "Controlling person" means any of the following:

(i) An owner, officer, or director of a corporation,

partnership, or other business entity that offers or applies to

offer appraisal management services in this state.

(ii) An individual who is employed, appointed, or authorized by

an appraisal management company and has the authority to enter into

contractual relationships with clients for the performance of

appraisal management services and the authority to enter into

agreements with independent appraisers for the performance of real

estate appraisal services.

(iii) An individual who possesses, directly or indirectly, the

power to direct or cause the direction of the management or

policies of an appraisal management company.

(i) "Real estate appraisal services" means the practice of

developing an opinion of the value of real property in a manner

that conforms with the uniform standards of professional appraisal

practice.

(j) "Uniform standards of professional appraisal practice"

means that term as defined in section 2601.

Sec. 2663. (1) Except as provided in subsection (2), a person

shall not do any of the following in this state without registering

with, and obtaining a certificate of registration from, the

department under this article:

(a) Directly or indirectly engage or attempt to engage in

business as an appraisal management company.

(b) Directly or indirectly perform or attempt to perform

appraisal management services.

business as an appraisal management company.

(d) In the conduct or name of its business, use the term

"appraisal management company", "mortgage technology company", or

any similar term that tends to indicate the person is registered

under this act.

(2) This article does not apply to any of the following:

(a) A person that exclusively engages individuals on an

employer and employee basis to perform real estate appraisal

services in the normal course of its business and that is

responsible for ensuring that the real estate appraisal services

performed by its employees comply with the uniform standards of

professional appraisal practice.

(b) A person that in the normal course of business enters into

an agreement, whether written or otherwise, with an independent

contractor appraiser for that appraiser to perform real estate

appraisal services and, when the appraisal is complete, cosigns the

report with that independent contractor appraiser.

and controlled by a financial institution regulated by a federal

financial institution regulatory agency. As used in this

subdivision:

(i) "Federal financial institution regulatory agency" means 1

of the federal financial institution regulatory agencies, as that

term is defined in 12 USC 3350.

(ii) "Financial institution" means that term as defined in 12

USC 3350.

Sec. 2665. (1) A person registering as an appraisal management

company in this state shall submit to the department a registration

application, in the form prescribed by the department, that

includes all of the following information:

(a) The applicant's name.

(b) The street address of the applicant's principal place of

business. The department shall not accept an application that

includes only a post office box as an address.

(d) If the applicant is not a corporation that is domiciled in

this state, the name and contact information for the applicant's

agent for service of process in this state.

(e) The name, address, and contact information for any

individual or any corporation, partnership, or other business

entity that owns 10% or more of the appraisal management applicant.

(f) The name, address, and contact information for any

controlling person of the applicant.

(g) A certification that the applicant has the system and

process described in section 2673(1) in place.

(h) A certification that the applicant has the system

described in section 2673(2) in place.

(i) A certification that the applicant maintains the detailed

record of each service request described in section 2673(3).

(j) A completed irrevocable consent to service of process, in

the form prescribed by the department, executed on behalf of the

applicant.

(k) Any other information that is reasonably required by the

department to process the application.

(2) An applicant for registration under subsection (1) shall

include with the application the registration fee described in

section 38a of the state license fee act, 1979 PA 152, MCL

338.2238a.

Sec. 2667. The department shall not grant registration to a

person applying for registration as an appraisal management company

under this article unless all of the following are met:

(a) Any individual who owns more than 10% of the applicant

meets all of the following:

(i) Has not had a license or certificate to act as an appraiser

refused, denied, canceled, or revoked in this state or in any other

state, unless that license or certificate was subsequently granted

or reinstated.

(ii) Has not been convicted of, or entered a plea of guilty or

nolo contendere to, a felony relating to the practice of appraisal

or any crime involving fraud, misrepresentation, or moral

turpitude.

(iii) Submits to a background investigation, as determined by

the department.

(iv) Certifies to the department that he or she has never had a

license to act as an appraiser refused, denied, canceled, or

revoked in this state or in any other state, unless that license or

certificate was subsequently granted or reinstated.

(b) The applicant designates an individual to act as the

primary contact for all communication between the department and

the appraisal management company. The individual designated under

this subdivision must be a licensed attorney designated by the

appraisal management company or an individual who meets all of the

following:

(i) He or she is a controlling person of the applicant.

(ii) He or she certifies to the department that he or she has

never had a certificate or a license issued by this state or any

other state to act as an appraiser refused, denied, canceled, or

revoked, unless that license or certificate was subsequently

granted or reinstated.

(iii) He or she has not been convicted of, or entered a plea of

guilty or nolo contendere to, a felony relating to the practice of

appraisal or any crime involving fraud, misrepresentation, or moral

turpitude.

(iv) He or she submits to a background investigation, as

determined by the department.

(v) He or she has a valid license as a certified appraiser.

Sec. 2669. (1) The department shall not grant registration

under this article to a person applying for registration as an

appraisal management company if the person does not meet the

requirements of sections 2665 and 2667.

(2) If the department grants a registration as an appraisal

management company under this article, the department shall provide

the registrant a certificate of registration.

(3) The department shall determine the term of a registration

under section 202. The department shall include the expiration date

of an appraisal management company's registration on its

certificate of registration.

Sec. 2671. (1) An appraisal management company shall ensure

that any employee of the appraisal management company, or any other

individual working on behalf of the appraisal management company,

who is responsible for selecting independent appraisers for the

performance of real estate appraisal services for the appraisal

management company or review completed appraisals for the appraisal

management company is appropriately trained.

(2) An appraisal management company shall ensure that any

employee or independent contractor of the company who is

responsible for completing standard 3 appraisal reviews, or who

performs a standard 3 appraisal review, on its behalf has a valid

license as a certified appraiser. As used in this subsection:

(a) "Quality control examination" means an examination of an

appraisal review report to determine the report's completeness,

including, but not limited to, examining the report for

grammatical, typographical, or other similar errors.

(b) "Standard 3 appraisal review" means an appraisal review

that meets the requirements of standard 3 of the uniform standards

of professional appraisal practice for appraisal reviews. The term

does not include a quality control examination.

(3) An appraisal management company shall not do any of the

following:

(a) Knowingly employ any individual to perform appraisal

services who has had a license or certificate to act as an

appraiser in this state or in any other state refused, denied,

canceled, surrendered in lieu of revocation, or revoked, unless

that license or certificate was subsequently granted or reinstated.

(b) Knowingly enter into any independent contractor

arrangement, whether in verbal, written, or other form, with any

individual to perform appraisal services who has had a license or

certificate to act as an appraiser in this state or in any other

state refused, denied, canceled, surrendered in lieu of revocation,

or revoked, unless that license or certificate was subsequently

granted or reinstated.

appraiser for the performance of real estate appraisal services

unless that individual is licensed under article 26.

(d) Fail, neglect, or refuse to pay an independent appraiser

for an appraisal or valuation assignment within 60 days after the

date on which the independent appraiser transmits or otherwise

provides the completed appraisal or valuation study to the

appraisal management company or its assignee, unless the appraiser

breached his or her agreement with the company concerning that

assignment or his or her performance of the appraisal or valuation

services was substandard.

(e) Alter, modify, or otherwise change a completed appraisal

report submitted by an independent appraiser.

(f) Procure a license for itself or anyone else by fraud,

misrepresentation, or deceit.

(g) Require an appraiser to indemnify the appraisal management

company or hold the appraisal management company harmless for

liability, damage, losses, or claims arising out of the services

provided by the appraisal management company, if the appraiser did

not perform those services.

Sec. 2673. (1) An appraisal management company registered

under this article shall certify to the department on an annual

basis, on a form prescribed by the department, that it has a system

and process in place to verify that an individual the company is

adding to its appraiser panel is licensed under article 26.

(2) An appraisal management company registered under this

article shall certify to the department on an annual basis, on a

form prescribed by the department, that it has a system in place to

periodically review the work of appraisers who perform real estate

appraisal services for it to verify that the real estate appraisal

services are being conducted in accordance with the uniform

standards of professional appraisal practice.

(3) An appraisal management company registered under this

article shall certify to the department on an annual basis, on a

form prescribed by the department, that it maintains a detailed

record of each service request that it receives and the identity of

the independent appraiser that performs the real estate appraisal

services for the appraisal management company. An appraisal

management company shall retain the records described in this

subsection for at least 5 years.

(4) An appraisal management company registered under this

article shall certify to the department on a biannual basis, on a

form prescribed by the department, that it has a system in place to

verify that each individual on its appraiser panel has not had his

or her license as an appraiser refused, denied, canceled, revoked,

or surrendered in lieu of a pending revocation in the 24 months

preceding the date of the company's certification under this

subsection.

Sec. 2675. (1) Except as provided in subsection (2), an

employee, director, officer, or agent of an appraisal management

company registered under this article shall not influence or

attempt to influence the development, reporting, or review of an

appraisal through coercion, extortion, collusion, compensation,

instruction, inducement, intimidation, or bribery or in any other

manner, including, but not limited to, any of the following:

(a) Withholding or threatening to withhold timely payment for

an appraisal.

(b) Withholding or threatening to withhold future business for

an independent appraiser.

terminate an independent appraiser.

(d) Promising an independent appraiser, either expressly or by

implication, future business, promotions, or increased

compensation.

(e) Conditioning a request for an appraisal service or the

payment of an appraisal fee or salary or bonus on reaching a

particular opinion, conclusion, or valuation or on a preliminary

estimate or opinion requested from an independent appraiser.

(f) Requesting that an independent appraiser provide an

estimated, predetermined, or desired valuation in an appraisal

report, or provide estimated values or comparable sales at any time

before the independent appraiser's completion of an appraisal

service.

(g) Providing to an independent appraiser an anticipated,

estimated, encouraged, or desired value for a subject property or a

proposed or target amount of a loan to a borrower. However, this

subdivision does not prohibit providing a copy of a sales contract

for a purchase transaction to the appraiser.

(h) Providing an independent appraiser, or a person related to

the appraiser, stock or other financial or nonfinancial benefits.

(i) Removing an independent appraiser from an appraiser panel

without prior written notice to that appraiser.

(j) Doing any other act or practice that impairs or attempts

to impair an appraiser's independence, objectivity, or

impartiality.

(2) Subsection (1) does not prohibit, and shall not be

construed to prohibit, an appraisal management company from

requesting that an independent appraiser provide additional

information about the basis for a valuation or that the appraiser

correct objective factual errors in an appraisal report.

Sec. 2677. (1) Beginning 90 days after an appraisal management

company first adds the independent appraiser to its appraiser

panel, the appraisal management company shall not remove an

appraiser from its appraiser panel, or otherwise refuse to assign

requests for real estate appraisal services to an independent

appraiser, without doing all of the following:

(a) Within 10 business days after the removal of the

appraiser, notifying the appraiser in writing of all of the

following, as applicable:

(i) The reasons why the appraiser was removed from the panel.

(ii) If the appraiser was removed from the panel for illegal

conduct, a violation of the uniform standards of professional

appraisal practice, or a violation of state licensing standards,

the nature of the alleged conduct or violation.

(b) Providing an opportunity for the appraiser to respond to

the company's notification or notifications under subdivision (a).

(2) If an appraisal management company removes an independent

appraiser from its appraiser panel for alleged illegal conduct, an

alleged violation of the uniform standards of professional

appraisal practice, or an alleged violation of state licensing

standards, the appraiser may file a complaint with the department

for a review of the decision of the appraisal management company.

In its consideration of the complaint, the department may not make

any determination regarding the nature of the business relationship

between the appraiser and the appraisal management company that is

unrelated to the alleged conduct or violation.

(3) If the department, after its investigation of a complaint

under subsection (2) and after providing the independent appraiser

and the appraisal management company that was the subject of the

complaint an opportunity for hearing and review, determines that an

appraiser did not commit a violation of law, a violation of the

uniform standards of professional appraisal practice, or a

violation of state licensing standards, the department shall order

the appraisal management company to add the appraiser to its

appraiser panel of the appraisal management company.

(4) After the adjudication of a complaint to the department by

an appraiser against an appraisal management company under

subsection (3), if the department finds that the appraisal

management company acted improperly in removing the appraiser from

its appraiser panel, the appraisal management company shall not

refuse to make assignments for real estate appraisal services to

the appraiser, reduce the number of assignments to the appraiser,

or otherwise penalize the appraiser.

Enacting section 1. This amendatory act takes effect April 1,

2013.

Enacting section 2. This amendatory act does not take effect

unless House Bill No. 5271 of the 96th Legislature is enacted into

law.