Bill Text: MI HB4975 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Occupations; appraisers; appraisal management companies; regulate. Amends sec. 602 of 1980 PA 299 (MCL 339.602) & adds art. 26A.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2012-12-31 - Assigned Pa 505'12 2012 Addenda [HB4975 Detail]
Download: Michigan-2011-HB4975-Engrossed.html
HB-4975, As Passed Senate, December 13, 2012
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4975
A bill to amend 1980 PA 299, entitled
"Occupational code,"
by amending section 602 (MCL 339.602), as amended by 2007 PA 157,
and by adding article 26A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 602. A person, school, or institution that violates this
act or a rule or order promulgated or issued under this act shall
be assessed 1 or more of the following penalties:
(a) Placement of a limitation on a license or certificate of
registration for an occupation regulated under articles 8 to 25.
(b) Suspension of a license or certificate of registration.
(c) Denial of a license, certificate of registration, or
renewal of a license or certificate of registration.
(d) Revocation of a license or certificate of registration.
(e) In the case of a person licensed or registered under this
act
and except as otherwise provided for by in this act, an
administrative
fine to be paid to the department , not to exceed of
not more than $10,000.00.
(f) Censure.
(g) Probation.
(h)
A requirement that restitution be made, based upon on
proofs submitted to and findings made by the hearing examiner after
a contested case.
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.
(c) "Appraisal management services" means to perform any of
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 a license
issued by 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.
(c) Advertise or hold itself out as engaging in or conducting
business as an appraisal management company.
(d) Use the term "appraisal management company", "mortgage
technology company", or any similar term that tends to indicate the
person is licensed 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.
(c) An appraisal management company that is a subsidiary owned
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 seeking licensure as an appraisal
management company under this article shall submit to the
department a license 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.
(c) Telephone contact information concerning the applicant.
(d) 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 licensure under subsection (1) shall
include with the application the license fee described in section
38a of the state license fee act, 1979 PA 152, MCL 338.2238a.
Sec. 2667. (1) The department shall not grant a license to a
person applying for a license 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 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.
(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 an attorney licensed to practice law in
any state or territory of the United States who is 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.
(c) If applicable, the applicant meets subsection (2).
(2) If an application for a license under this article is made
by a person whose license under this article was previously denied,
suspended, or revoked as a result of disciplinary action for
violation of this article or rules promulgated under this article,
the department may require, as a condition to licensure of the
applicant or the removal of the suspension, that the applicant
provide a surety bond to the department that meets all of the
following:
(a) Is issued by a bonding company or insurance company
authorized to do business in this state.
(b) Expires after the date the license expires.
(c) Is in a principal amount of not more than $5,000.00. The
department shall determine the principal amount of the bond, based
on the size of the applicant's operation in this state.
(d) Is in a form satisfactory to the department, is payable to
the department for the benefit of Michigan residents, and secures
the performance of the obligations of the applicant in connection
with the conduct of its business.
(3) If the department orders the filing of a bond under
subsection (2), a person injured by an unlawful act or omission of
the applicant may bring an action in a proper court on the bond for
the amount of the damage suffered as a result to the extent covered
by the bond.
Sec. 2669. (1) The department shall not issue a license under
this article to a person applying for licensure as an appraisal
management company if the person does not meet the requirements of
sections 2665 and 2667.
(2) If the department issues a license as an appraisal
management company under this article, the department shall provide
the licensee a license certificate.
(3) The term of a license under this article is 3 years. The
department may grant a shorter term for an initial license under
this article so that all licenses issued under this article expire
on the same date. The department shall include the expiration date
of an appraisal management company's license on its license
certificate.
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 that does any of the
following is subject to the penalties under article 6:
(a) Employs 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) Enters 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.
(c) Enters into a contract or agreement with an independent
appraiser for the performance of real estate appraisal services
unless that individual is licensed under article 26.
(d) Fails, neglects, or refuses 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 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) Alters, modifies, or otherwise changes a completed
appraisal report submitted by an independent appraiser.
(f) Procures a license for itself or anyone else by fraud,
misrepresentation, or deceit.
(g) Requires 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 licensed 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 licensed 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 licensed 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 licensed 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 licensed under this article that influences or attempts 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, is subject to
the penalties under article 6:
(a) Withholding or threatening to withhold timely payment for
an appraisal.
(b) Withholding or threatening to withhold future business for
an independent appraiser.
(c) Demoting or terminating or threatening to demote or
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 do any of the following:
(a) Provide additional information about the basis for a
valuation.
(b) Correct objective factual errors in an appraisal report.
(c) Consider additional verifiable information that was not
previously known or considered by the appraiser in completing the
valuation or appraisal.
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.
Enacting section 1. This amendatory act takes effect April 1,
2014.
Enacting section 2. This amendatory act does not take effect
unless House Bill No. 5271 of the 96th Legislature is enacted into
law.
