BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
237 (Calderon)
Hearing Date: 4/27/09 Amended: 4/13/09
Consultant: Maureen Ortiz Policy Vote: B.P. & E. D. 8-1
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BILL SUMMARY: SB 237 requires real estate appraisal management
companies to register with the Office of Real Estate Appraisers
(OREA), and subjects those entities to the provisions of the
Real Estate Appraisers' Licensing and Certification Law.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
AMC registration program $60 $120
$120 Special*
Registration fee (revenue)
($120) ($120) Special*
*Real Estate Appraisers Regulation Fund
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STAFF COMMENTS: The Office of Real Estate Appraisers indicates
start-up costs of approximately $60,000 in addition to
absorbable costs for promulgating regulation changes, updating
the existing database, developing application and complaint
forms, and staff training. First year and annual ongoing costs
are anticipated at $120,000 which under the provisions of the
bill will be fully offset by fee revenue. These cost estimates
are based on the assumption that 150 appraisal management
companies may be required to register, resulting in fees of
about $800 annually to cover all costs.
Current law requires the licensure and regulation of real estate
appraisers by the OREA. An appraisal management company (AMC),
currently not regulated in California, is defined as any person
or entity that administers networks of independent contractor
appraisers to perform appraisals for clients, essentially
serving as a third-party broker of appraisals between clients
and appraisers. SB 237 provides that a bank, credit union,
trust company, savings and loan association, or industrial loan
company is not considered an AMC, nor is any individual licensed
as a finance lender, resident mortgage lender, real estate
broker, or a person licensed to practice law and who orders an
appraisal in connection with a bona fide client relationship.
Further, AMC does not include a person or entity that
exclusively delegates appraisal assignments to appraisers or
trainees as employees rather than independent contractors; or
one that does contract with independent appraisers but co-signs
the appraisal report with that independent contract appraiser.
.
SB 237 provides that the registration program for appraisal
management companies be mirrored after the existing licensing
program for real estate appraisers, including fingerprinting and
background checks for owners of 10% interest and any controlling
person to be performed by the Department of Justice with
applicants paying the costs of those services.
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SB 237 (Calderon)
AMC's will be required to demonstrate to the OREA that a system
has been established to ensure the independent contract
appraisers contracted by the applicant possess all required
licenses and certificates, and that the appraisals are reviewed
and performed in accordance with the federal Uniform Standards
of Professional Appraisal Practice.
Existing law prohibits a person with an interest in a real
estate transaction involving an appraisal to improperly
influence through coercion, extortion, or bribery, the
development, reporting, result, or review of a real estate
appraisal sought in connection with a mortgage loan.
Under a practice that is becoming increasingly common, lenders
and others seeking real property appraisals are contracting with
AMCs. The AMCs assemble panels of appraisers on whom they can
call when they receive an order for an appraisal. Upon
completion, the AMCs deliver the appraisals to the lenders and
brokers who ordered them.