BILL ANALYSIS �
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|Hearing Date:June 25, 21012 |Bill No:AB |
| |2519 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 2519Author:Bill Berryhill
As Amended:February 24, 2012 Fiscal:Yes
SUBJECT: Real estate appraisers: licensing.
SUMMARY: Specifies a number of required or discretionary disciplinary
actions to be taken by the Office of Real Estate Appraisers (OREA)
against its licensees, and makes other changes to the law governing
real estate appraisers and appraisal management companies (AMCs).
Existing law:
1)Defines "appraisal" as a written statement independently and
impartially prepared by a qualified appraiser setting forth an
opinion in a federally related transaction as to the market value of
an adequately described property as of a specific date, supported by
the presentation and analysis of relevant market information.
(Business and Professions Code (BPC) � 10131)
2)Authorizes the Director of the OREA to adopt regulations governing
the process and procedure of licensing and disciplining real estate
appraisers. (BPC � 13313)
3)Authorizes the Director to issue a citation to a licensee or course
provider that may impose a requirement to complete an education
course or courses, as specified. If the licensee fails to
satisfactorily or timely complete the required education course, the
license is automatically suspended. (BPC � 13315)
4)Authorizes OREA to publish a summary of public disciplinary actions
against licensees and registrants, including resignations while
under investigation. (BPC � 13317)
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5)Provides that a holder of a valid real estate broker license shall be
deemed to have completed the experience requirements for licensure,
upon proof that he or she has accumulated 1,000 hours of experience
in the valuation of real property. (BPC � 11340)
6)Requires fingerprinting and background checks by the Department of
Justice (DOJ) for applicants for real estate appraiser licenses and
each controlling person of an applicant for registration as an AMC.
(BPC � 11343)
7)Requires AMCs to comply with specified standards regarding appraisers
who act as independent contractors, including standards relating to
licensure, performance of appraisal services, and appraisal reports.
(BPC � 11345.3)
8)Prohibits a registered AMC from requiring an appraiser to provide the
AMC with the appraiser's digital signature or seal. An appraiser
may voluntarily provide his or her digital signature or seal to
another person. (BPC � 11345.6)
9)Requires licensing and issuance-related fees to be paid to the OREA
at the time of submitting the application and allows fees to be
paid, among other means, by government purchase order. (BPC �
11400)
10)Requires applications for a license be submitted to OREA within one
year of the successful completion of a required examination. (BPC �
11408)
This bill:
1)Prohibits the renewal of a license if the licensee fails to
satisfactorily complete the additional education requirements
imposed by the citation.
2)Authorizes the office to institute or continue disciplinary
proceedings against a licensee or registrant despite the expiration,
suspension, cancellation, forfeiture of the license and certificate
of registration.
3)Requires each real estate appraiser applicant and each controlling
person of each applicant for registration as an AMC to submit to the
DOJ fingerprint images and information via LiveScan. If the
applicant is located out of state, the applicant shall include his
or her fingerprint card with the application package and the OREA
shall submit the fingerprint cards to the DOJ.
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4)Adds employee appraisers of AMCs to existing law requirements that
apply to AMC independent contractor appraisers, and makes conforming
changes.
5)Allows an appraiser to voluntarily provide his or her digital
signature or seal to another person only to the extent permissible
under the Uniform Standards of Professional Appraiser Practice
(USPAP).
6)Deletes a requirement that issuance-related fees be paid at the time
the issuance application is submitted, deletes a provision allowing
payment of fees by government purchase order, and makes conforming
changes.
7)Specifies that an applicant for licensure shall not be eligible to
have a license issued unless he or she notifies the OREA within one
year of successful completion of a required examination.
8)Repeals existing law providing that a holder of a valid real estate
broker license shall be deemed to have completed the experience
requirements for licensure upon proof of accumulating 1,000 hours of
experience in the valuation of real property.
9)Deletes reference to the Resolution Trust Corporation.
10)Repeals reference to inclusion of application and issuance fees as
part of the fee for an original or renewal certification.
FISCAL EFFECT: According to the Assembly Appropriations Committee,
costs are minor and absorbable.
COMMENTS:
1.Purpose. The intent of this legislation is to provide technical
changes to real estate law as it pertains to real estate appraiser
licenses. The Author notes that the language clarifies enforcement
powers, modernizes the statutes and in some cases makes changes that
are necessary in order to remain in compliance with federal law.
This bill, sponsored by the California Government Relations
Subcommittee of the Appraisal Institute , makes several
non-controversial changes to law governing the OREA and its
licensees.
a) This bill provides that a license will not be renewed if the
licensee has not completed continuing education mandated in an
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enforcement citation. OREA has been advised by legal counsel
that OREA may not automatically suspend a license for failure to
comply with the terms of a final disciplinary order, although it
can refuse to renew a license if a fine is not paid. Adding this
provision will strengthen OREA's ability to enforce terms of
citations.
b) This bill provides that the suspension, expiration or
forfeiture of a license or certification does not deprive OREA of
the power to institute or continue disciplinary proceedings.
OREA indicates that this clarification is necessary to allow
discipline against licensees who voluntarily surrender a license
to avoid and investigation.
c) This bill repeals language in current law that provides that
holders of a valid real estate broker license may receive credit
for appraisal license application experience requirements if they
provide proof of 1,000 hours of experience in the valuation of
real property. This "broker credit" language has been in the
appraiser licensing law since its inception in the early 1990s.
It was intended to recognize experience in preparing broker
opinions of value to qualify for the appraiser license level.
OREA reports that 69 individuals possess an appraiser license
based upon real estate broker credit. However, federal law
currently does not permit individuals holding an appraiser
license that is based upon broker credit to perform appraisals
for federally related transactions, which are the only
transactions for which a state appraisal license or certificate,
is required. In other words, these 69 individuals may no longer
perform appraisals for federally related transactions. OREA
further indicates that these individuals will no longer be
permitted to renew their licenses at all after 2014, pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Thus, the change in this section conforms to federal law.
d) This bill deletes a reference to the Resolution Trust
Corporation, as the entity ceased to exist 15 years ago.
e) This bill changes language relating to fingerprints, to
clarify that in-state applicants must submit fingerprints via
LiveScan, while out-of-state applicants must submit fingerprint
cards with applications, which OREA then submits to DOJ.
f) This bill adds references to "employee appraiser" to existing
law regulating AMCs. AMCs emerged in the appraisal profession
after the appraiser licensing law was enacted in the early 1990s.
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Before the emergence of AMCs, banks and other lenders maintained
lists of approved appraisers and contracted directly with
appraisers for services. More frequently now, lenders maintain
contracts with AMCs, which in turn contract with appraisers for
these services. While most AMCs utilize independent contractor
appraisers for services, they may also have employee appraisers
on staff to appraise property or review the appraisals submitted
by others. OREA indicates that this bill clarifies that employee
appraisers of AMCs must comply with the same standard as
independent contractor appraisers.
g) This bill allows appraisers to voluntarily provide their
digital signature or seal to the extent permissible under USPAP.
This is a technical change, as state licensing law expressly
incorporates USPAP as the standards to which all appraisers must
comply.
h) This bill makes technical changes to sections relating to
fees. OREA indicates that the current language in the statutes
has proven very confusing to licensees, resulting in significant
staffing resources dedicated to processing reimbursements for
overpayments. These changes are intended to add clarity for
licensees, with no changes in the amounts that licensees must
pay.
1.Background. The OREA is responsible for regulating the practice of
real estate appraisers in California, by ensuring that only
qualified persons are licensed to conduct appraisals in federally
related real estate loan transactions and that all real estate
appraisers licensed by the state adhere to applicable laws,
regulations, and standards. Originally enacted in 1990, the OREA
was established and charged with developing and implementing a real
estate appraiser licensing program that complied with the federal
mandate established by Congress in 1989 as a result of the savings
and loan disaster of the late 1980's. That mandate, Title XI of the
Financial Institutions Reform, Recovery and Enforcement Act,
requires states to license and certify real estate appraisers who
appraise property for federally related transactions.
OREA currently licenses more than 13,800 licensed appraisers in
California, with some 200 new licenses issued and 6,000 licenses
renewed in FY 2009/2010. There are four levels of appraiser
licensees: appraiser trainee (AT); appraiser licensee (AL);
certified residential (AR); and certified general (AG). Levels of
licensure are distinguished by increasing levels of education,
experience, and scope of practice (property type, transaction value
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and supervision level). When a licensee wishes to move to up to a
higher level of licensure, they must meet the qualifications and
apply to upgrade the license.
The Director of the Office of Real Estate Appraisers, who serves as
the chief executive of the OREA, is appointed by the governor,
subject to confirmation by the Senate Committee on Rules. The
Director is mandated to administer and enforce the Real Estate
Appraisers Licensing and Certification Law.
2.Related Legislation. SB 706 (Price, Chapter 712, Statutes of 2011)
made numerous enforcement changes to the Department of Real Estate
and the OREA, required specified licensing boards to post
information about licensees on the Internet, and made updating and
conforming changes.
SB 6 (Calderon, Chapter 716, Statues of 2011) updated California's Real
Estate Law, Appraisal Law, and Civil Code, to reflect recent changes
enacted at the federal level, pursuant to the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank).
SB 2357 (Calderon, Chapter 173, Statutes of 2009) created a
registration program for AMCs, as defined, within the OREA, and
required AMCs to meet similar existing licensing program
requirements for independent appraisers. This bill also specified
and clarified prohibited acts by AMCs as well as others who have an
interest in a real estate transaction involving an appraisal.
AB 33 (Nava) of 2009 proposed to consolidate the OREA with the DRE.
The bill also proposed a number of other changes, including a
complete reorganization of several departments in BTH. This bill
was amended to address a different subject.
SUPPORT AND OPPOSITION:
Support:
California Government Relations Subcommittee of the Appraisal
Institute (Sponsor)
Opposition:
None received as of June 14, 2012
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Consultant:Michael Lynch