So state Rep. Stephen Slesnick, D-Canton, and the Ohio Coalition of Appraisal Professionals introduced Wednesday, May 26, a bill in the Ohio House that would regulate and license appraisal management companies under the Ohio Department of Commerce’s Real Estate Division.
The bill also would require that the companies use only licensed appraisers and that computer-generated appraisals must be reviewed by a licensed appraiser. It also prohibits the company from attempting to influence an appraiser’s estimate of a property’s value.
“With the economic climate being what it is and the high rate of foreclosures,” Slesnick said, “I believe it’s important to bring up the standards of the AMCs and hold them accountable.”
Currently, the bill’s sponsors say, while banks are subject to federal regulation and appraisers to state law, appraisal management companies are unregulated, allowing them to cut corners.
Appraisals for seven out of 10 mortgage applications nationwide are handled by the AMCs, said Ron Stickelman, president of Stickelman, Schneider & Associates and president of the coalition. In addition, he said, the largest AMCs are owned by either title companies or banks, who will profit from the loan closing.
“You think you’re paying $375 for a competent local appraiser, right?” Stickelman said. “Well actually you’re giving $200 to a subsidiary of the bank or the title company that’s going to also make money off of you. And they’re going to pay $175 for any appraiser, no matter where they’re located, who is willing to do that assignment for that kind of money.”
None of the 60 local members of Ohio Coalition of Appraisal Professionals will do appraisals for that amount, he said.
“What this bill does is make sure the appraisal management companies are regulated just like us and just like the banks are,” said Sally Carothers, vice president of Stickelman, Schneider & Associates and secretary for the coalition. “They can also be audited by the Division of Real Estate, and their practices are regulated.”
The measure is modeled on legislation drawn up by the Appraisal Institute, a nationwide trade organization, and also is supported by the Ohio Association of Realtors, the Ohio Division of Real Estate.
Fifteen states have passed similar measures, and five have them pending, Stickelman said. A hearing of the bill is scheduled in the House Financial Institutions, Real Estate and Securities Committee on Wednesday, June 2.
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