Appraisal management companies wanting to do business in New Mexico must now post a surety bond in order to secure a license.
Part of a nationwide crackdown on AMCs, New Mexico became the latest state to usher in tighter restrictions on the once loosely regulated industry. Signed into law this week by Gov. Bill Richardson, the bill requires AMCs to obtain a $25,000 surety bond to be posted with the state Regulation and Licensing Department.
In addition, the New Mexico measure:
- Requires AMC employees be “geographically competent” to review appraisals
- Adopts fee disclosure requirements similar to recently adopted FHA requirements
- Prohibits AMCs from indemnification against liability or enforcing hold harmless provisions
The new regulations in New Mexico come as states continue to consider measures that provide consumers with greater protection against runaway AMCs.
Six states enacted new AMC regulations in 2009. Industry officials anticipate as many as 20 more states may do so this year.
This spring, Utah and Arkansas became the first states to fully regulate appraisal management companies through their state’s real estate appraiser boards. Four more states enacted similar legislation by the fall, and industry experts anticipate as many as 20 more states to consider AMC legislation in 2010.
Arkansas was the first state to include a surety bond requirement.
“There is a significant belief out there that mortgage fraud played a significant role in the meltdown in the housing market, and any unregulated entity that is out there presents the possibility for mortgage fraud to creep back into the system,” said Scott DiBiasio, manager of state and industry affairs for the Washington, D.C.-based Appraisal Institute, told Insurance Journal last year. “I think legislators recognized that this was a gaping loophole that needed to be corrected.”