When An AMC Files Bankruptcy

[BRCJR]

Does anyone know if we have anything similar in Virginia?

From Illinois:

ICAP's Bill (HB3333) Passed The Illinois House of Representatives

On May 31, 2016 a bill that makes it possible for appraisers to collect payment from Appraisal Management Companies (AMC) that declare bankruptcy passed Illinois House of Representatives. The bill will be sent to the Governor within 30 days. The Governor then has 60 calendar days to sign it, or to return it with his veto.

Drafted by ICAP and sponsored by Representative Robert Rita of Illinois 28th District, the Bill amends Illinois Appraisal Management Company Registration Act to create an Appraisal Management Company Recovery Fund.

The Appraisal Management Company Recovery Fund will be used to provide restitution to each State-certified general real estate or residential real estate appraiser who has suffered monetary loss in certain circumstances.

The amount to be paid to the appraiser shall equal the actual amount of appraisal fees that are proven to be owed to the appraiser by the relevant appraisal management company and any reasonable and appropriate court costs associated with determining the final judgment in favor of the appraiser.

The bill also amends the Real Estate License Act of 2000 regarding a statement that must be contained in a broker price opinion or comparative market analysis, provides that the broker price opinion or comparative market analysis was prepared by a licensed real estate broker or managing broker who was not acting as a State certified real estate appraiser.

Thanks to everyone, epically to ICAP’s legislative team, and ICAP's immediate past president Rick Hiton, IFAS all of their hard work that was put into this bill.

 

[Elliott]

http://appraisalnewsonline.typepad....surety-bonds-requirements-impacting-AMCs.html

Appraisal management bonds protect industry professionals and consumers.
The idea behind appraisal management bonds is to keep companies from misusing their power. Generally speaking, an appraisal management bond guarantees the faithful performance of a company by requiring them to provide proof of financial responsibility. However, the bond amount can be used to benefit claims against the company if necessary. Real estate appraisers who have a problem with an appraisal management company's tactics can make a claim on the bond, though the bond's legal language typically states that consumer claims are given priority in recovering the bond's funds. To date, the following states enforce surety bond requirements for appraisal management companies.

• Arkansas
• Arizona
• Georgia
• Kentucky
• Missouri
• Nebraska
• New Mexico
• Oregon
• Tennessee
• Washington

...................................................
And that list was from 2012.

For Oregon, its a $25,000 bond. I wonder how much debt a AMC could amass in say, 180 days, though. The claims, after the attorney's get through with the carcass, probably mean pennies on the dollar.
..................................................

"Oregon appraisal management company bonds ensure that appraisal management companies will abide by all laws, rules and regulations stated in the Oregon Revised Statutes Chapter 674. Prohibited actions under this act include:

• withholding or threatening to withhold timely payment or future business
• altering any appraisal report
• influencing the development of any appraisal report

Contact a surety specialist today to get bonded instantly. You’ll pay just $250 for an Oregon appraisal management company bond when you work with SuretyBonds.com. "

 

[3 Putt]

I believe the only other state that has a recovery fund is KY. There are some states that do not even require an AMC to get a bond.

 

[glenn walker]

Good luck most AMC's that have filed bankruptcy owed hundreds of thousand so a $25,000 bond ? Let's see each appraiser gets a check for about $3- $5 dollars in a year or so when the BK is closed out : ) LOL

 

[OSU Beavers]

You get stiffed, the CEO gets to keep his Bentley and just starts up a new AMC.

http://www.sandiegouniontribune.com/news/2012/jun/12/judge-sd-firm-failed-pay-appraisers-171-times/

 

[peturner]

Virginia statute requires a $100,000 bond.

 

[Meandering]

Virginia statute requires a $100,000 bond.

That should be per appraisal ordered.

.

 

[Howard Klahr]

Virginia statute requires a $100,000 bond.

And based on an average fee of $500 that covers 200 assignments ... at a $250 average fee that represents 400 assignments. Are you aware of the amount in outstanding fees from the previous round of AMC failures? That is a drop in the bucket. Don't be assuaged by this false sense of security.

The proper way to address this issue is to have AMCs place appraisal fees into an escrow account when the assignment is engaged. Afterall, it is not part of their operating funds at that point but rather a pass-thru of advance fees paid by the borrower.

 

[gregb]

The two AMC's I have worked with reportedly have not been paid by the lender for the appraisal at the time the appraiser is engaged.

 

[Howard Klahr]

The two AMC's I have worked with reportedly have not been paid by the lender for the appraisal at the time the appraiser is engaged.

Then of they were to file for bankruptcy, the outstanding payables would still be due from the lender. It does not alter the fact that the actual appraisal fee is not operating revenue for the AMC but is in fact actually advance fees paid by te borrower and should be held separately.

It is not much different than real estate agents and title companies being required to hold advance fees and deposits separately from operating funds.