BOSTON (SHNS) – With the clock ticking under federal law, the House on Wednesday voted unanimously to establish a framework for licensing and regulating appraisal management companies in Massachusetts.
Rep. Thomas Stanley, a Waltham Democrat, said the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act gave states until Aug. 10, 2019 to enact legislation licensing appraisal management companies. Stanley said he has been filing the bill since 2011.
Most states have already passed licensing laws, and Massachusetts must follow suit for appraisal management companies, or AMCs, to continue operating here, Stanley said.
Stanley said 80 percent of appraisal orders in Massachusetts are processed by AMCs, and if a law is not in place in the next 53 days, lending for home purchases and refinancing packages would be “severely disrupted” as it would take 30 days or more for lenders to be able to replicate the companies’ services.
The House and Senate last year each passed versions of the bill that Stanley said were “slightly different,” but the branches did not get a bill over the finish line to Gov. Charlie Baker’s desk.
“At this time, this legislation is supported by everyone. It’s very important that it passes,” Stanley said.
The bill (H 3904) cleared the House Wednesday on a 152-0 vote. It now moves to the Senate for consideration.
Rep. James Murphy, who co-chairs the Financial Services Committee, said the bill provides safeguards to ensure appraisals are accurate and free of outside influence. It establishes a state board of real estate appraisers and makes it unlawful to perform appraisal management services without first registering with the board.
The board would oversee a “stringent” licensing system and have the power to revoke registration and impose fines, Murphy said. Stanley said it’s estimated that more than 120 AMCs would register, and that the fee structure would be sufficient to cover operational expenses.
Murphy, a Weymouth Democrat, said the Dodd-Frank act addressed appraisal management companies because overinflated valuations for mortgage purposes were a contributing factor in the housing market collapse associated with the 2008 financial crisis.
The federal government required a separation between appraisers and lenders, Murphy said, and AMCs serve as that firewall.
Murphy told his colleagues on the House floor that buying a home is one of the most important financial decisions many of their constituents will make and that they must make sure people receive accurate assessments. He said regulating the appraisal management industry will protect consumers.