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LRB-0530/2
MED:wlj/emw/klm
2017 - 2018 LEGISLATURE
October 12, 2017 - Introduced by Representatives Allen, Katsma, Young, Knodl,
Petersen, Kooyenga, Genrich, Doyle and Petryk, cosponsored by Senators
Craig, Lasee, Nass and Bewley. Referred to Committee on Housing and Real
Estate.
AB533,1,11 1An Act to amend 15.405 (10r) (a) 3., 20.165 (1) (g), 440.03 (9) (a) (intro.), 458.03
2(1) (c), 458.03 (2), 458.03 (3) (a), 458.03 (3) (b), 458.085 (1), 458.085 (2), 458.085
3(3), 458.095 (intro.), 458.105, 458.13, 458.21, 458.26 (2), 458.26 (3) (intro.),
4458.26 (3) (i), 458.26 (4) and 458.30; and to create 15.405 (10r) (a) 1m., 440.03
5(13) (b) 5s., 440.08 (2) (a) 10m., subchapter I (title) of chapter 458 [precedes
6458.01], 458.01 (2m), 458.01 (3m), 458.03 (1) (dm), 458.03 (3) (c), 458.04 (3),
7subchapter II (title) of chapter 458 [precedes 458.055] and subchapter III of
8chapter 458 [precedes 458.31] of the statutes; relating to: regulation of
9appraisal management companies, providing an exemption from emergency
10rule procedures, granting rule-making authority, and providing a criminal
11penalty.
Analysis by the Legislative Reference Bureau
This bill provides for the regulation of certain appraisal management
companies (AMCs) pursuant to provisions in the Dodd-Frank Wall Street Reform
and Consumer Protection Act, enacted in 2010 (the act). Under current state law,
the state does not regulate AMCs. However, the Department of Safety and

Professional Services and the Real Estate Appraisers Board regulate appraisers.
The bill provides for regulation of AMCs by DSPS and the board pursuant to the act
and regulations promulgated thereunder.
Federal law; Dodd-Frank Act; federal regulations
“Appraisal management company” is defined under the act as “in connection
with valuing properties collateralizing mortgage loans or mortgages incorporated
into a securitization, any external third party authorized either by a creditor of a
consumer credit transaction secured by a consumer's principal dwelling or by an
underwriter of or other principal in the secondary mortgage markets, that oversees
a network or panel of more than 15 certified or licensed appraisers in a State or 25
or more nationally within a given year a) to recruit, select, and retain appraisers; b)
to contract with licensed and certified appraisers to perform appraisal assignments;
c) to manage the process of having an appraisal performed ... ; or d) to review and
verify the work of appraisers.”
Under the act, a number of federal agencies are required, by rule, to jointly
establish minimum requirements to be applied by a state in the registration of
AMCs. The minimum requirements include that an AMC must a) register with and
be subject to supervision by a state appraiser certifying and licensing agency in each
state in which the AMC operates; b) verify that only licensed or certified appraisers
are used for federally related transactions; c) require that appraisals coordinated by
an AMC comply with the Uniform Standards of Professional Appraisal Practice; and
d) require that appraisals are conducted independently and free from inappropriate
influence and coercion pursuant to standards established under the Truth in
Lending Act. Under the act, an AMC that is owned and controlled by a financial
institution and regulated by a federal financial institution regulatory agency is not
required to be registered with the state, but is otherwise required to comply with the
requirements described above.
Also under the act, an AMC may not be registered by a state if the AMC is owned
by any person who has had an appraiser license or certificate refused, denied,
cancelled, surrendered in lieu of revocation, or revoked in any state. In addition,
each person that owns more than 10 percent of an AMC must be of good moral
character, as determined by the state appraiser certifying and licensing agency, and
must submit to a background investigation carried out by the state appraiser
certifying and licensing agency. Finally, under the act, a national registry must be
maintained of AMCs that either are registered with and subject to supervision of a
state appraiser certifying and licensing agency or are operating subsidiaries of a
federally regulated financial institution. A state with an appraiser certifying and
licensing agency must collect an annual registry fee from an AMC that has registered
with a state or that operates as a subsidiary of a federally related financial
institution.
The act prohibits an AMC from performing services related to a federally
related transaction in a state after the date that is 36 months after the date on which
the federal regulations described above are finalized unless the AMC is registered
with the state or subject to oversight by a federal financial institutions regulatory
agency, subject to an additional 12-month extension that may be granted if certain

conditions are met. The final federal regulations became effective on August 10,
2015, meaning that an AMC cannot perform services related to a federally related
transaction in a state after August 10, 2018, unless the AMC is registered with the
state.
The bill
The bill implements the provisions in the Act described above and establishes
provisions for the licensure of AMCs, described in further detail as follows:
1. The bill prohibits the performance of appraisal management services for
compensation, or the use of the title “appraisal management company” or “licensed
appraisal management company” by any person unless the person is licensed by
DSPS. The bill requires DSPS to grant and issue a license to an AMC if the AMC a)
submits certain information; b) pays a fee; and c) meets any other applicable
requirements. Certain persons, including persons who own more than 10 percent of
the AMC, must submit to background investigations prior to the AMC's licensure,
and the applicant must be determined by DSPS to have good moral character in order
for the AMC to be licensed. As provided in the act, federally regulated AMCs are not
required to be licensed, but must comply with other provisions in the bill.
2. The bill creates prohibitions on AMCs and establishes ownership limitations
for AMCs.
3. The bill requires applicants for an AMC license to designate a controlling
individual to be the primary contact for all communications between DSPS and the
AMC. Such a controlling individual must meet certain criteria in order to be so
designated.
4. The bill requires AMCs that perform appraisal management services in
federally related transactions to pay the annual registry fee to DSPS, pursuant to the
act as described above. The bill requires DSPS to transmit the fees to the Federal
Financial Institutions Examination Council.
5. The bill establishes requirements that an AMC must satisfy before assigning
appraisal services to an AMC, adding appraisers to an appraiser panel, or assigning
appraisal reviews. The bill also requires AMCs to regularly review the work of
appraisers performing appraisal services for the AMC to ensure they comply with the
Uniform Standards of Professional Appraisal Practice.
6. The bill requires AMCs to compensate appraisers at a rate that is reasonable
and customary, and establishes other requirements with respect to the payment and
statement of fees by AMCs.
7. The bill establishes record-keeping requirements for AMCs and allows
DSPS to audit those records.
8. The bill establishes requirements and prohibitions to ensure appraiser
independence, consistent with federal law. The bill also establishes limitations on
the removal of appraisers from AMC appraiser panels and allows DSPS to order
reinstatement of an appraiser to an appraiser panel in certain cases.
9. The bill provides for discipline of AMCs by DSPS and the board, and requires
DSPS to report violations of applicable laws to the federal Appraisal Subcommittee
of the Federal Financial Institutions Examination Council.

10. The bill makes a violation of provisions established in the bill subject to a
fine of not more than $10,000.
The bill also modifies provisions in current law pertaining to the regulation of
appraisers to also reference AMCs. Finally, the bill removes from the Real Estate
Appraisers Board one public member and replaces it with a controlling individual of
an AMC.
The bill provides that the provisions in the bill do not apply if federal law is
amended or repealed so as to allow AMCs that are not federally regulated AMCs to
perform services related to a federally related transaction without being required to
register with and be subject to supervision by a state appraiser certifying and
licensing agency as required under the act.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB533,1 1Section 1. 15.405 (10r) (a) 1m. of the statutes is created to read:
AB533,4,32 15.405 (10r) (a) 1m. One controlling individual, as defined in s. 458.31 (6). This
3subdivision does not apply if s. 458.48 applies.
AB533,2 4Section 2. 15.405 (10r) (a) 3. of the statutes is amended to read:
AB533,4,65 15.405 (10r) (a) 3. Three Two public members or, if s. 458.48 applies, 3 public
6members
.
AB533,3 7Section 3. 20.165 (1) (g) of the statutes is amended to read:
AB533,5,28 20.165 (1) (g) General program operations. The amounts in the schedule for
9the licensing, rule making, and regulatory functions of the department, other than
10the licensing, rule-making, and credentialing functions of the medical examining
11board and the affiliated credentialing boards attached to the medical examining
12board and except for preparing, administering, and grading examinations. Ninety
13percent of all moneys received under chs. 440 to 480, except ch. 448 and ss. 440.03
14(13), 440.05 (1) (b), 458.21, and 458.365, less $10 of each renewal fee received under

1s. 452.12 (5); all moneys transferred from the appropriation under par. (i); and all
2moneys received under s. 440.055 (2), shall be credited to this appropriation.
AB533,4 3Section 4. 440.03 (9) (a) (intro.) of the statutes is amended to read:
AB533,5,74 440.03 (9) (a) (intro.) Subject to pars. (b) and (c) and s. 458.33 (2) (b) and (5),
5the department shall, biennially, determine each fee for an initial credential for
6which no examination is required, for a reciprocal credential, and for a credential
7renewal by doing all of the following:
AB533,5 8Section 5. 440.03 (13) (b) 5s. of the statutes is created to read:
AB533,5,99 440.03 (13) (b) 5s. Appraisal management company.
AB533,6 10Section 6. 440.08 (2) (a) 10m. of the statutes is created to read:
AB533,5,1211 440.08 (2) (a) 10m. Appraisal management company: December 15 of each
12odd-numbered year.
AB533,7 13Section 7. Subchapter I (title) of chapter 458 [precedes 458.01] of the statutes
14is created to read:
AB533,5,1515 chapter 458
AB533,5,1616 subchapter I
AB533,5,1717 general provisions
AB533,8 18Section 8. 458.01 (2m) of the statutes is created to read:
AB533,5,2019 458.01 (2m) “Appraisal management company" has the meaning given in 12
20CFR 34.211
(c).
AB533,9 21Section 9 . 458.01 (3m) of the statutes is created to read:
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