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OCC Bulletin 2019-43 | September 16, 2019
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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; All Department and Division Heads; All Examining Personnel; and Other Interested Parties
The Office of the Comptroller of the Currency (OCC) is issuing this bulletin to remind banks1 of the new registration requirement for appraisal management companies (AMC) that became effective on August 10, 2019. Under this requirement, AMCs must register with the state or states in which they do business and must be subject to state supervision. Federal law bars AMCs from providing appraisal management services to financial institutions for consumer credit transactions secured by a consumer's principal dwelling2 that are federally related transactions (covered FRT) if the AMCs are not registered as required.3 This bulletin discusses considerations for banks with regard to confirming AMC registration as part of sound third-party risk management and suggests alternatives that banks can use when no registered AMCs are available.
This bulletin applies to all OCC-supervised banks that engage AMCs.
Bank management should be aware of the following:
AMCs are entities that serve as intermediaries between appraisers and banks.4 Many banks outsource the process of engaging appraisers for real estate transactions to AMCs. Section 1473 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank)5 includes provisions on minimum requirements to be applied by states in the registration and supervision of AMCs. On June 9, 2015, the OCC, along with the Board of Governors of the Federal Reserve System (FRB) and the Federal Deposit Insurance Corporation (FDIC), adopted a regulation to implement the AMC provisions of Dodd–Frank.6
The regulation applies to AMCs that provide appraisal management services related to consumer credit transactions secured by a consumer's principal dwelling. The AMC registration requirement applies to AMCs that oversee a panel of more than 15 appraisers in a single state or 25 or more appraisers nationally in a given year. An AMC that is owned and controlled by an insured depository institution7 and regulated by the OCC, FRB, or FDIC (referred to as a federally regulated AMC)8 is not subject to the registration requirement.
Under section 1473 of Dodd–Frank, states are not required to establish an AMC registration and supervision program. In a state that does not have an AMC registration and supervision program, AMCs are barred from providing appraisal management services for covered FRTs.9
The Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC) is required to maintain an AMC national registry.10 The registry includes AMCs that (1) are registered with and subject to supervision by a state appraiser certifying and licensing agency or (2) are federally regulated.
A bank's use of third parties, including AMCs, does not diminish the bank's responsibility to confirm that the activity is performed in a safe and sound manner and in compliance with applicable laws and regulations. Bank management should conduct sufficient due diligence to confirm that the bank's third-party AMCs are registered as required. Some methods that banks can use to confirm an AMC's registration include the following:
Bank management should work with AMCs to properly identify transactions that meet the definition of a covered FRT. In determining whether the transaction is a covered FRT, the bank should either notify the AMC that the transaction is a covered FRT or provide sufficient information to enable the AMC to identify the transaction as a covered FRT. When the bank relies on an AMC's determination of whether transactions are covered FRTs, bank management should conduct sufficient due diligence as part of sound third-party risk management to confirm that the AMC appropriately identifies covered FRTs as such. If the transaction is not a covered FRT, the AMC registration rule does not apply. If the transaction is a covered FRT in a state that is not registering AMCs, banks may use one of the following:
For more information regarding third-party risk management applicable to AMCs, refer to
Please contact Steven Jones, Director for Retail Credit Risk, at (202) 649-0429, or Kevin Lawton, Real Estate Appraisal Specialist, at (202) 649-6220.
Grovetta N. Gardineer Senior Deputy Comptroller for Bank Supervision Policy
1 The term "banks" refers collectively to national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.
2 "Consumer credit," for purposes of the AMC rule, means credit offered or extended to a consumer primarily for personal, family, or household purposes. Refer to 12 CFR 34.211(g), "Consumer Credit."
3 Refer to 12 USC 3353, "Appraisal Management Company Minimum Requirements," and 12 CFR 34, subpart H, "Appraisal Management Company Minimum Requirements." "States" is defined as the 50 states and the District of Columbia and the territories of Guam, Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. Refer to 12 CFR 34.211(o), "States." Federally related transactions are real estate-related financial transactions that require the services of an appraiser and that the OCC or any of its regulated banks engages in or contracts for. Refer to 12 CFR 34.42(g), "Federally Related Transaction."
4 Refer to 12 CFR 34.211(c), "Appraisal Management Company," for the full definition of an AMC.
5 Pub. L. 111-203, 124 Stat. 1376.
6 Refer to 12 CFR 34, subpart H.
7 The term "insured depository institution" means any bank or savings association the deposits of which are FDIC-insured. Refer to 12 USC 1813, "Definitions."
8 Refer to 12 CFR 34.211(k), "Federally Regulated AMC."
9 Refer to 12 CFR 34.215(a), "Requirements in Providing Services."
10 Refer to 12 USC 3332(a)(6). The ASC's AMC national registry is at asc.gov.
