In compliance with federal law, Colorado currently requires the licensing of real estate appraisers. In order to promote enhanced consumer protection, recently adopted federal guidelines now require mortgage lenders to use entities known as appraisal management companies, which hire licensed real estate appraisers, to value property for lending purposes. Appraisal management companies are not currently subject to regulation under Colorado law.
The bill authorizes the board of real estate appraisers in the division of real estate in the department of regulatory agencies to regulate appraisal management companies. Necessary terminology is defined and the registration of appraisal management companies is required. Section 5 of the bill sets forth the requirements for registration and exemptions for certain types of activities. Section 3 of the bill amends the section creating the board of real estate appraisers by adding a member who is an officer or employee of an appraisal management company and subtracting one public member. Requirements for owners and controlling persons of appraisal management companies are established, including a requirement that certain persons submit information, including fingerprints, for criminal history record checks. The bill sets forth prohibited activities and grounds for disciplinary action against appraisal management companies and owners and controlling persons. Administrative and criminal penalties for violations are established, and the board of real estate appraisers is granted the power to administer the provisions of the bill.
The bill requires real estate appraisers to maintain errors and omissions insurance. Appraisal management companies are required to post with the board a surety bond in the amount of $25,000.
Sections 12 through 15 of the bill make conforming amendments to existing statutes to make them consistent with the changes made in the bill.