82(R) HB 1146 - Senate Committee Report version

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Appraisal management companies (AMC) are business entities that administer networks of independent appraisers to fulfill real estate appraisal assignments on behalf of lenders. The AMC recruits and qualifies appraisers, verifies licensure, and negotiates fees and service-level expectations with a network of third-party appraisers. The AMC is also responsible for many tasks associated with the collateral valuation process, including appraisal review, quality control, market value dispute resolution, warranty administration, and record retention. To date, AMCs have not been subject to government oversight or regulation. Title XIV, Section 1473 of the federal Dodd-Frank Act imposes a requirement that AMCs be regulated.

C.S.H.B. 1146 amends the Occupations Code relating to the registration and regulation of appraisal management companies. The bill establishes the Texas Appraiser Licensing and Certification Board (TALCB) to oversee appraisal management companies. TALCB would register and regulate appraisal management companies. The bill requires TALCB to issue a unique registration number to each appraisal management company and publish annually a list of the registered companies.

C.S.H.B. 1146 amends current law relating to the registration and regulation of appraisal management companies, and provides penalties.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Appraiser Licensing and Certification Board in SECTION 2 (Sections 1104.051, 1104.052, 1104.103, and 1104.208, Occupations Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter D, Chapter 1103, Occupations Code, by adding Section 1103.157, as follows:

Sec. 1103.157. ADVISORY COMMITTEE. Requires the Texas Appraiser Licensing and Certification Board (TALCB) to establish an advisory committee to advise TALCB and make recommendations on matters related to the regulation of appraisal management companies under Chapter 1104.

(b) Provides that the advisory committee consists of the assistant presiding officer of TALCB and two persons appointed by the governor as follows:

(1) a controlling person of an appraisal management company registered under Chapter 1104; and

(2) a public member with recognized business ability.

(d) Provides that the members of the advisory committee appointed by the governor serve staggered two-year terms, with the terms of the appraisal management company member and the public member expiring on January 31 of alternate years.

SECTION 2. Amends Subtitle A, Title 7, Occupations Code, by adding Chapter 1104, as follows:

CHAPTER 1104. APPRAISAL MANAGEMENT COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1104.001. SHORT TITLE. Authorizes this chapter to be cited as the Texas Appraisal Management Company Registration and Regulation Act.

Sec. 1104.002. PURPOSE. Provides that the purpose of this chapter is to establish and enforce standards related to appraisal management services for appraisal reports on residential properties located in this state with fewer than five units.

Sec. 1104.003. DEFINITIONS. (a) Provides that the definitions in Section 1103.003 (Definitions) apply to this chapter.

(b) Defines, in this chapter, "appraisal management company," "appraisal management service," "appraisal panel," "appraisal review," "appraiser," "controlling person," "financial institution," and "Uniform Standards of Professional Appraisal Practice."

Sec. 1104.004. EXEMPTIONS. (a) Provides that this chapter does not apply to:

(1) a person who exclusively employs appraisers on an employer and employee basis for the performance of appraisals;

(2) a person acting as an appraisal firm as defined by board rule that at all times during a calendar year employs on an exclusive basis as independent contractors not more than 15 appraisers for the performance of appraisals;

(3) a financial institution, including a department or unit within the institution, that is regulated by an agency of this state or the United States government;

(4) subject to Subsection (b), a person who enters into an agreement with an appraiser for the performance of an appraisal that on completion results in a report signed by both the appraiser who completed the appraisal and the appraiser who requested completion of the appraisal;

(5) an appraisal management company with an appraisal panel of not more than 15 appraisers at all times during a calendar year; or

(6) an appraisal management company that is a subsidiary owned and controlled by a financial institution that is subject to appraisal independence standards at least as stringent as those under Section 1104.203 or the Truth in Lending Act (15 U.S.C. Section 1601 et seq.) through regulation by an agency of this state or the United States government.

(b) Prohibits an appraisal management company from requiring an employee of the appraisal management company who is an appraiser to sign an appraisal that is completed by another appraiser who contracts with the appraisal management company in order to avoid the requirements of this chapter.

[Reserves Sections 1104.005-1104.050 for expansion.]

SUBCHAPTER B. BOARD POWERS AND DUTIES

Sec. 1104.051. RULES. Authorizes TALCB to adopt rules necessary to administer the provisions of this chapter.

Sec. 1104.052. FEES. (a) Requires TALCB by rule, subject to Subsection (b), to establish application, renewal, and other fees in amounts so that the sum of the fees paid by all appraisal management companies seeking registration under this chapter is sufficient for the administration of this chapter.

(b) Requires TALCB to collect annually from each appraisal management company registered under this chapter the national registry fee required by the appraisal subcommittee for each person who is on the appraisal panel of the company and licensed or certified as an appraiser in this state. Requires TALCB to deposit the registry fees to the credit of the appraiser registry account in the general revenue fund.

(c) Requires that the fees collected under Subsection (b) be sent to the appraisal subcommittee regularly as required by federal law.

[Reserves Sections 1104.053-1104.100 for expansion.]

SUBCHAPTER C. REGISTRATION REQUIREMENTS

Sec. 1104.101. REGISTRATION REQUIRED. Prohibits a person, unless the person is registered under this chapter, from:

(1) acting or attempting to act as an appraisal management company;

(2) providing or attempting to provide appraisal management services; or

(3) advertising or representing or attempting to advertise or represent the person as an appraisal management company.

Sec. 1104.102. ELIGIBILITY FOR REGISTRATION; OWNERSHIP. (a) Prohibits a person who has had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation in any state from owning in any manner more than one percent of an appraisal management company registered or applying for registration under this chapter unless the person has subsequently had a license or certificate to act as an appraiser granted or reinstated.

(b) Prohibits an entity more than 10 percent of which is owned by any person who has had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation in any state from owning more than 10 percent of an appraisal management company registered or applying for registration under this chapter unless the person has subsequently had a license or certificate to act as an appraiser granted or reinstated.

(1) be of good moral character, as determined by TALCB; and

(2) submit to a background investigation, as determined by TALCB.

(d) Requires an appraisal management company applying for registration under this chapter to certify to TALCB that:

(1) it has reviewed each entity that owns more than 10 percent of the company; and

(2) no entity reviewed under Subdivision (1) is more than 10 percent owned by a person who has had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation and who has not subsequently had a license or certificate to act as an appraiser granted or reinstated.

Sec. 1104.103. APPLICATION FOR REGISTRATION OR RENEWAL. (a) Requires an applicant for registration or registration renewal under this chapter to submit:

(1) an application on a form approved by TALCB; and

(2) the application or renewal fee established under Section 1104.052(a).

(b) Requires that the application contain:

(1) the name, business address, and telephone contact information of the entity seeking registration;

(2) the name and contact information for the company's agent for service of process in this state if the entity is not a corporation domiciled in this state;

(3) the name, address, and contact information for any individual or any corporation, partnership, or other business entity that owns more than 10 percent of the appraisal management company;

(4) the name, address, and contact information for at least one controlling person;

(5) the designation of a primary contact under Section 1104.104;

(6) the name and contact information of at least one appraiser designated by the company to respond to and communicate with appraisers on the company's appraisal panel regarding appraisal assignments;

(7) a certification that the entity has a system in place to ensure compliance with Subchapter D and Section 129E of the Truth in Lending Act (15 U.S.C. Section 1601 et seq.);

(8) a written irrevocable consent to service of process; and

(9) any other information required by TALCB to approve the application.

Sec. 1104.104. DESIGNATION OF PRIMARY CONTACT. (a) Requires an appraisal management company applying for registration under this chapter to designate one controlling person as the primary contact for all communication between TALCB and the company.

(b) Provides that the controlling person designated under Subsection (a):

(1) must:

(A) be certified as an appraiser in at least one state at all times during the designation; or

(B) have completed:

(i) the 15-hour national Uniform Standards of Professional Appraisal Practice course; and

(ii) the seven-hour national Uniform Standards of Professional Appraisal Practice update course not more than two years before the renewal of the appraisal management company's registration;

(2) may not have had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation in any state unless the person has subsequently had a license or certificate to act as an appraiser granted or reinstated;

(3) must be of good moral character, as determined by TALCB; and

(4) shall submit to a background investigation, as determined by TALCB.

Sec. 1104.105. DENIAL OF REGISTRATION. (a) Authorizes TALCB to deny a registration:

(1) to an applicant who fails to satisfy a requirement of this chapter; or

(2) on a determination by TALCB that:

(A) there is reasonable evidence that any person who owns more than 10 percent of the appraisal management company or any controlling person of the company has, within the 24 months preceding the date of the application, had a license or certification as an appraiser or a registration as an appraisal management company suspended, revoked, or put on probation in any state;

(B) the applicant has, while registered under this chapter, demonstrated incompetency, untrustworthiness, or conduct or practices that render the registrant unfit to perform appraisal management services; or

(C) the applicant no longer performs appraisal management services in good faith and is a source of detriment, injury, or loss to the public.

(b) Requires TALCB to immediately provide written notice to the applicant of TALCB's denial of a registration under this chapter.

(c) Provides that an appeal of the denial of a registration is governed by Chapter 2001 (Administrative Procedure), Government Code.

Sec. 1104.106. ISSUANCE AND PUBLICATION OF REGISTRATION NUMBER. Requires TALCB to:

(1) issue a unique registration number to each appraisal management company registered under this chapter; and

(2) publish annually a list of the companies registered under this chapter and the registration number of each company.

Sec. 1104.107. EXPIRATION OF REGISTRATION. Provides that, unless renewed, a registration issued under this chapter expires on the second anniversary of the date the registration is issued.

[Reserves Sections 1104.108-1104.150 for expansion.]

SUBCHAPTER D. PRACTICE BY APPRAISAL MANAGEMENT COMPANY

Sec. 1104.151. EMPLOYMENT OF CERTAIN PERSONS PROHIBITED. (a) Prohibits an appraisal management company registered under this chapter from knowingly:

(1) employing a person in a position in which the person has the responsibility to order appraisals or to review completed appraisals if the person has had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation in any state;

(2) entering into any independent contractor arrangement for the provision of appraisals or appraisal management services with any person who has had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation in any state; or

(3) entering into any contract, agreement, or other business relationship for the provision of appraisals or appraisal management services with any entity that employs, has entered into an independent contract arrangement, or has entered into any contract, agreement, or other business relationship with any person who has ever had a license or certificate to act as an appraiser denied, revoked, or surrendered in lieu of revocation in any state.

(b) Provides that an appraisal management company is not in violation of Subsection (a) if the person whose license or certification was denied, revoked, or surrendered in lieu of revocation has since that denial, revocation, or surrender had a license or certificate granted or reinstated and the person maintains the license or certificate in good standing.

Sec. 1104.152. VERIFICATION OF LICENSURE OR CERTIFICATION. Requires an appraisal management company registered under this chapter to verify that an individual to whom the company is making an assignment for the completion of an appraisal:

(1) is licensed or certified under Chapter 1103 (Real Estate Appraisers); and

(2) has not had a license or certificate as an appraiser denied, revoked, or surrendered in lieu of revocation since the last time the company made an assignment for an appraisal to the appraiser.

Sec. 1104.153. APPRAISAL REVIEW. Requires a person who performs an appraisal review for an appraisal management company to be licensed or certified under Chapter 1103 (Real Estate Appraisers) with at least the same certification for the property type as the appraiser who completed the report being reviewed.

Sec. 1104.154. COMPETENCY OF APPRAISERS. Requires an appraisal management company, before making an assignment to an appraiser, to verify that the appraiser receiving the assignment satisfies each provision of the competency rule of the Uniform Standards of Professional Appraisal Practice for the appraisal being assigned.

Sec. 1104.155. PROFESSIONAL STANDARDS. Requires an appraisal management company registered under this chapter to on a periodic basis perform an appraisal review of the work of appraisers performing appraisal services for the company to ensure that the services comply with:

(1) the edition of the Uniform Standards of Professional Appraisal Practice in effect at the time of the appraisal; or

(2) other standards prescribed by TALCB rule.

Sec. 1104.156. BUSINESS RECORDS. (a) Requires an appraisal management company registered under this chapter or that has applied for registration under this chapter to retain for at least five years all business records relating to each service request that the company receives and the appraiser who performs the appraisal for the company.

(b) Authorizes TALCB to audit the records of an appraisal management company registered under this chapter to ensure compliance with this chapter, TALCB rules, and the Uniform Standards of Professional Appraisal Practice.

(c) Requires that a written record of all substantive communications between an appraisal management company registered under this chapter and an appraiser relating to inclusion on an appraisal panel or to an appraisal assignment be maintained as provided under Subsection (a).

Sec. 1104.157. COMPENSATION OF APPRAISERS. (a) Requires an appraisal management company to:

(1) pay an appraiser, except in cases of breach of contract or substandard performance of services, for the completion of an appraisal or valuation assignment not later than the 60th day after the date the appraiser provides the completed appraisal or valuation assignment to the company or its assignee; and

(2) compensate appraisers at a rate that is reasonable and customary for appraisals being performed in the market area of the property being appraised consistent with the presumptions under federal law.

(b) Authorizes an appraiser who is aggrieved under this section to file a complaint with TALCB against the appraisal management company if the matter remains unresolved after the appraiser completes the company's dispute resolution process under Section 1104.162.

Sec. 1104.158. STATEMENT OF FEES. (a) Requires an appraisal management company, in reporting to a client, to separately state the fees:

(1) paid to an appraiser for the completion of an appraisal; and

(2) charged by the company for appraisal management services.

(b) Prohibits an appraisal management company from:

(1) prohibiting an appraiser from recording in the body of the report that is submitted by the appraiser to the company the fee that the appraiser was paid by the company for completing the appraisal; or

(2) including any fees for appraisal management services performed by the company in the amount the company reports as charges for the actual completion of an appraisal by an appraiser.

Sec. 1104.159. DISCLOSURE OF REGISTRATION NUMBER. Requires an appraisal management company registered under this chapter to disclose the company's registration number on all documents used to procure appraisals in this state.

Sec. 1104.160. MANDATORY REPORTING. Requires an appraisal management company that has a reasonable basis to believe an appraiser is failing to comply with the Uniform Standards of Professional Appraisal Practice in a manner that materially affects a value conclusion, violating applicable laws, or otherwise engaging in unethical or unprofessional conduct to refer the matter to TALCB in the manner provided by Section 1104.204.

Sec. 1104.161. REMOVAL OF APPRAISER FROM APPRAISAL PANEL. (a) Prohibits a company, other than during the first 30 days after the date an appraiser is first added to the appraisal panel of an appraisal management company, from removing an appraiser from its panel, or otherwise refusing to assign requests for appraisal services to an appraiser without:

(1) notifying the appraiser in writing of the reasons for removal from the company's panel;

(2) if the appraiser is being removed from the panel for illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice, or a violation of this chapter, notifying the appraiser of the nature of the alleged conduct or violation; and

(3) providing an opportunity for the appraiser to respond in writing to the notification.

(b) Authorizes an appraiser who is removed from the appraisal panel of an appraisal management company for alleged illegal conduct, a violation of the Uniform Standards of Professional Appraisal Practice, or a violation of this chapter, to file a complaint with TALCB for a review of the decision of the company if the matter remains unresolved after the appraiser completes the company's dispute resolution process under Section 1104.162.

(c) Prohibits TALCB, in a review under Subsection (b), from making any determination regarding the nature of the business relationship between the appraiser and the appraisal management company that is unrelated to the grounds for the removal.

(d) Requires TALCB to hear and resolve a complaint filed under Subsection (b) not later than the 180th day after the date the complaint is filed with TALCB.

(e) Requires TALCB to order that an appraiser be returned to the appraisal panel of the appraisal management company if, after opportunity for hearing and review, TALCB determines that the appraiser did not commit the alleged violation. Prohibits the appraisal management company from refusing to make assignments for appraisal services or otherwise penalize the appraiser after returning the appraiser to the company's appraisal panel.

Sec. 1104.162. DISPUTE RESOLUTION. Requires an appraisal management company to make a dispute resolution process available to review a written request by an appraiser who:

(1) is dismissed from the company's appraisal panel for a reason stated in Section 1104.161(a)(2);

(2) is not paid as required by Section 1104.157; or

(3) alleges a violation by the company of one or more prohibitions in Section 1104.203.

[Reserves Sections 1104.163-1104.200 for expansion.]

SUBCHAPTER E. DISCIPLINARY ACTIONS AND PROCEDURES AND ADMINISTRATIVE PENALTIES

Sec. 1104.201. DISCIPLINARY POWERS OF BOARD. (a) Authorizes TALCB to reprimand an appraisal management company or conditionally or unconditionally suspend or revoke any registration issued under this chapter if TALCB determines that the appraisal management company has:

(1) violated or attempted to violate this chapter or any rule adopted by TALCB under this chapter; or

(2) procured or attempted to procure a license or registration by fraud, misrepresentation, or deceit.

(b) Authorizes TALCB to probate the suspension or revocation of a registration under reasonable terms determined by TALCB.

Sec. 1104.202. ADMINISTRATIVE PENALTY. (a) Authorizes TALCB to impose, in addition to any other disciplinary action under this chapter, an administrative penalty against a person who violates this chapter or a rule adopted under this chapter.

(b) Prohibits the amount of the administrative penalty from exceeding $10,000 for each violation. Provides that each day of a continuing violation is a separate violation.

(1) the seriousness of the violation;

(2) the history of previous violations;

(3) the amount necessary to deter a future violation;

(4) efforts made to correct the violation; and

(5) any other matter that justice may require.

Sec. 1104.203. PROHIBITED PRACTICES. (a) Prohibits an appraisal management company or an employee, director, officer, or agent of an appraisal management company from:

(1) causing or attempting to cause the appraised value of a property assigned under an appraisal to be based on any factor other than the independent judgment of the appraiser;

(2) causing or attempting to cause the mischaracterization of the appraised value of a property in conjunction with a consumer credit transaction;

(3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of a consumer credit transaction;

(4) altering, modifying, or otherwise changing a completed appraisal report submitted by an appraiser by:

(A) altering or removing the appraiser's signature or seal; or

(B) adding information to, removing information from, or changing information contained in the appraisal report, including any disclosure submitted by an appraiser in or with the report;

(5) conditioning the request for an appraisal or the payment of an appraisal fee, salary, or bonus on the opinion, conclusion, or valuation to be reached, or on a preliminary estimate or opinion requested from an appraiser;

(6) requesting that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report, or provide estimated values or comparable sales at any time before the appraiser's completion of an appraisal;

(7) providing to an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for a purchase transaction may be provided;

(8) making any part of the appraiser's fee or the appraisal management company's fee contingent on a favorable outcome, including a loan closing, or a specific valuation being achieved by the appraiser in the appraisal report;

(9) withholding or threatening to withhold timely payment for an appraisal report or appraisal services rendered when the appraisal report or services are provided in accordance with the contract between the parties;

(10) withholding or threatening to withhold future business from an appraiser;

(11) demoting or terminating or threatening to demote or terminate an appraiser;

(12) expressly or impliedly promising future business, promotions, or increased compensation for an appraiser;

(13) providing to an appraiser, or any person related to the appraiser, stock or other financial or nonfinancial benefits;

(14) allowing the removal of an appraiser from an appraisal panel, without prior written notice to the appraiser;

(15) obtaining, using, or paying for a second or subsequent appraisal or order an automated valuation model in connection with a mortgage financing transaction unless:

(A) there is a reasonable basis to believe that the initial appraisal was flawed or tainted and that basis is clearly and appropriately noted in the loan file;

(B) the subsequent appraisal or automated valuation model is done under a bona fide pre-funding or post-funding appraisal review or quality control process; or

(16) prohibiting legal and allowable communication between the appraiser and:

(A) the lender;

(B) a real estate license holder;

(C) any other person from whom the appraiser, in the appraiser's own professional judgment, believes information would be relevant;

(17) refusing to accept an appraisal report prepared by more than one appraiser if an appraiser provides substantial assistance to another appraiser in the preparation of the report, unless the appraisal assignment names an individual appraiser or the statement of work requires an unassisted report; or

(18) requiring an appraiser to:

(A) prepare an appraisal report if the appraiser, in the appraiser's own professional judgment, believes the appraiser does not have the necessary expertise for the specific geographic area and the appraiser has notified the company of the belief;

(B) prepare an appraisal report under a schedule that the appraiser, in the appraiser's own professional judgment, believes does not afford the appraiser the ability to meet all the relevant legal and professional obligations if the appraiser has notified the company of this belief;

(D) modify any aspect of an appraisal report without the appraiser's agreement that the modification is appropriate;

(E) engage in any act or practice that does not comply with:

(i) the Uniform Standards of Professional Appraisal Practice; or

(ii) any assignment conditions and certifications required by the client;

(F) engage in any other act or practice that impairs or attempts to impair an appraiser's independence, objectivity, or impartiality;

(G) enter into an agreement to not serve on the panel of another appraisal management company;

(H) indemnify or hold harmless the appraisal management company against liability except liability for errors and omissions by the appraiser; or

(I) pay a fee imposed on the appraisal management company under Section 1104.052.

(b) Prohibits Subsection (a) from being construed to prohibit:

(1) an appraiser from reimbursing an appraisal management company for the actual cost of discretionary services provided to the appraiser;

(2) an appraiser from voluntarily providing the appraiser's digital signature to another person; or

(3) an appraisal management company from asking an appraiser, after a report is delivered, to:

(A) consider additional appropriate property information, including the consideration of additional comparable properties to make or support an appraisal;

(B) provide further detail, substantiation, or explanation for the appraiser's value conclusion; or

(4) an appraisal management company from requiring an appraiser to provide advance notice of and an opportunity for the appraisal management company to participate in any legal and allowable communications between the appraiser and a lender; or

(5) a copy of the executed contract for a purchase transaction being provided to an appraiser.

(c) Authorizes TALCB to institute a disciplinary action or impose an administrative penalty under Chapter 1103 against an appraiser who, while acting as an employee, officer, or agent of an appraisal management company, engages in conduct prohibited by Subsection (a).

Sec. 1104.204. COMPLAINT. (a) Authorizes any person, including a member of TALCB, to file with TALCB a written complaint on a form prescribed by TALCB.

(b) Authorizes TALCB, on its own motion, to file a complaint against an appraisal management company registered under this chapter.

Sec. 1104.205. REVIEW AND INVESTIGATION. (a) Requires TALCB, on receipt of a complaint or on its own motion, to review and investigate an alleged act or omission that TALCB believes is a ground for disciplinary action.

(b) Requires an investigator designated by the presiding officer of TALCB or commissioner to investigate each allegation in a complaint to determine whether probable cause exists for a hearing on the complaint.

(c) Requires TALCB or the commissioner of TALCB (commissioner) to dismiss the complaint and prohibits them from taking further action if TALCB determines that a complaint does not present facts that are grounds for disciplinary action.

Sec. 1104.206. GENERAL SUBPOENA AUTHORITY. (a) Authorizes TALCB to request and, if necessary, compel by subpoena:

(1) the attendance of witnesses for examination under oath; and

(2) the production of records, documents, and other evidence relevant to the investigation of an alleged violation of this chapter for inspection and copying.

(b) Authorizes TALCB to also issue a subpoena for purposes of an investigation of a complaint to determine whether TALCB should institute a contested case proceeding.

(c) Authorizes TALCB, acting through the attorney general, to file suit to enforce the subpoena in a district court in Travis County or in the county in which a hearing conducted by TALCB may be held if a person does not comply with a subpoena.

(d) Requires the court to order compliance with the subpoena if the court finds that good cause exists for the issuance of the subpoena.

Sec. 1104.207. REPORT OF INVESTIGATION REQUIRED. (a) Requires the investigator, at the conclusion of the investigation of a complaint, to submit to TALCB a written report to enable TALCB to determine what further action is necessary.

(b) Requires that the report contain:

(1) statements of fact;

(2) the recommendations of the investigator; and

(3) the position or defense of the investigated appraisal management company.

Sec. 1104.208. ACTION BASED ON REPORT. (a) Authorizes TALCB, based on the report submitted under Section 1104.207, to:

(1) order further investigation of the complaint;

(2) determine that there is not probable cause to believe that a violation occurred and dismiss the case; or

(3) determine that there is probable cause to believe that a violation occurred and enter into an agreed order with the respondent or proceed as the complainant with a contested case hearing under Chapter 2001, Government Code.

(b) Authorizes TALCB by rule to delegate any of its authority under Subsection (a) to the commissioner.

Sec. 1104.209. NOTICE OF VIOLATION AND PENALTY. (a) Requires TALCB, if, after investigating a possible violation and the facts surrounding that possible violation, TALCB determines that a violation occurred, to give written notice of the violation to the person alleged to have committed the violation.

(b) Requires that the notice:

(1) include a summary of the alleged violation;

(2) state the recommended sanction, including the amount of the proposed administrative penalty; and

(3) inform the person of the person's right to a hearing on the occurrence of the violation, the amount of the penalty, or both.

(1) accept TALCB's determination, including the proposed administrative penalty; or

(2) make a written request for a hearing on that determination.

Sec. 1104.210. PENALTY TO BE PAID OR HEARING REQUESTED. Requires TALCB by order to approve the determination and impose the proposed penalty if the person accepts TALCB's determination or fails to respond to the notice in a timely manner.

Sec. 1104.211. TEMPORARY SUSPENSION. (a) Requires the presiding officer of TALCB to appoint a three-member disciplinary panel consisting of TALCB members to determine whether a person's registration under this chapter should be temporarily suspended.

(b) Requires the disciplinary panel to temporarily suspend the person's registration if the disciplinary panel determines from the information presented to the panel that a person registered under this chapter would, by the person's continuation in practice, constitute a continuing threat to the public welfare.

(1) institution of proceedings for a contested case hearing is initiated simultaneously with the temporary suspension; and

(2) a hearing is held under Chapter 2001, Government Code, and this chapter as soon as possible.

(d) Provides that a temporary suspension under this section automatically expires after 45 days if TALCB has not scheduled a hearing to take place within that time or if, at TALCB's request, the hearing is continued beyond the 45th day.

(e) Authorizes the disciplinary panel, notwithstanding Chapter 551 (Open Meetings), Government Code, to hold a meeting by telephone conference call if immediate action is required and convening the panel at one location is inconvenient for any member of the panel.

Sec. 1104.212. NOTICE OF HEARING. Requires TALCB to personally deliver or send by certified mail to the company notice of the hearing not later than the 30th day before the hearing date of a contested case involving an appraisal management company.

Sec. 1104.213. APPLICABILITY OF ADMINISTRATIVE PROCEDURE LAW. Provides that, except as otherwise provided by this chapter, a proceeding under this subchapter is subject to Chapter 2001, Government Code.

Sec. 1104.214. ACTION AFTER HEARING. Requires the administrative law judge, on conclusion of a contested case hearing under this subchapter, to:

(1) make findings of fact and conclusions of law; and

(2) issue to TALCB a proposal for decision that TALCB shall take one or more of the following actions:

(A) dismiss the charges;

(B) revoke the appraisal management company's registration;

(D) impose a period of probation, with or without conditions;

(E) issue a public or private reprimand or a warning;

(F) impose an administrative penalty; or

(G) require the payment of costs expended by TALCB associated with the contested case, including legal fees and administrative costs.

Sec. 1104.215. DECISION BY BOARD. (a) Authorizes TALCB by order to determine, based on the findings of fact and conclusions of law and the recommendations of the hearings examiner, that:

(1) a violation has occurred and may impose an administrative penalty or another sanction; or

(2) a violation did not occur.

(b) Requires TALCB to give notice of the order to the person. Requires that the notice include:

(1) separate statements of the findings of fact and conclusions of law;

(2) the amount of any penalty imposed or a description of any sanction imposed; and

(3) a statement of the right of the person to judicial review of the order.

Sec. 1104.216. APPLICATION FOR REHEARING. (a) Authorizes a party, not later than the 20th day after the date a final decision is issued in a contested case, to file an application with TALCB for a rehearing. Requires that the application state:

(1) the specific grounds for rehearing; and

(2) the relief sought.

(b) Provides that the application is denied if TALCB does not grant it before the 120th day after the date the commissioner is served with the application.

Sec. 1104.217. DECISION ON REHEARING. (a) Prohibits the decision made at the conclusion of the original contested case hearing from being reversed or modified for a procedural, evidentiary, or other error that did not cause substantial injustice to the parties.

(b) Authorizes the decision made on a rehearing to incorporate by reference any part of the decision made at the conclusion of the original hearing.

(1) the facts arose after the original hearing was concluded;

(2) the party offering the evidence could not reasonably have provided the evidence at the original hearing; or

(3) the party offering the evidence was misled by a party regarding the necessity for offering the evidence at the original hearing.

[Reserves Sections 1104.218-1104.250 for expansion.]

SUBCHAPTER F. OTHER ENFORCEMENT PROVISIONS

Sec. 1104.251. INJUNCTION. (a) Authorizes TALCB to institute an action in its own name against any person, including a person who is not registered under this chapter, to enjoin a violation of this chapter or a rule adopted by TALCB under this chapter.

(b) Requires that an action under this section be brought in a district court in Travis County. Requires the attorney general to act as legal advisor to TALCB and provide necessary legal assistance.

Sec. 1104.252. CIVIL PENALTY FOR ENGAGING IN ACTIVITY WITHOUT REQUIRED REGISTRATION. (a) Provides that a person who receives consideration for engaging in an activity for which registration is required under this chapter and who is not registered is liable for a civil penalty.

(b) Prohibits the amount of a civil penalty imposed under this section from being less than the amount of money equal to the value of the consideration received or more than three times the amount of money equal to the value of the consideration received.

(c) Authorizes the attorney general or a district or county attorney, at the request of TALCB, to bring an action in district court to recover a civil penalty under this section.

(d) Requires that a civil penalty recovered in an action under this section be deposited in the state treasury.

Sec. 1104.253. CRIMINAL PENALTY FOR ENGAGING IN ACTIVITY WITHOUT REQUIRED REGISTRATION. (a) Provides that a person commits an offense if the person engages in an activity for which registration is required under this chapter without being registered.

(b) Provides that an offense under this section is a Class A misdemeanor.

SECTION 3. Requires the governor, not later than January 31, 2013, to appoint the members of the advisory committee established under Section 1103.157, Occupations Code, as added by this Act.

SECTION 4. Requires TALCB, not later than January 1, 2012, to adopt all rules, fees, and forms as required by Chapter 1104, Occupations Code, as added by this Act.

SECTION 5. (a) Requires the Real Estate Center at Texas A&M University to conduct a study of the reasonable and customary rates of compensation for appraisals performed by appraisers in various market areas of this state.

(b) Requires the Real Estate Center at Texas A&M University, not later than November 1, 2012, to submit to the appropriate standing committees of the legislature, a report containing the findings of the study conducted under Subsection (a) of this section.

SECTION 6. Authorizes an appraisal management company conducting business in this state on or before the effective date of this Act, notwithstanding Section 7(b) of this Act, to continue to conduct business in this state without registering under Chapter 1104, Occupations Code, as added by this Act, until the 120th day after the date the registration process created by TALCB under Chapter 1104, Occupations Code, as added by this Act, takes effect if that process is not in effect on March 1, 2012.

SECTION 7. (a) Effective date, except as provided by Subsection (b) of this section: September 1, 2011.

(b) Effective date, Section 1104.101 and Subchapters E and F, Chapter 1104, Occupations Code, as added by this Act: March 1, 2012.

Senate Research Center	C.S.H.B. 1146
82R25311 JAM-D	By: Kuempel, Margo (Carona)
	Business & Commerce
	5/10/2011
	Committee Report (Substituted)