House File 2393 - Introduced HOUSE FILE 2393 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 596) A BILL FOR An Act relating to real estate appraisal, including by 1 requiring the superintendent of banking to regulate 2 appraisal management companies and supervise the Iowa real 3 estate appraiser board, making penalties applicable, and 4 including effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5368HV (1) 86 gh/rn

H.F. 2393 DIVISION I 1 APPRAISAL MANAGEMENT COMPANIES 2 Section 1. NEW SECTION . 543E.1 Short title. 3 This chapter shall be known and may be cited as the “Iowa 4 Appraisal Management Company Registration and Supervision Act” . 5 Sec. 2. NEW SECTION . 543E.2 Purpose and scope. 6 The purpose of this chapter is to protect the independence 7 and integrity of the appraisal process when an appraisal is 8 provided through an appraisal management company in connection 9 with a consumer credit transaction secured by the principal 10 dwelling of an Iowa consumer or securitization of such a 11 transaction. 12 Sec. 3. NEW SECTION . 543E.3 Definitions. 13 Unless the context otherwise requires, the definitions 14 contained in section 543D.2 shall apply to this chapter. In 15 addition, the following definitions shall apply for purposes of 16 this chapter: 17 1. “Administrator” means the superintendent of the 18 division of banking of the department of commerce or the 19 superintendent’s designee. 20 2. “Appraisal management company” means a person that 21 oversees an appraiser panel of more than fifteen certified 22 appraisers in this state or twenty-five or more certified 23 or licensed appraisers nationally within a year, and that 24 directly or indirectly performs appraisal management services 25 for creditors or secondary mortgage market participants in 26 connection with consumer credit transactions secured by the 27 principal dwellings of Iowa consumers or securitizations of 28 those transactions. 29 3. “Appraisal management services” means any of the 30 following: 31 a. Recruiting, selecting, and retaining appraisers. 32 b. Contracting with state certified or licensed appraisers 33 to perform appraisal assignments. 34 c. Managing the process of having an appraisal performed, 35 -1- LSB 5368HV (1) 86 gh/rn 1/ 29

H.F. 2393 including providing administrative services such as receiving 1 appraisal orders and appraisal reports, submitting completed 2 appraisal reports to creditors and secondary mortgage market 3 participants, collecting fees from creditors and secondary 4 mortgage market participants for services provided, and paying 5 appraisers for services performed. 6 d. Reviewing and verifying the work of appraisers. 7 4. “Appraisal review” means developing and communicating an 8 opinion under the uniform standards of professional appraisal 9 practice review standards regarding the quality of another 10 appraiser’s work product prepared as part of an appraisal 11 assignment. An “appraisal review ” does not include quality 12 control solely to assure an appraisal report is complete, or to 13 correct grammatical, typographical, or other similar errors. 14 5. “Appraisal subcommittee” means the appraisal subcommittee 15 of the federal financial institutions examination council. 16 6. “Appraiser” means a person who holds a certificate as a 17 certified real estate appraiser issued under chapter 543D. 18 7. “Appraiser panel” means a network, list, or roster of 19 certified appraisers who are independent contractors with 20 an appraisal management company and who have been selected 21 and approved by the appraisal management company to perform 22 appraisals directly for the appraisal management company or 23 for persons that have ordered appraisals through the appraisal 24 management company. Appraisers on an appraisal management 25 company’s appraiser panel may include both appraisers engaged 26 to perform one or more appraisals for covered transactions or 27 for secondary mortgage market participants in connection with 28 covered transactions, and appraisers accepted by the appraisal 29 management company for consideration for future appraisal 30 assignments for such purposes, as the administrator may further 31 provide by rule. 32 8. “Associate real estate appraiser” means a person who is 33 registered with the Iowa real estate appraiser examining board 34 under section 543D.20. 35 -2- LSB 5368HV (1) 86 gh/rn 2/ 29

H.F. 2393 9. “Consumer credit” means credit offered or extended to a 1 consumer primarily for personal, family, or household purposes. 2 10. “Controlling person” means any of the following: 3 a. An owner, officer, or director of an appraisal management 4 company. 5 b. An individual employed, appointed, or authorized by 6 an appraisal management company who has the authority to 7 enter into a contractual relationship with other persons for 8 the performance of appraisal management services or has the 9 authority to enter into agreements with appraisers for the 10 performance of appraisals. 11 c. An individual who possesses, directly or indirectly, the 12 power to direct or cause the direction of the management or 13 policies of an appraisal management company. 14 11. “Covered transaction” means any consumer credit 15 transaction secured by the consumer’s principal dwelling. 16 12. “Creditor” means a person who regularly extends consumer 17 credit that is subject to a finance charge or is payable by 18 written agreement in more than four installments, not including 19 a down payment, and to whom the obligation is initially 20 payable, either on the face of the note or contract, or by 21 agreement when there is no note or contract. For purposes of 22 this subsection, a person “regularly extends consumer credit” 23 if the person extended credit, other than credit subject to 24 the requirements of 12 C.F.R. §1026.32, more than five times 25 in the preceding calendar year for transactions secured by a 26 dwelling. If a person did not meet those numerical standards 27 in the preceding calendar year, the numerical standards 28 shall be applied to the current calendar year. A person also 29 “regularly extends consumer credit” if, in any twelve-month 30 period, the person originates more than one credit extension 31 that is subject to the requirements of 12 C.F.R. §1026.32 or 32 one or more such credit extensions through a mortgage broker. 33 13. “Dwelling” means a residential structure that contains 34 one to four units, whether or not that structure is attached to 35 -3- LSB 5368HV (1) 86 gh/rn 3/ 29

H.F. 2393 real property. “Dwelling” includes an individual condominium 1 unit, cooperative unit, mobile home, and trailer, if it is used 2 as a residence. 3 14. “Federally regulated appraisal management company” means 4 an appraisal management company that is owned and controlled 5 by an insured depository institution, as defined in 12 U.S.C. 6 §1813 and regulated by the office of the comptroller of the 7 currency, the board of governors of the federal reserve system, 8 or the federal deposit insurance corporation. 9 15. “Federally related transaction regulations” means 10 regulations established by the comptroller of the currency, the 11 board of governors of the federal reserve system, the federal 12 deposit insurance corporation, or the national credit union 13 administration pursuant to sections 1112, 1113, and 1114 of 14 Tit. XI of the federal Financial Institutions Reform, Recovery, 15 and Enforcement Act, 12 U.S.C. §§3341-3343. 16 16. “National registry” means the registry of 17 state-registered appraisal management companies and federally 18 regulated appraisal management companies maintained by the 19 appraisal subcommittee. 20 17. “Nonsubstantive reason” means a reason not described in 21 section 543E.17 to constitute grounds for disciplinary action, 22 including but not limited to the failure to pay appropriate 23 fees. 24 18. “Person” means as defined in section 4.1. 25 19. “Principal dwelling” means the primary residence of a 26 consumer. For purposes of this chapter, a consumer may have 27 only one “principal dwelling” . A vacation or other second home 28 shall not be considered a “principal dwelling” . However, if 29 a consumer buys or builds a new dwelling that will become the 30 consumer’s primary residence within a year or upon completion 31 of the construction, the new residence is considered the 32 “principal dwelling” for purposes of this chapter. 33 20. “Secondary mortgage market participant” means a guarantor 34 or insurer of mortgage-backed securities, or an underwriter 35 -4- LSB 5368HV (1) 86 gh/rn 4/ 29

H.F. 2393 or issuer of mortgage-backed securities. “Secondary mortgage 1 market participant” only includes an individual investor in a 2 mortgage-backed security if that investor also serves in the 3 capacity of a guarantor, insurer, underwriter, or issuer for 4 the mortgage-backed security. 5 21. “States” means the fifty states of the United States, 6 the District of Columbia, and the territories of American 7 Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the 8 United States Virgin Islands. 9 22. “Substantive reason” means a reason specified in section 10 543E.17 as constituting grounds for disciplinary action. 11 23. “Uniform standards of professional appraisal practice” 12 means the uniform standards promulgated by the appraisal 13 standards board of the appraisal foundation. 14 Sec. 4. NEW SECTION . 543E.4 Registration required. 15 A person shall not directly or indirectly engage in or 16 attempt to engage in business as an appraisal management 17 company or advertise or hold itself out as engaging in or 18 conducting business as an appraisal management company in this 19 state without first registering with the administrator. 20 Sec. 5. NEW SECTION . 543E.5 Exemptions. 21 This chapter shall not apply to any of the following: 22 1. A person that exclusively employs appraisers on an 23 employer and employee basis for the performance of appraisals. 24 2. A government body, as defined in section 22.1, subsection 25 1, that performs appraisals or retains appraisers on behalf of 26 the government body. 27 3. A federally regulated appraisal management company. 28 4. A department or division of an entity that provides 29 appraisal management services only to that entity. 30 Sec. 6. NEW SECTION . 543E.6 Ownership —— restrictions and 31 requirements. 32 1. An appraisal management company registered or applying 33 for registration in this state shall not be directly or 34 indirectly owned in whole or in part by a person who has had a 35 -5- LSB 5368HV (1) 86 gh/rn 5/ 29

H.F. 2393 license or certificate to act as an appraiser refused, denied, 1 canceled, revoked, or surrendered in lieu of revocation in 2 any state for a substantive reason. An appraisal management 3 company may be directly or indirectly owned in whole or in part 4 by a person who has had a license or certificate to act as an 5 appraiser refused, denied, canceled, revoked, or surrendered 6 in lieu of revocation in a state for a nonsubstantive reason 7 if the license or certificate was subsequently granted or 8 reinstated. 9 2. A person who directly or indirectly owns more than ten 10 percent of an appraisal management company in this state shall 11 be of good moral character, as prescribed by rules adopted by 12 the administrator consistent with applicable federal law and 13 regulations, and shall submit to a background investigation, 14 as prescribed by rules adopted by the administrator consistent 15 with applicable federal law and regulations. 16 Sec. 7. NEW SECTION . 543E.7 Designation of controlling 17 person. 18 1. An appraisal management company registered or applying 19 for registration in this state shall designate a controlling 20 person who shall be the main contact for all communications 21 between the administrator and the appraisal management company, 22 and who shall be responsible for assuring the appraisal 23 management company complies with the provisions of this chapter 24 when performing appraisal management services in connection 25 with real estate located in this state. 26 2. The designated controlling person shall not have had a 27 license or certificate to act as an appraiser refused, denied, 28 canceled, revoked, or surrendered in lieu of revocation in 29 any state for a substantive reason. A designated controlling 30 person may have had a license or certificate to act as an 31 appraiser refused, denied, canceled, revoked, or surrendered 32 in lieu of revocation in a state for a nonsubstantive reason 33 if the license or certificate was subsequently granted or 34 reinstated. 35 -6- LSB 5368HV (1) 86 gh/rn 6/ 29

H.F. 2393 3. The designated controlling person shall be of good moral 1 character, as prescribed by rules adopted by the administrator 2 consistent with applicable federal law and regulations, and 3 shall submit to a background investigation, as prescribed by 4 rules adopted by the administrator consistent with applicable 5 federal law and regulations. 6 Sec. 8. NEW SECTION . 543E.8 Registration —— application 7 requirements. 8 1. An application for registration as an appraisal 9 management company shall be submitted on a form prescribed by 10 the administrator. 11 2. An application shall at a minimum include the following: 12 a. The name, form of business entity, contact information, 13 and official domicile of the applicant. 14 b. The names and contact information for all persons 15 who directly or indirectly own more than ten percent of the 16 applicant and for the controlling person designated pursuant 17 to section 543E.7, and such additional information the 18 administrator may need to enforce section 543E.6, subsection 1. 19 c. Information as reasonably necessary to establish the size 20 of the applicant’s nationwide and Iowa appraiser panels, in 21 accordance with rules adopted by the administrator. 22 d. Certification that the applicant does all of the 23 following: 24 (1) Verifies that appraisers who perform appraisal 25 assignments concerning real estate located in this state hold a 26 valid, unexpired certificate in good standing as a real estate 27 appraiser issued under chapter 543D. 28 (2) Requires that appraisals provided or coordinated by the 29 applicant comply with the uniform standards of professional 30 appraisal practice and has a system in place to monitor such 31 compliance. 32 (3) Maintains a system to assure that appraisal 33 management services are performed independently and free from 34 inappropriate influence and coercion pursuant to the appraisal 35 -7- LSB 5368HV (1) 86 gh/rn 7/ 29

H.F. 2393 independence standards established under section 129E of the 1 federal Truth in Lending Act, including the requirements for 2 the payment of reasonable and customary fees, and pursuant to 3 section 543D.18, subsections 1 and 2, and section 543D.18A. 4 (4) Maintains a system to retain detailed records of all 5 appraisal management services to be performed in this state. 6 (5) Maintains a system to assure that the appraiser selected 7 for an appraisal assignment is independent of the transaction 8 and has the requisite education, expertise, and experience 9 necessary to competently complete the appraisal assignment for 10 the particular market and property type. 11 e. If the applicant is not domiciled in this state, the name 12 and contact information for the applicant’s agent for service 13 of process in this state and consent to service of process upon 14 the secretary of state in any action or proceeding against the 15 applicant arising out of a transaction or operation connected 16 with or incidental to services performed by the applicant as 17 a registered appraisal management company in this state or 18 involving real property located in this state. 19 f. Any additional information that is reasonably needed for 20 the administrator to implement the provisions of this chapter 21 and assure that the applicant is eligible for registration 22 under this chapter. 23 Sec. 9. NEW SECTION . 543E.9 Registration renewal and annual 24 certification. 25 1. A registration issued under this chapter shall be valid 26 for one year as provided by rule. 27 2. An application to renew registration shall be submitted 28 in the form and in the manner prescribed by the administrator. 29 The administrator may further require periodic disclosures of 30 changes impacting registration, such as a change in ownership 31 or the designated controlling person. 32 3. An application to renew registration shall contain the 33 information described in section 543E.8, subsection 2. 34 4. A registration issued under this chapter shall lapse if 35 -8- LSB 5368HV (1) 86 gh/rn 8/ 29

H.F. 2393 not timely renewed, in accordance with rules adopted by the 1 administrator. 2 5. A person holding a lapsed registration shall not directly 3 or indirectly engage in or attempt to engage in business as an 4 appraisal management company or advertise or hold itself out as 5 engaging in or conducting business as an appraisal management 6 company in this state until the registration has been 7 reinstated under the process prescribed by the administrator 8 by rule. 9 Sec. 10. NEW SECTION . 543E.10 Fees. 10 1. The administrator shall by rule establish fees for 11 registration, renewal, reinstatement, and such additional fees 12 as are reasonably necessary for the administration of this 13 chapter. The fees shall be established in consideration of 14 the costs of administering this chapter and the actual cost 15 of the specific service to be provided or performed. The 16 administrator shall periodically review and adjust the schedule 17 of fees as needed to cover projected expenses. 18 2. Except as provided in subsection 3, all fees collected 19 under this chapter shall be deposited into the department of 20 commerce revolving fund created in section 546.12 and are 21 appropriated to the administrator to be used to administer 22 this chapter including but not limited to purposes such as 23 examinations, investigations, and administrative staffing. 24 Notwithstanding section 8.33, moneys appropriated pursuant to 25 this subsection are not subject to reversion to the general 26 fund of the state. 27 3. The administrator shall also collect the national 28 registry fee from each appraisal management company seeking 29 to register in this state and from federally regulated 30 appraisal management companies operating in this state. The 31 administrator shall transfer all national registry fees 32 collected by the administrator to the appraisal subcommittee. 33 Sec. 11. NEW SECTION . 543E.11 Appraiser, appraisal review, 34 and employee restrictions. 35 -9- LSB 5368HV (1) 86 gh/rn 9/ 29

H.F. 2393 1. The following individuals shall not have had a license or 1 certificate to act as an appraiser refused, denied, canceled, 2 revoked, or surrendered in lieu of revocation in any state 3 for a substantive reason, but may have had a license or 4 certificate to act as an appraiser refused, denied, canceled, 5 revoked, or surrendered in lieu of revocation in a state for 6 a nonsubstantive reason if the license or certificate was 7 subsequently granted or reinstated: 8 a. An appraiser in an appraisal management company’s 9 appraiser panel who performs or may perform appraisals of real 10 estate located in this state. 11 b. An employee, independent contractor, or other agent of 12 an appraisal management company who performs or may perform an 13 appraisal review of an appraisal of real estate located in this 14 state. 15 c. An employee, independent contractor, or other agent 16 of an appraisal management company who does or may, with 17 respect to real estate located in this state, have any 18 responsibility for assigning appraisers to specific appraisal 19 assignments, providing quality control for appraisal reports, 20 or communicating with appraisers regarding potential appraisal 21 report deficiencies. 22 2. An appraiser who on behalf of an appraisal management 23 company performs or may perform an appraisal review of an 24 appraisal of a dwelling located in this state shall comply with 25 the review provisions of the uniform standards of professional 26 appraisal practice, and shall be certified as an appraiser 27 under the laws of any state, except that a review appraiser 28 shall be certified under chapter 543D if such certification 29 is required by any applicable state or federal law, rule, or 30 regulation, or to the extent the review appraiser provides 31 the review appraiser’s own opinion of value, concurs with the 32 original appraiser’s opinion of value, or disagrees with the 33 original appraiser’s opinion of value. 34 3. An appraisal management company may rely on the national 35 -10- LSB 5368HV (1) 86 gh/rn 10/ 29

H.F. 2393 registry for purposes of verifying compliance with this 1 section. 2 Sec. 12. NEW SECTION . 543E.12 Adherence to standards —— 3 mandatory reporting. 4 1. An appraisal management company shall direct all 5 appraisers it requests to perform appraisal assignments 6 involving real estate located in this state to comply with the 7 uniform standards of professional appraisal practice, including 8 the competency rule. 9 2. An appraisal management company shall have an appraisal 10 review system in place to monitor compliance with subsection 1. 11 3. An appraisal management company that has a reasonable 12 basis to believe an appraiser has materially failed to 13 comply with the uniform standards of professional appraisal 14 practice or has otherwise materially violated chapter 543D or 15 this chapter shall refer the matter to the administrator in 16 conformance with applicable federal law and regulations. An 17 appraisal management company that has a reasonable basis to 18 believe another appraisal management company is failing to 19 comply with the provisions of this chapter shall refer the 20 matter to the administrator in conformance with section 272C.9, 21 subsection 2. 22 4. An appraiser who is employed by or is on the appraiser 23 panel of an appraisal management company registered under this 24 chapter who has a reasonable basis to believe the appraisal 25 management company is in violation of this chapter shall refer 26 the matter to the administrator. 27 Sec. 13. NEW SECTION . 543E.13 Recordkeeping —— payment. 28 1. An appraisal management company shall maintain a 29 detailed record of each service request the appraisal 30 management company receives involving real estate located in 31 this state and the identity of the appraiser who performs the 32 appraisal assignment. All such records shall be maintained for 33 at least five years after the request is sent by the appraisal 34 management company to the appraiser or the completion of the 35 -11- LSB 5368HV (1) 86 gh/rn 11/ 29

H.F. 2393 appraisal report, whichever period expires later. An appraisal 1 management company shall maintain such additional records 2 regarding appraisal management services performed in this state 3 as the administrator may specify by rule. 4 2. An appraisal management company shall, except in the 5 case of breach of contract or substandard performance of 6 an appraisal service, make payment to an appraiser for the 7 completion of an appraisal service within forty-five days 8 of the date on which the appraiser transmits or otherwise 9 provides the results of the completed appraisal service to the 10 appraisal management company. An appraisal management company 11 shall maintain detailed records to verify that all payments to 12 appraisers have been made in compliance with this section. All 13 such records shall be maintained for at least five years after 14 payment is made or the completion of the appraisal service, 15 whichever is later. 16 Sec. 14. NEW SECTION . 543E.14 Appraiser independence —— 17 compensation. 18 1. An appraisal management company registered under 19 this chapter shall take all reasonable steps to assure 20 that appraisals are conducted independently and free from 21 inappropriate influence or coercion pursuant to the appraisal 22 independence standards established under section 129E of the 23 federal Truth in Lending Act, including the requirements for 24 the payment of reasonable and customary fees, and in compliance 25 with the independence, objectivity, and impartiality provisions 26 of section 543D.18, subsections 1 and 2, and section 543D.18A. 27 2. An appraisal management company shall compensate 28 appraisers at a rate that is reasonable and customary for 29 appraisal services being performed in the market area of the 30 property being appraised in accordance with federal law. 31 Sec. 15. NEW SECTION . 543E.15 Prohibited acts. 32 An appraisal management company registered under this 33 chapter, or an employee, owner, director, controlling person, 34 or other agent of an appraisal management company, shall not 35 -12- LSB 5368HV (1) 86 gh/rn 12/ 29

H.F. 2393 do any of the following: 1 1. Require an appraiser to indemnify an appraisal 2 management company or hold an appraisal management company 3 harmless for any liability, damage, losses, or claims arising 4 out of the services performed by the appraisal management 5 company, and not the services performed by the appraiser. 6 2. Alter, modify, or otherwise change a completed appraisal 7 report submitted by an appraiser without the appraiser’s 8 written consent. 9 3. Require that an appraiser provide the appraisal 10 management company with the appraiser’s digital or electronic 11 signature, seal, or certification, or any password or other 12 form of security intended to prevent persons other than the 13 appraiser from affixing the appraiser’s digital or electronic 14 signature, seal, or certification on a completed appraisal 15 report. 16 4. Remove an appraiser from an appraiser panel without prior 17 written notice that identifies the basis for removal. Upon 18 request or in conjunction with an examination, an appraisal 19 management company shall forward to the administrator copies 20 of such notices issued to an appraiser located or certified in 21 Iowa. 22 5. Require an appraiser to modify any aspect of an appraisal 23 report other than through a request permitted under section 24 543D.18A, subsection 4. 25 6. Require an appraiser to perform an appraisal assignment 26 if the appraiser has notified the appraisal management company 27 that, in the appraiser’s own professional judgment, any of the 28 following apply: 29 a. The appraiser does not have the necessary competence or 30 expertise for the specific geographic area or type of property 31 to be appraised. 32 b. The timeframe under which the appraisal assignment is 33 to be performed is insufficient for the appraiser to meet all 34 relevant legal and professional obligations. 35 -13- LSB 5368HV (1) 86 gh/rn 13/ 29

H.F. 2393 7. Require, either knowingly or through lack of reasonable 1 diligence, an appraiser to take any action that would violate 2 the uniform standards of professional appraisal practice, or 3 any provision of chapter 543D or rule adopted pursuant thereto. 4 8. Prohibit an appraiser from disclosing the fee paid to the 5 appraiser for appraisal services in the appraisal report. 6 9. Prohibit or inhibit lawful communications between the 7 appraiser and the lender, a real estate salesperson or broker, 8 or any other person from whom the appraiser, in the appraiser’s 9 own professional judgment, believes information obtained would 10 be relevant to the appraisal assignment. 11 10. Condition payment of all or any part of an appraiser’s 12 fee or the appraisal management company’s fee on a particular 13 outcome, including but not limited to any of the following 14 outcomes: 15 a. A loan closing. 16 b. A specific dollar amount in an appraisal report. 17 c. An outcome that would violate section 543D.18, subsection 18 2, or section 543D.18A, subsection 1. 19 11. Engage in any acts or practices that violate section 20 543E.14. 21 Sec. 16. NEW SECTION . 543E.16 Display of registration 22 number. 23 An appraisal management company registered under this 24 chapter shall be issued a unique registration number and shall 25 include its registration number in any record, such as an 26 engagement letter, order, or agreement, in which the appraisal 27 management company contracts with an appraiser to perform an 28 appraisal assignment involving real estate located in this 29 state. 30 Sec. 17. NEW SECTION . 543E.17 Grounds for disciplinary 31 action. 32 1. After notice and hearing, the administrator may 33 revoke, suspend, or refuse to issue, renew, or reinstate 34 a registration; reprimand, censure, or limit the scope of 35 -14- LSB 5368HV (1) 86 gh/rn 14/ 29

H.F. 2393 practice of any registrant; impose a civil penalty not to 1 exceed ten thousand dollars per violation; require remedial 2 action; or place any registrant on probation; all with or 3 without terms, conditions, or in combinations of remedies, for 4 any one or more of the following reasons: 5 a. Fraud or deceit in obtaining registration, which may also 6 result in permanent revocation of the registration. 7 b. Dishonesty, fraud, or gross negligence in the provision 8 of appraisal management services. 9 c. A violation of this chapter or implementing rules by 10 the appraisal management company or by an employee, owner, 11 director, controlling person, or other agent of the appraisal 12 management company. 13 d. Conviction of a felony or other indictable offense, any 14 element of which is dishonesty, deception, or fraud, or is 15 otherwise related to the performance of appraisal management 16 services, under the laws of any state or the United States. 17 e. Cancellation, revocation, suspension, or refusal to renew 18 the authority to practice as an appraisal management company, 19 or the acceptance of the voluntary surrender of a registration 20 to practice as an appraisal management company to conclude a 21 disciplinary investigation or action, by any other state, a 22 federal agency, or foreign authority for any cause other than 23 failure to pay appropriate fees in the other jurisdiction. 24 f. A violation of section 272C.10. 25 2. When determining whether to initiate a disciplinary 26 proceeding against an appraisal management company based 27 on actions or omissions by an employee, owner, director, 28 controlling person, or other agent of the appraisal management 29 company, the administrator shall take into consideration all 30 of the following: 31 a. Whether the appraisal management company took reasonable 32 steps to prevent the violation. 33 b. Whether the violation was or could have been discovered 34 by the appraisal management company upon reasonable inquiry. 35 -15- LSB 5368HV (1) 86 gh/rn 15/ 29

H.F. 2393 c. What steps the appraisal management company took upon 1 discovering the violation. 2 d. Whether the violation could have been avoided had the 3 appraisal management company established the systems or other 4 procedures required under this chapter. 5 e. Whether the violation is an isolated matter or more 6 systemic to the appraisal management company’s performance. 7 Sec. 18. NEW SECTION . 543E.18 Unlawful practice —— 8 complaints and investigations —— remedies and penalties. 9 1. If, as the result of a complaint or otherwise, the 10 administrator believes that a person has engaged, or is about 11 to engage, in an act or practice that constitutes or will 12 constitute a violation of this chapter, the administrator may 13 make application to the district court for an order enjoining 14 such act or practice. Upon a showing by the administrator that 15 such person has engaged, or is about to engage, in any such act 16 or practice, an injunction, restraining order, or other order 17 as may be appropriate shall be granted by the district court. 18 2. The administrator may investigate a complaint or 19 initiate a complaint against a person who is not registered 20 under this chapter to determine whether grounds exist to make 21 application to the district court pursuant to subsection 1 or 22 to issue an order pursuant to subsection 3, and in connection 23 with such complaint or investigation may issue subpoenas to 24 compel witnesses to testify or persons to produce evidence 25 consistent with the provisions of section 272C.6, subsection 26 3, as needed to determine whether probable cause exists to 27 initiate a proceeding under this section or to make application 28 to the district court for an order enjoining a violation of 29 this chapter. 30 3. In addition to or as an alternative to making application 31 to the district court for an injunction, the administrator may 32 issue an order to a person who is not registered under this 33 chapter to require compliance with this chapter and may impose 34 a civil penalty against such person for any violation specified 35 -16- LSB 5368HV (1) 86 gh/rn 16/ 29

H.F. 2393 in subsection 4 in an amount up to ten thousand dollars for 1 each violation. All civil penalties collected pursuant to this 2 section shall be deposited in the housing trust fund created 3 in section 16.181. An order issued pursuant to this section 4 may prohibit a person from applying for registration under this 5 chapter or certification or registration under chapter 543D. 6 4. The administrator may impose a civil penalty against a 7 person who is not registered under this chapter for any of the 8 following: 9 a. A violation of section 543E.4. 10 b. A violation of section 543D.18A, subsection 1. 11 c. Fraud, deceit, or deception, through act or omission, 12 in connection with an application for registration under this 13 chapter. 14 5. The administrator, before issuing an order under 15 this section, shall provide the person written notice and 16 the opportunity to request a hearing. The hearing must be 17 requested within thirty days after receipt of the notice 18 and shall be conducted in the same manner as provided for 19 disciplinary proceedings involving a registrant under this 20 chapter. 21 6. A person aggrieved by the imposition of a civil penalty 22 under this section may seek judicial review pursuant to section 23 17A.19. 24 7. If a person fails to pay a civil penalty within thirty 25 days after entry of an order imposing the civil penalty, or 26 if the order is stayed pending an appeal, within ten days 27 after the court enters a final judgment in favor of the 28 administrator, the administrator shall notify the attorney 29 general. The attorney general may commence an action to 30 recover the amount of the penalty, including reasonable 31 attorney fees and costs. 32 8. An action to enforce an order under this section may be 33 joined with an action for an injunction. 34 Sec. 19. NEW SECTION . 543E.19 Surety bond. 35 -17- LSB 5368HV (1) 86 gh/rn 17/ 29

H.F. 2393 1. The administrator shall require that an appraisal 1 management company be covered by a surety bond in the amount of 2 twenty-five thousand dollars. 3 2. The surety bond shall be in a form as prescribed by 4 the administrator. The administrator may, pursuant to rule, 5 determine requirements for such surety bonds as are necessary 6 to accomplish the purposes of this chapter. The requirements 7 for a surety bond shall only relate to liabilities, damages, 8 losses, or claims arising out of the appraisal management 9 services performed by the appraisal management company 10 involving real estate located in this state. The bond shall 11 provide that a person having a claim against an appraisal 12 management company may bring suit directly on the bond or the 13 administrator may bring suit on behalf of such person. 14 Sec. 20. NEW SECTION . 543E.20 Additional administrator 15 authority. 16 1. The administrator is vested with broad administrative 17 authority to administer, interpret, and enforce this chapter 18 and to promulgate rules implementing this chapter. 19 2. In addition to the duties and powers conferred upon the 20 administrator in this chapter, the administrator shall have 21 the authority to adopt such rules as are reasonably necessary 22 to assure the administrator’s registration and supervision 23 of appraisal management companies comply with the minimum 24 requirements of 12 U.S.C. §3352 and related federal laws and 25 regulations, with respect to any of the following: 26 a. Reviewing and approving or denying an appraisal 27 management company’s application for initial or renewal 28 registration. 29 b. Examining the books and records of an appraisal 30 management company operating in the state and requiring the 31 appraisal management company to submit reports, information, 32 and documents. 33 c. Verifying that the appraisers on an appraisal management 34 company’s appraiser panel who perform appraisal assignments in 35 -18- LSB 5368HV (1) 86 gh/rn 18/ 29

H.F. 2393 this state hold valid certificates issued under chapter 543D. 1 d. Conducting investigations of appraisal management 2 companies to assess potential violations of applicable 3 appraisal-related laws, regulations, rules, or orders. 4 e. Disciplining, suspending, terminating, or denying renewal 5 of the registration of an appraisal management company that 6 violates applicable appraisal-related laws, regulations, rules, 7 or orders. 8 f. Notwithstanding section 272C.6, subsection 4, reporting 9 an appraisal management company’s violation of applicable 10 appraisal-related laws, regulations, rules, or orders, as well 11 as disciplinary and enforcement investigations and actions 12 and other relevant information about an appraisal management 13 company’s operations, to the appraisal subcommittee. 14 g. Imposing requirements on appraisal management companies 15 that are mandated by federal law and regulations applicable 16 to appraisal management companies that are not exempt under 17 federal law, including any of the following: 18 (1) Registration and supervision requirements. 19 (2) Ownership limitations. 20 (3) Engaging only certified appraisers for federally 21 related transactions in conformity with all applicable 22 federally related transaction regulations. 23 (4) Establishing systems for engaging appraisers who are 24 competent and independent, and who are suited for the appraisal 25 assignments to which they are assigned based on education, 26 expertise, and experience. 27 (5) Directing appraisers to perform appraisal assignments 28 in accordance with the uniform standards of professional 29 appraisal practice. 30 (6) Establishing and complying with processes and controls 31 reasonably designed to ensure appraisal management companies 32 conduct appraisal management services in accordance with the 33 requirements of section 129E(a)-(i) of the federal Truth 34 in Lending Act, 15 U.S.C. §1639e(1)-(i), and regulations 35 -19- LSB 5368HV (1) 86 gh/rn 19/ 29

H.F. 2393 thereunder including but not limited to the requirement that 1 appraisers who complete an appraisal in connection with a 2 consumer credit transaction secured by the principal dwelling 3 of the consumer be compensated with a customary and reasonable 4 fee. 5 h. Assessing, collecting, and forwarding to the appraisal 6 subcommittee national registry fees from appraisal management 7 companies registered under this chapter and from federally 8 regulated appraisal management companies. 9 3. The administrator may conduct periodic examinations of 10 applicants or registrants under this chapter as reasonably 11 necessary to assure compliance with all or specific provisions 12 of this chapter. All papers, documents, examination reports, 13 and other records relating to such examinations shall be 14 confidential as provided in section 272C.6, subsection 4, 15 except as provided in this section. 16 4. The administrator may adopt rules governing an 17 appraiser’s use of associate real estate appraisers while 18 performing appraisal assignments subject to this chapter. 19 Associate real estate appraisers may provide appraisal services 20 under the supervision of a certified appraiser as provided 21 in chapter 543D and associated rules, but shall not be on an 22 appraiser panel of an appraisal management company. 23 5. The administrator may require a national criminal 24 history check through the federal bureau of investigation or, 25 if authorized by federal law or regulation, the nationwide 26 mortgage licensing system and registry, as defined in section 27 535D.3, when conducting background investigations under 28 this chapter. Except as inconsistent with the registry, the 29 following shall apply: 30 a. The administrator may require owners and controlling 31 persons who are subject to the background investigation 32 provisions of sections 543E.6 and 543E.7 to provide a full 33 set of fingerprints, in a form and manner prescribed by the 34 administrator. Such fingerprints, if required, shall be 35 -20- LSB 5368HV (1) 86 gh/rn 20/ 29