Bill Text: CT SB00228 | 2010 | General Assembly | Introduced

---

Bill Title: An Act Concerning Appraisal Reform.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2010-03-03 - Public Hearing 03/11 [SB00228 Detail]

Download: Connecticut-2010-SB00228-Introduced.html

---

General Assembly		Raised Bill No. 228
February Session, 2010		LCO No. 1017
		*01017_______BA_*
Referred to Committee on Banks
Introduced by:
(BA)

AN ACT CONCERNING APPRAISAL REFORM.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-20 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2010):

If any person subject to the general supervision of the commissioner owns real property, or if real property taxes on any property mortgaged to secure a loan with any such person are more than one year in arrears, or if any such mortgage loan is more than one year in arrears as to either interest or required principal payments, the commissioner may employ an expert real estate appraiser licensed in accordance with the provisions of chapter 400g at the expense of such person to appraise such real estate owned by or mortgaged to such person.

Sec. 2. Subsection (b) of section 36a-260 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2010):

(b) At least once a year, the governing board of each Connecticut bank shall adopt a loan policy governing loans made pursuant to sections 36a-260 to 36a-266, inclusive, as amended by this act. The governing board of each Connecticut bank shall develop and implement internal controls that are reasonably designed to ensure compliance with such loan policy. The loan policy shall require applications for all loans, and address the categories and types of secured and unsecured loans offered by the bank, the manner in which loans will be made and approved, underwriting guidelines and collateral requirements, and, in accordance with safety and soundness, acceptable standards for title review, title insurance and appraiser qualifications, policies for the approval and selection of appraisers, appraisal and evaluation standards, and the bank's administration of the appraisal and evaluation process. Such standards shall include the following: (1) A requirement that only real estate appraisers licensed in accordance with the provisions of chapter 400g may charge a fee in connection with a real estate appraisal, (2) a prohibition against a real estate appraiser sharing such appraiser's fee with any one other than a real estate appraiser licensed in accordance with the provisions of chapter 400g, and (3) a requirement that every real estate appraiser incorporate into the appraisal report such appraiser's invoice reflecting the actual fee charged by such appraiser for performing the real estate appraisal and provide the loan applicant with a copy of such invoice. The loan policy and any loan made pursuant to the policy shall be subject to the examination of the commissioner concerning safe and sound banking practices.

Sec. 3. Subsection (e) of section 36a-261 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2010):

(e) The real estate shall be appraised or otherwise suitably evaluated, before any loan is made on its security, by one or more suitable persons who are familiar with real estate values in the community where the real estate is located. Such persons shall be licensed in accordance with the provisions of chapter 400g and approved by the governing board of the Connecticut bank making the loan, or by a management committee, board committee or agent appropriately designated by such governing board in accordance with the appraisal policy required by this subsection, provided, if the loan under consideration is a loan to be insured or guaranteed by a governmental agency, the appraiser may be one who appraised the property for the governmental agency. Such appraisal or evaluation shall be in writing, shall state the amount at which the property has been appraised or evaluated and shall be filed with the Connecticut bank until the loan is paid or until the loan is sold. Connecticut banks shall adopt and implement an appraisal policy which reflects, in accordance with safe and sound banking principles, consideration of appraiser qualifications, procedures for the approval and selection of appraisers, appraisal and evaluation standards, and the bank's administration of the appraisal and evaluation process. Such policy shall (1) prohibit the appraiser from sharing an appraiser's fee with anyone other than a real estate appraiser who has been licensed in accordance with the provisions of chapter 400g; and (2) require the appraiser to incorporate into the appraisal report an invoice reflecting the actual fee charged by the appraiser for performing the real estate appraisal and provide a copy of such invoice to the loan applicant.

Sec. 4. Subsection (a) of section 36a-457a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2010):

(a) A Connecticut credit union shall adopt and implement a written loan policy that requires written applications for all extensions of credit, and addresses the categories and types of secured and unsecured extensions of credit offered by the credit union, the manner in which mortgage loans, member business loans and insider loans will be made and approved, underwriting guidelines and collateral requirements, and which addresses, in accordance with safety and soundness, acceptable standards for title review, title insurance and appraiser qualifications, procedures for the approval and selection of appraisers, appraisal and evaluation standards, and the credit union's administration of the appraisal and evaluation process. Such standards shall include the following: (1) A requirement that only real estate appraisers licensed in accordance with the provisions of chapter 400g may charge a fee in connection with a real estate appraisal, (2) a prohibition against a real estate appraiser sharing such appraiser's fee with any one other than a real estate appraiser licensed in accordance with the provisions of chapter 400g, and (3) a requirement that every real estate appraiser incorporate into the appraisal report such appraiser's invoice reflecting the actual fee charged by such appraiser for performing the real estate appraisal and provide the loan applicant with a copy of such invoice. The commissioner may review a Connecticut credit union's loan policy and may order changes to be made to ensure safe and sound lending practices.

Sec. 5. Subsection (c) of section 36a-457b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2010):

(c) The real estate shall be appraised or otherwise suitably evaluated before any mortgage loan is made on its security, by one or more suitable persons who are familiar with real estate values in the community where the real estate is located. Such persons shall be licensed in accordance with the provisions of chapter 400g and approved by the governing board of the Connecticut credit union making the loan, or any board-appointed committee or person appropriately designated by such governing board in accordance with the loan and insider policies of the Connecticut credit union, provided if the loan under consideration is a loan to be insured or guaranteed by a governmental agency, the appraiser may be one who appraised the real estate for the governmental agency. Such appraisal or evaluation shall be in writing, state the amount at which the real estate has been appraised or evaluated and be filed with the lending Connecticut credit union until the loan is paid or sold. The appraiser shall not share such appraiser's fee for performing the appraisal with anyone other than a real estate appraiser who has been licensed in accordance with the provisions of chapter 400g. The appraiser shall incorporate into the appraisal report an invoice reflecting the actual fee charged by such appraiser for performing the real estate appraisal and provide a copy of such invoice to the loan applicant.

Sec. 6. Section 36a-755 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2010):

(a) As used in this section:

(1) "Applicant" means a natural person who applies for a mortgage loan;

(2) "Financial institution" means a bank, out-of-state bank, Connecticut credit union, federal credit union, out-of-state credit union, mortgage lender, mortgage correspondent lender or mortgage broker licensee; and

(3) "Mortgage loan" means a loan to be secured by a mortgage on one, two, three or four family residential real property, including a unit of a condominium.

(b) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal on real property to secure a mortgage loan shall make available to such applicant at no charge a copy of the appraisal report promptly after the financial institution's receipt of the applicant's written request for a copy of the appraisal report, provided the financial institution receives the written request not later than ninety days after the financial institution has provided the applicant with notice of action taken on the applicant's application or not later than ninety days after the application is withdrawn by the applicant, as applicable.

(c) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal shall either (1) notify such applicant in writing of the availability of a copy of the appraisal report or (2) provide such applicant with a copy of the appraisal report at no charge, such notice or copy to be provided not later than ten days after receipt of the appraisal report, but in any event not later than the date on which the sale of such property is to be consummated.

(d) Any person who prepares such appraisal report shall not be liable to any person with whom the preparer has not contracted to make such appraisal report for opinions or facts stated in or omitted from such appraisal report, unless such statement or omission results from intentional misrepresentation.

(e) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal shall provide such applicant with a copy of an invoice reflecting the actual fee charged by the appraiser for performing the appraisal, such copy to be provided to the applicant not later than ten days after receipt of the invoice by the financial institution.

[(e)] (f) The commissioner may adopt such regulations pursuant to chapter 54 as the commissioner deems necessary to carry out the provisions of this section.

Sec. 7. (NEW) (Effective October 1, 2010) (a) Only real estate appraisers who are licensed in accordance with the provisions of chapter 400g of the general statutes may charge a fee for performing a real estate appraisal in this state.

(b) No real estate appraiser shall share such appraiser's fee for performing a real estate appraisal in this state with anyone other than a real estate appraiser who is licensed in accordance with the provisions of chapter 400g of the general statutes.

(c) A real estate appraiser shall incorporate into the appraisal report an invoice reflecting the actual fee charged by such appraiser for performing the real estate appraisal and provide a copy of such invoice to the owner of such real estate or the mortgage loan applicant.

This act shall take effect as follows and shall amend the following sections:
Section 1	October 1, 2010	36a-20
Sec. 2	October 1, 2010	36a-260(b)
Sec. 3	October 1, 2010	36a-261(e)
Sec. 4	October 1, 2010	36a-457a(a)
Sec. 5	October 1, 2010	36a-457b(c)
Sec. 6	October 1, 2010	36a-755
Sec. 7	October 1, 2010	New section

Statement of Purpose:

To require real estate appraisers to be licensed in accordance with the provisions of chapter 400g of the general statutes before they are allowed to charge a fee for performing appraisals and to ensure transparency with regard to the fees charged by such appraisers.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]