The state of Louisiana may have taken action to directly respond to the Federal Trade Commission’s claim that the regulatory body that oversees property appraisals in the state stifled price competition by requiring appraisal management companies to follow the state’s established polices for the fees that AMCs pay to appraisers, but that doesn’t mean that the FTC is ready to drop the case entirely.
Recently, Louisiana Gov. John Bel Edwards issued an executive order that will lead to the law that dictated how AMCs pay appraisers being repealed.
That was followed shortly by the Louisiana Real Estate Appraisers Boardissuing a resolution stating that it planned to repeal the controversial law and develop a new method to ensure that AMCs pay appraisers “reasonable and customary” fees, as they are required to do under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In light of those actions, the Louisiana Real Estate Appraisers Board is now asking the FTC to stay its action against the regulatory body and allow the state to fully implement its new policies.
As HousingWire reported earlier this week, LREAB’s resolution states that the rule on how AMCs pay appraisers will be repealed and replaced.
The rule in question is the state’s AMC Law, also called Rule 31101.
Rule 31101 stipulates that AMCs must compensate appraisers at a rate determined by one of three methods:
- An AMC may use a survey of fees recently paid by lenders in the relevant geographic area
- An AMC may use a fee schedule established by the Board
- An AMC may identify recently paid fees and adjust this base rate using six specified factors: the type of property; the scope of work; the time in which the appraisal must be performed; the appraiser’s qualifications; the appraiser’s experience and professional record; and the appraiser’s work quality
In its complaint, the FTC said that Rule 31101 “unlawfully restrains competition on its face by prohibiting AMCs from arriving at an appraisal fee through the operation of the free market.”
The LREAB resolution calls for the “repeal and replacement” of Rule 31101.
After issuing that resolution, the LREAB asked the FTC to pause its proceedings for 120 days so the state can put its new policies into place.
“These State acts substantially change the factual and legal basis of this proceeding, by confirming state action immunity with respect to any current and prospective actions of the Board, and addressing the retroactive and prospective relief sought in the Complaint,” the LREAB said in its request to the FTC.
“Respondent therefore requests a 120-day stay to give the State time to implement the Governor’s and Board’s directives, and allow the parties time to consider the impact of these new requirements on this proceeding,” the request continues.
According to the LREAB, the stay will “conserve resources, avoid unnecessary burdens on the parties and third parties, and promote the public interest in enforcement of Louisiana law.”
The LREAB states that the Edwards’ executive order alone “fundamentally alters the factual and legal underpinnings of this proceeding.”
Additional action by the state and the LREAB will “further reshape the landscape” on which the FTC’s complaint is based.
The LREAB adds that by granting the stay, the FTC will be “allowing Louisiana to continue to maintain the integrity of its residential appraisal market, as envisioned by the Dodd-Frank Act.”
Without the stay, official state functions “would be impeded or delayed to the detriment of the public interest in a sound residential real estate appraisal market,” the LREAB said.
HousingWire contacted the FTC for comment on this issue, but as of publication, has not received a response. This article will be updated should the FTC respond.
https://www.housingwire.com/articles/40726-louisiana-asks-ftc-to-pause-regulatory-action-while-state-repeals-controversial-appraisal-laws
