Appraisal Management Companies in New Jersey Will Have to Get Bonded
Appraisal management companies (AMCs) in New Jersey will have to meet new registration criteria, which will become effective as of November 11, 2017. Businesses who want to offer appraisal management services will have to obtain an appraisal management company bond in order to be allowed to operate in the state.
The changes will be introduced by Assembly Bill 1973, which was passed in May 2017. The new legislation will be adopted by the NJ Real Estate Appraisers Board in September 2017. It also entails additional new registration rules that appraisal management businesses will need to comply with to complete appraisal management company registration.
New Jersey joins a list of more than 20 other states that have already introduced a bonding requirement for AMCs. The move aims to raise the quality of services offered, as well as ensure better security for customers of appraisal management providers.
Here are the most important new stipulations in the Bill, and how you can ensure your company’s compliance.
The new bonding requirement
Appraisal management companies provide valuation services of residential properties. Valuations are typically needed by mortgage lenders who are assessing the real estate in order to provide a loan to an end customer. AMCs work with appraisers who conduct the valuations.
Once the bill enters into force in November 2017, all appraisal management companies in the state will need to obtain a surety bond. The bond amount required is $25,000. It is one of the main requirements for getting registered as an AMC in the state.
The purpose of the bond is to ensure higher levels of protection for the customers of appraisal management providers. It guarantees the bonded AMC will conduct its activities in accordance with state laws that govern the industry. The security measure is often required from businesses who want to get a state license. By demanding bonding, state authorities make sure that the licensed companies are safe to work with. In case a party suffers losses from any unlawful actions committed by an AMC, the bond can provide financial compensation up to the penal sum of $25,000.
The New Jersey appraisal management company registration
The new bill, known as the Appraisal Management Company Registration and Regulation Act, introduces registration requirements for appraisal management companies. Previously, only individual real estate appraisers, residential appraisers, certified general appraisers and apprentice appraisers had to undergo such a procedure.
The registration process is managed by the NJ Real Estate Appraisers Board. AMCs will have to apply via the online services website of the Board. They will have to provide information about their business entity, responsible officers, location, and more.
Appraisal management companies will have to cover a fee of up to $2,500 to apply for their registration. Registrations will be active for one year. After this period, AMCs who wish to continue their operations will need to renew their license with the Board.
How to meet the bonding criteria
In order to obtain an appraisal management surety bond, AMCs need to apply with a surety provider. The surety then needs to examine your personal and business financials to assess the bonding risk, as it backs up your company. The factors it has to consider include your credit score, company financial statements, and assets and liquidity you can showcase.
The bond price you will have to pay is only a fraction of the bond amount required from you, which is $25,000. If your overall finances are in good shape, the premium can be between 1% and 5%. This means you can pay only $250 to $1,250 to get bonded.
Still have questions about the new bonding requirement for New Jersey appraisal management companies? We’re here to help. Just call us at 877.514.5146.