House Bill 398 (Stevenson) requires appraisal management companies to be registered with the State Board of Certified Real Estate Appraisers. Pennsylvania is the 30th state to pass such legislation.

More appraisal management companies appeared throughout the country, as a result of the Home Valuation Code of Conduct (HVCC). The Home Valuation Code of Conduct originated from a settlement among New York Attorney General Andrew Cuomo, the Federal Housing Finance Agency, Fannie Mae and Freddie Mac. While the HVCC was sunset, the issue of unregulated appraisal management companies remained.

“We believe this legislation is important to protect homebuyers in the Commonwealth,” said PAR President Frank Jacovini. “Research initially showed after the Home Valuation Code of Conduct was enacted, consumers were paying higher fees for appraisals that were frequently inaccurate and misrepresented the value of the property. We also saw closings being delayed as a result.”

The new law will create a level playing field for AMCs and appraisers. Appraisal management companies will now be required to work within the nationally sanctioned Uniform Standards of Professional Appraisal Practice (USPAP).

“Thanks to a collaborative group of all stakeholders providing input into this bill, this new legislation provides protection for consumers and industry participants alike,” according to Michelle Bradley, chair of PAR’s Appraisal Management Company Task Force. “Those who own or operate AMCs will be accountable to industry standards and state regulation.”

The new legislation also:

• Implements a registration and renewal fee of $1,000
• Implements a $20,000 bond or letter of credit to secure the faithful performance
• Requires all appraisal reviews to be conducted by a certified or licensed appraiser
• Requires AMCs to adopt Uniform Standards of Professional Appraisal Practice (USPAP) record-keeping rules.

The board approved the service which establishes a fee-based PAR association management service that can assist local associations in delivering core services to members. These services could be offered to local Realtor® associations or associations unaffiliated with the Realtor® family.

The board approved the hiring of a professional consultant to organize a coordinated internal messaging program with local associations to promote the value of Realtor® membership.

Representative Dick Stevenson (R-Butler), who sponsored House Bill 398 to regulate appraisal management companies (AMC’s), spoke to PAR’s board of director’s regarding the recent passage of the bill. PAR worked together with Rep. Stevenson and the Appraisal Institute to forward this legislation. Rep. Stevenson was a certified general appraiser for more than 20 years and is a past president of the Greater Mercer County Board of Realtors®.

“I’m here to thank you. Without PAR, this bill would not have become a law. I hope this serves as a reminder to keep doing what you’re doing and support PAR,” said Rep. Stevenson.

Brian Hudson, Sr., executive director and chief executive officer of the Pennsylvania Housing Finance Agency (PFHA), reviewed new PFHA programs for Realtors® to assist consumers.  “I want to thank PA Realtors®,” said Hudson. “Without you, we would have no product to sell. We are looking forward to a fantastic 2012.”

Treasurer Ron Croushore reported a 2012 budgeted surplus of $7,700 which was approved the board. As of now, Croushore says there are no yearend budget projections.

The 2012 PAR board of directors were installed by Realtor® and 2016 NAR presidential candidate Jim Helsel.

In other business:

• The board announced the return of the Leadership PAR program with the 2012-2013 class to begin at the Spring Business Meetings. Applications must be completed and received by PAR no later March 1, 2012.
• The board approved the establishment of a “report card” that would rate existing agent evaluation systems to help members and consumers understand which systems use the best evaluation criteria designed to indentify agent professionalism and to develop informational programming around those criteria.
• The Realtors® Political Action Committee (RPAC) raised $25,600 at the Business meetings, surpassing their goal of $20,000.
• The board granted Realtor® Emeritus status for: James McGoey, Greater Erie; Ann Lewis and George Sailus, Greater Wilkes-Barre; George Andralis, Dolores Breisch, Michael Engle, Donald Frederick, Charles Inhoff, John Judd, Lloyd Kemmerer, John Monaghan, James Nolfa, Edward Sample, George Santoro, Gordon Schantz, Thomas Stupak, Peter Sukeena, George West, Richard Woodring, Jr., and John Yurconic, Lehigh Valley Association.

State legislators return to session next week. PAR will continue to work the Hill, encouraging legislators to pass House Bill 398 (the AMC legislation), which would require Appraisal Management Companies to register with the state.

When we’re following a bill like this, sometimes it seems like it’s good to go, then several other hot-button issues, like Marcellus Shale and redistricting, jump ahead of something we’re following, consuming both the House and Senate’s time. This makes it incredibly difficult to get anything else on the agenda.

It seems like we’ve been talking about the AMC legislation forever. But the process of getting legislation passed has numerous steps and hiccups. Patience is definitely a virtue when you spend any amount of time on the Hill.

Let’s look at the progress we’ve made so far. The proposed AMC legislation was introduced in the state House early last year. After that, it was referred to the House Professional Licensure Committee, where it was vetted and voted out of committee. At this point, you might think, “Hurray!” But we still have a lot of steps to go!

It’s returned to the House for first consideration. The bill passed the House on both first and second consideration, then it was sent to the House Appropriations Committee. This committee reviewed the bill for any fiscal impact, approved it and sent it back to the House. Then the House approved it for the third and final consideration. Wow – all those steps and we’re not even halfway there yet!

In May, the bill went onto the Senate where it was referred to the Senate Consumer Protection and Professional Licensure Committee. That committee amended HB 398 and finally voted it out of committee in October. At this point, the bill is sent to the full Senate, where it was passed on first consideration and forwarded to the Senate Appropriations Committee. Appropriations approved the bill and the Senate approved the bill on second consideration in December. And that’s where this bill is at this point.

We’re hoping the Senate will have its third and final vote on this legislation in the coming weeks. Then, because the bill was amended by the Senate, the bill will return to the House to be voted on concurrence. Once the House concurs, HB 398 will be passed to Gov. Tom Corbett to sign into law. Now you understand why we feel like we should have a parade when the governor signs a piece of legislation!

This isn’t the only issue PAR is following through this process. We’re monitoring more than 300 pieces of legislation which could have an impact on your industry and private property owners. Currently, the most notable legislation is on Mechanic’s Lien and Seller Financing. Both of these are at the top of our agenda and we hope to see movement on these issues in the coming months.

House Bill 398, introduced by Rep. Dick Stevenson (R-Mercer), would require appraisal management companies to be registered with the State Board of Certified Real Estate Appraisers.

“AMCs are the only entity in the real estate transaction that aren’t regulated,” according to Michelle Bradley, chair of PAR’s Specialized Practices Subcommittee. “Since the Home Valuation Code of Conduct (HVCC) was introduced, we’ve seen a significant increase in the number of AMCs and problems because of them.”

The legislation also:

• Implements a registration and renewal fee of $1,000
• Implements a $20,000 bond or letter of credit to secure the faithful performance
• Requires all appraisal reviews to be conducted by a certified or licensed appraiser
• Requires AMCs to adopt Uniform Standards of Professional Appraisal Practice (USPAP) record-keeping rules

Realtors® are asked to contact their state legislators to urge them to pass this legislation.

Now to be fair, Pennsylvania’s legislature did not act on its own. The changes were made in response to the federal SAFE Mortgage Licensing Act which established minimum standards for mortgage licensing that were to apply in all states. Pennsylvania’s amendment was an effort to remain compliant with federal law and to provide “enhanced consumer protection.”

As you can image, the real estate community’s response to this restriction has been deafening. PAR has been working with legislators and the Department of Banking to introduce legislation that would restore seller financing to its original intent.

In the meantime, in August 2011 HUD issued final regulations related to the SAFE Act that were inconsistent with Pennsylvania’s newly amended legislation. On October 6, 2011, the Pennsylvania Secretary of Banking, Glen Moyer, issued a letter discussing the department’s position in light of the new HUD regulations. The secretary stated that until the MLL is officially amended to come into line with HUD regulations, “The Department will not take exception to an individual making or brokering three or less mortgage loans in a calendar year without being licensed . . .”

Although the secretary’s statement appears to announce a return of the prior exception, it is important to recognize that the secretary’s letter is not “the law.”  It is a statement of the department’s policy and while it is safe to presume that the law will be restored, unlicensed sellers may wish to proceed with caution and obtain the benefit of an opinion from legal counsel before providing mortgage financing. While it is likely very safe for a seller to proceed with seller financing, we believe that the seller should make that determination and that real estate licensees should refrain from offering a legal opinion.

Also of note, in the letter of October 6, 2011, the secretary also announced that the Department of Banking has reversed its prior position that installment sales agreements are not a form of seller financing subject to the mortgage licensing requirements. The secretary explained that the reason for this reversal is that under the new HUD regulations, an installment sales agreement is considered to be a “residential mortgage loan” for purposes of the SAFE Act. Such agreements create an “equivalent consensual security interest on a dwelling or on residential real estate” and for that reason are essentially the equivalent of a mortgage. It therefore appears that an installment sales agreement will count toward the annual limit of three if the law is changed as anticipated by the Department of Banking.

All-in-all, the secretary’s letter is welcomed news!

James Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. He may be reached at realcompliance.com.

Douglas Oberholser is an attorney with Caldwell & Kearns, which serves as general counsel to PAR. He routinely provides advice and counsel to real estate licensees as one of the voices of the PAR Legal Hotline. A substantial portion of his practice is dedicated to providing counsel on real estate matters and representing real estate salespersons and brokers in civil lawsuits.  He may be reached at realcompliance.com.

Kimberly Skumanick

Housing challenges related to the Marcellus Shale gas industry were the topic of a Senate Urban Affairs and Housing Committee public hearing in Williamsport this week.

PAR Treasurer Kimberly Skumanick offered her observations on the housing issues caused as a result of the developing gas industry in the northern tier. Her comments were presented to Sen. Gene Yaw (R-23), chair of the committee.

The development of the Marcellus Shale gas play has spurred economic growth and created jobs in the northern tier of Pennsylvania but it has also unintentionally put tremendous pressure on the housing supply, particularly the rental market, according to Skumanick.

“In most markets, we’ve seen an impact on the rentals first,” Skumanick said. “With the influx of tens of thousands of employees, we’ve seen a shortage of subsidized housing and working families seeking assistance to afford housing.”

Skumanick, who lives in Tunkhannock, Wyoming County and is an associate broker with Lewith and Freeman Real Estate in Clarks Summit, has listed, sold and leased properties in northeastern Pennsylvania for more than 17 years.

“We’ve seen rents double and even triple in the past three years, creating great difficulty for low- and fixed-income residents. Many landlords will not renew existing leases with local residents so that they can charge higher rents to gas workers moving here. This is especially challenging for working families,” she said.

In addition, Skumanick said the widespread devastation from the flooding along the Susquehanna River and many streams have also left hundreds of homeowners without shelter, either temporarily until repairs are made, or permanently if their homes are condemned.

The hearing was conducted by Sen. Yaw as part of a fact-finding series of public hearings. Previously, the committee held two hearings in Bradford County.

Other speakers included: the Hon. Gabriel Campana, mayor of Williamsport; Barry Denk and Jonathan Johnson, the Center for Rural Pennsylvania; Dr. Vincent Matteo and Jason Fink, Williamsport/Lycoming County Chamber of Commerce; MeriLyn Severson and Barbara Hoover, Lycoming County Housing Authority; Colby Fuser, Halliburton; Scott Lowery and Rosann Pelleschi, Lycoming County United Way; and Bob Yoder, The Yoder Group (developers).

Editor’s note: To watch the hearing, please visit Sen. Yaw’s website.

Greater Hazleton President Dianne French, left, and District #1 Vice-President Patricia Copeland at the meet and greet for Congressman Lou Barletta that was hosted by the Greater Hazleton Association.

Congressman Lou Barletta returned to his hometown of Hazleton to meet and greet with Realtors® from northeastern Pennsylvania. Almost 40 Realtors® from the Greater Hazleton, Greater Scranton, Greater Wilkes-Barre, Pocono Mountains and the Carbon County associations were in attendance.

The meet and greet, sponsored by the National Association of Realtors®, provided an opportunity for the Congressman to meet Realtors® in his district. During the event, the Congressman spoke on the need for fiscal responsibility in Washington, the importance of maintaining the mortgage interest deduction and some of the challenges of being a new face on the hill.

In his first term representing the 11th district, Congressman Barletta co-sponsored the resolution in support of the mortgage interest deduction (MID) and signed a letter opposing mandatory 20 percent down payment as per the qualified residential mortgage definition. He also voted to reauthorize the National Flood Insurance Program.

The south central portion of Pennsylvania has had record-breaking amounts of rain with many home evacuations already underway. It’s expected that the Susquehanna River will reach flood stage in Harrisburg Thursday morning, cresting later in the week several feet above the flood stage.

At this time, no date has been rescheduled for the NAR bus to come to Pennsylvania.

NAR’s Home Ownership Matters bus will stop in Harrisburg on Friday, Sept. 9. The event will highlight why housing needs to remain a priority on the nation’s public policy agenda.

“We’re pleased that NAR’s Home Ownership Matters bus is coming to Pennsylvania,” said PAR President Guy A. Matteo, GRI, SRES. “This is a great opportunity for Realtors® to explain the importance of preserving the Mortgage Interest Deduction to consumers.”

The bus will park outside of the East Wing of the State Capitol Building (fountain side) and Realtors® throughout the Commonwealth are invited to join this rally. NAR and PAR will hold a press conference at 10 a.m.

NAR’s Home Ownership Matters bus has toured throughout the country, promoting the benefits of home ownership and working to ensure that the nation’s 75 million home owners continue to receive the Mortgage Interest Deduction.

Please advise PAR if you plan to bring a contingency of members to next week’s event by emailing pargovtaff@parealtor.org.