DEPARTMENT OF REGULATORY AGENCIES
DIVISION OF REAL ESTATE
BOARD OF REAL ESTATE APPRAISERS
4 CCR 725-2

REDLINE BEFORE RULEMAKING HEARING

CHAPTER 18:	PROFESSIONAL STANDARDS – APPRAISAL MANAGEMENT COMPANIES

18.1	An appraisal management company must have and follow a written policy in place regarding the annual audit of appraisals completed for Colorado assignments during the previous year. The policy must have an effective date and memorialize the dates any modifications are made. The policy must outline, at a minimum, the following:

A.	Appraisal Selection. The audit sample must be randomly selected and consist of not less than two (2) USPAP standard Standard 3 reviews Reviews for each appraiser who completed Colorado appraisal assignments during the previous year. If an appraiser completed only one (1) appraisal assignment in Colorado, the appraisal management company must complete a USPAP standard Standard 3 review Review of the appraisal.

B.	Risk-Based Reviews. If an appraisal management company maintains a risk-based review process, the appraisal management company is required to comply with subsection (a) Board Rule 18.1(A) of these Rules only for those appraisers for whom a USPAP standard Standard 3 review Review was not performed under the risk-based appraisal review process.

C.	Review Criterion. The appraisals must be evaluated for compliance with state and federal regulations, including the Uniform Standards of Professional Appraisal Practice (USPAP).

D.	Reviewer Qualifications. The individual(s) performing the audit of the appraisals must possess a certified credential in this state or any state jurisdiction and be competent to appraise residential real estate.

E.	Appraisal Deficiencies. The appraisal management company must have procedures in place to address material deficiencies that affect the value conclusion or the credibility of the report with the appraiser. Material violations of the USPAP or the Colorado Real Estate Appraiser Licensing Act license law must be reported to the Board.

The Board may evaluate an appraisal management company’s compliance with its own audit policies during an investigation.

18.2	For each Colorado appraisal assignment, an appraisal management company must maintain the following documents or records for a period of at least five (5) years, or at least two (2) years after the final disposition of any judicial proceeding in which a representative of the appraisal management company provided testimony related to the assignment, which ever period expires last:

A.	Contractual agreements with clients.

B.	Any documents associated with the engagement of an appraiser used to appraise Colorado real estate.

C.	All correspondence with a client or an appraiser regarding a specific assignment, including an accounting of payments received from the client and paid to the appraiser.

D.	Appraisals, appraisal reviews, appraisal updates, recertifications of value, certificates of completion, broker price opinions or competitive market analyses, comparable property checks, rent schedules or income analyses, measurements, building sketches, and any client approved forms (Colorado Real Estate only).

E.	A list of all approved appraisers for Colorado real property appraisals, including a list of all appraisers engaged during each calendar year.

F.	Copies of final appraisal reports reviewed in accordance with Board rule Rule 18.1, findings and any subsequent correspondence with the appraiser, client, or Board.

Records may be maintained in electronic format, but must be produced upon request by the Board and must be in a format that has the continued capability to be retrieved and legibly printed. Upon request by the Board, printed records shall must be produced.

18.3	For all Colorado appraisal assignments, an appraisal management company must disclose its Colorado license number in writing in the engagement letter with an appraiser.

REDLINE AFTER RULEMAKING HEARING

CHAPTER 18:  PROFESSIONAL STANDARDS – APPRAISAL MANAGEMENT COMPANIES

18.1	An appraisal management company must have and follow a written policy in place regarding the annual audit of appraisals completed for Colorado assignments during the previous year. The policy must have an effective date and memorialize the dates any modifications are made. The policy must outline, at a minimum, the following:

A.	Appraisal Selection. The audit sample must be randomly selected and consist of not less than two (2) USPAP Standard 3 Reviews for each appraiser who completed Colorado appraisal assignments during the previous year. If an appraiser completed only one (1) appraisal assignment in Colorado, the appraisal management company must complete a USPAP Standard 3 Review of the appraisal.

B.	Risk-Based Reviews. If an appraisal management company maintains a risk-based review process, the appraisal management company is required to comply with Board Rule 18.1(A) of these Rules only for those appraisers for whom a USPAP Standard 3 Review was not performed under the risk-based appraisal review process.

C.	Review Criterion. The appraisals must be evaluated for compliance with state and federal regulations, including the USPAP.

D.	Reviewer Qualifications. The individual(s) performing the audit of the appraisals must possess a certified credential in this state or any jurisdiction and be competent to appraise residential real estate.

E.	Appraisal Deficiencies. The appraisal management company must have procedures in place to address material deficiencies that affect the value conclusion or the credibility of the report with the appraiser. Material violations of the USPAP or the Colorado Real Estate Appraiser Licensing Act must be reported to the Board.

The Board may evaluate an appraisal management company’s compliance with its own audit policies during an investigation.

18.2	For each Colorado appraisal assignment, an appraisal management company must maintain the following documents or records for a period of at least five (5) years, or at least two (2) years after the final disposition of any judicial proceeding in which a representative of the appraisal management company provided testimony related to the assignment, whichever period expires last:

A.	Contractual agreements with clients.

B.	Any documents associated with the engagement of an appraiser used to appraise Colorado real estate.

C.	All correspondence with a client or an appraiser regarding a specific assignment, including an accounting of payments received from the client and paid to the appraiser.

D.	Appraisals, appraisal reviews, appraisal updates, recertifications of value, certificates of completion, broker price opinions or competitive market analyses, comparable property checks, rent schedules or income analyses, measurements, building sketches, and any client approved forms (Colorado Real Estate only).

E.	A list of all approved appraisers for Colorado real property appraisals, including a list of all appraisers engaged during each calendar year.

F.	Copies of final appraisal reports reviewed in accordance with Board Rule 18.1, findings and any subsequent correspondence with the appraiser, client, or Board.

Records may be maintained in electronic format, but must be produced upon request by the Board and must be in a format that has the continued capability to be retrieved and legibly printed. Upon request by the Board, printed records must be produced.

18.3	For all Colorado appraisal assignments, an appraisal management company must disclose its Colorado license number in writing in the engagement letter with an appraiser. [This rule was not adopted.]