As a result of the Dodd-Frank Act, many individual states are requiring appraisal management companies (AMCs) and their employees to register with their domicile state in order to continue operation. While not necessarily a bad thing, the costs associated with obtaining additional licensing is forcing many smaller AMCs to band together, while others are being forced out of the industry entirely. In January 2010, AMCs didn’t require licensing of any kind. States didn’t particularly regulated AMCs, either, which, although potentially problematic, was business as usual. Fannie Mae then began issuing rules in the form of Appraiser Independence Regulations (AIR). “Over time, through a flurry of complaints from consumers, realtors, lenders and other industry professionals; pressure was put on the states to begin regulating this market segment," said Kevin Marconi, COO of United Fidelity Funding. "Legislation was being passed by each state to regulate these AMCs and impose annual fees and bonds to help legitimize this type of business." One of the latest states to begin imposing Fannie Mae’s AIR guidelines is the state of Illinois. As this is a Dodd-Frank requirement, the lenders are ultimately responsible for properly vetting all vendors, because an illegal or improper loan is their responsibility. “The state-by-state rules have also challenged lenders who are now legally responsible for the actions of their third party vendors, including AMCs. Recently we reviewed a spread sheet that cross referenced the number of AMCs that were licensed in all states and the number was shockingly low,” said Aaron Fowler, president of United States Appraisals. The irony here is that lenders hire AMCs to be the appraisal expert, however; lenders now need to audit their AMCs. While the number of states requiring AMCs to regulate is on the rise, this isn’t a particularly surprising move. As illustrated above, individual states are merely following rules put in place by the United States government. Appraisers remain up in arms over nebulous state laws and what their typical fines could be. With fine totals numbering in the thousands of dollars, AMCs should look to find themselves in compliance sooner rather than later.