The Senate Commerce and Energy Committee passed a bill that requires appraisal management companies to maintain a surety bond or irrevocable letter of credit. These companies act as an intermediary between appraisers and lenders. Sherry Bren is the Executive Director of the South Dakota Appraiser Certification Program. She says if an appraisal management company goes bankrupt, Senate Bill 48 protects appraisers, financial institutions, and consumers.
“Requiring an appraisal management company to obtain and maintain a surety bond or letter of credit ensures that the company’s financial health is sufficient to be issued a bond or letter,” Bren says. “And that if the company does fail there will be money available to pay those harmed by a company that goes bankrupt.”
The bill requires appraisal management companies to file a surety bond or letter of credit of 25,000 dollars. The committee passed the bill unanimously. It now heads to the Senate floor.