(a)  Every bank, trust company, loan-investment company, mortgage company, and credit union or any other lending institution, that accepts an application for any residential mortgage loan or any commercial mortgage loan that requires an appraisal in order to process the loan is not permitted to use an appraisal company that is either owned by or has directors, stockholders, or employees of that bank, trust company, loan-investment company, mortgage company, and credit union or any other lending institution.

Terms Used In Rhode Island General Laws 5-20.7-24

  • Appraisal: A determination of property value.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Department: means the department of business regulation. See Rhode Island General Laws 5-20.7-2
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC

(b)  All appraisal companies doing business in the state are required to disclose with the Rhode Island department of business regulation those lending institutions that may have an ownership interest in the appraisal company. If an ownership relationship exists between the lending institution and an appraisal company, then the appraisal company is prohibited from conducting any appraisals for that lending institution.

(c)  Any appraisal companies doing business within the state shall comply with the provisions of this chapter, title XI of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. § 3331 et seq., as may be amended from time to time, and with the federal and state regulatory standards promulgated thereunder.

(d)  Any lending institution that maintains Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) insurance protection for its deposits at a lending institution is exempt from this provision.

(e)  A violation of this section shall also be considered to be a violation of chapter 13.1 of Title 6.

History of Section.
P.L. 1992, ch. 211, § 1; P.L. 2014, ch. 92, § 2; P.L. 2014, ch. 93, § 2.