PRIOR PRINTER'S NO. 364

PRINTER'S NO.  1446

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

398

Session of

2011

  

  

INTRODUCED BY STEVENSON, HELM, QUINN, BOYD, BUXTON, CALTAGIRONE, CARROLL, CLYMER, D. COSTA, CREIGHTON, DeLUCA, DENLINGER, ELLIS, J. EVANS, FARRY, GEIST, GIBBONS, GODSHALL, GOODMAN, GRELL, GROVE, HARKINS, HENNESSEY, HORNAMAN, M. K. KELLER, KILLION, KOTIK, KULA, MAJOR, MARKOSEK, MARSICO, MILLER, MURT, O'NEILL, PEIFER, PICKETT, PYLE, READSHAW, REICHLEY, SAYLOR, SCAVELLO, SONNEY, VULAKOVICH, WATSON, YOUNGBLOOD, STURLA, DAVIS, SANTONI, ROCK, KAUFFMAN, BEAR, DAVIDSON AND KORTZ, FEBRUARY 2, 2011

  

  

AS REPORTED FROM COMMITTEE ON PROFESSIONAL LICENSURE, HOUSE OF REPRESENTATIVES, AS AMENDED, APRIL 6, 2011   

  

  

  

AN ACT

  

1

Providing for registration of appraisal management companies,

2

for powers of the State Board of Certified Real Estate

3

Appraisers with respect to appraisal management companies,

4

for the responsibilities and duties of appraisal management

5

companies, for prohibited activities, for discipline and for

6

penalties.

7

The General Assembly of the Commonwealth of Pennsylvania

8

hereby enacts as follows:

9

Section 1.  Short title.

10

This act shall be known and may be cited as the Appraisal

11

Management Company Registration Act.

12

Section 2.  Definitions.

13

The following words and phrases when used in this act shall

14

have the meanings given to them in this section unless the

15

context clearly indicates otherwise:

16

"Applicant."  A person who files an application for

 


1

registration as an appraisal management company.

2

"Appraisal."  The term has the meaning provided in section 2

3

of the act of July 10, 1990 (P.L.404, No.98), known as the Real

4

Estate Appraisers Certification Act.

5

"Appraisal management company."  A person that provides

6

appraisal management services and acts as a third-party

7

intermediary between a person seeking a valuation of real estate

8

and an appraiser or firm of appraisers.

9

"Appraisal management services."  Conducting business by

10

telephone, by electronic means, by mail or in person directly or

11

indirectly for compensation or in the expectation of

12

compensation to manage the performance of appraisals for a

13

client, including, without limitation:

14

(1)  Recruiting appraisers.

15

(2)  Contracting with appraisers to perform appraisals.

16

(3)  Negotiating fees with appraisers.

17

(4)  Receiving appraisal orders and appraisals.

18

(5)  Submitting appraisals received from appraisers to

19

the client.

20

(6)  Providing related administrative and clerical

21

duties.

22

"Appraisal review."  The act or process of developing and

23

communicating an opinion about the quality, adequacy or

24

reasonableness of the work of an appraiser, including the

25

appraiser's opinions or conclusions developed in an appraisal

26

assignment, such as value.

27

"Appraiser."  An individual certified under the act of July

28

10, 1990 (P.L.404, No.98), known as the Real Estate Appraisers

29

Certification Act, as a certified residential appraiser or

30

certified general appraiser.

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1

"Appraiser panel."  A group of appraisers that have been

2

selected by an appraisal management company to perform

3

appraisals for the appraisal management company.

4

"Board."  The State Board of Certified Real Estate Appraisers

5

within the Bureau of Professional and Occupational Affairs in

6

the Department of State.

7

"Client."  A person that contracts with or otherwise enters

8

into an agreement with an appraisal management company for the

9

performance of appraisal management services.

10

"Compliance person."  An individual who is employed,

11

appointed or authorized by an appraisal management company to be

12

responsible for ensuring compliance with this act.

13

"Exempt company."  A person that is exempted by Federal law

14

from registering under this act.

15

"Key person."  A person other than a compliance person who is

16

a director, officer, supervisor, manager or other person

17

performing a similar function in an appraisal management

18

company. 

19

"Mortgage Bankers and Brokers and Consumer Equity Protection

20

Act."  The act of December 22, 1989 (P.L.687, No. 90), known as

21

the Mortgage Bankers and Brokers and Consumer Equity Protection

22

Act.

23

"REACA."  The act of July 10, 1990 (P.L.404, No.98), known as

24

the Real Estate Appraisers Certification Act.

25

"Registrant."  An appraisal management company that is

26

registered under this act.

27

"RELRA."  The act of February 19, 1980 (P.L.15, No.9), known

28

as the Real Estate Licensing and Registration Act.

29

Section 3.  Registration of appraisal management companies

30

required.

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1

(a)  General rule.--Except as provided in subsection (b), a

2

person who is not an exempt company or a registrant may not:

3

(1)  Act as an appraisal management company in this

4

Commonwealth.

5

(2)  Hold out as an appraisal management company in this

6

Commonwealth.

7

(3)  Advertise or hold out as engaging in or conducting

8

the business of an appraisal management company in this

9

Commonwealth. 

10

(b)  Exceptions.--This act does not apply to:

11

(1)  An appraiser who:

12

(i)  in the normal course of business enters into an

13

agreement, whether written or otherwise, with an

14

appraiser for the performance of an appraisal; and

15

(ii)  under the agreement cosigns the appraisal upon

16

its completion.

17

(2)  A person authorized to engage in business as a

18

banking institution, credit union or savings association

19

organized under the laws of this Commonwealth or any other

20

jurisdiction.

21

Section 4.  Powers of the board.

22

(a)  Regulations.--The board shall have the powers necessary

23

to implement, administer and enforce this act, including,

24

without limitation, the power to adopt rules and regulations

25

consistent with this act.

26

(b)  Guidelines.--In order to facilitate the speedy

27

implementation of this act, the board shall have the power and

28

authority to promulgate, adopt and use guidelines to prescribe

29

the procedures, forms and standards required for registration

30

under this section, subject to the following provisions:

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1

(1)  Guidelines promulgated under this subsection shall

2

be published in the Pennsylvania Bulletin. 

3

(2)  Guidelines promulgated under this subsection shall

4

be submitted for review pursuant to the procedures set forth

5

in section 4 of Executive Order 1996-1.

6

(3)  Guidelines promulgated under this subsection shall

7

not be subject to review under:

8

(i)  Section 205 of the act of July 31, 1968

9

(P.L.769, No.240), referred to as the Commonwealth

10

Documents Law.

11

(ii)  Sections 204(b) and 301(10) of the act of

12

October 15, 1980 (P.L.950, No.164), known as the

13

Commonwealth Attorneys Act.

14

(iii)  The act of June 25, 1982 (P.L.633, No.181),

15

known as the Regulatory Review Act.

16

(4)  Guidelines promulgated under this subsection shall

17

be effective for a period not to exceed the effective date of

18

a final rulemaking promulgated by the board pursuant to the

19

authority granted in subsection (a), or two years from the

20

effective date of this act, whichever is earlier.

21

Section 5.  Requirements for registration.

22

(a)  Application.--Before acting or offering to act as an

23

appraisal management company in this Commonwealth, a person that

24

is not an exempt company shall make written application to the

25

board for registration accompanied by the required fee and bond.

26

(b)  Required information.--The application shall contain

27

such information as the board shall require, including, without

28

limitation, the following information:

29

(1)  The name, business street address, telephone number

30

and other contact information of the applicant.

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1

(2)  If the applicant is not an individual and is

2

incorporated or otherwise formed under the laws of a

3

jurisdiction other than this Commonwealth, documentation that

4

the applicant is authorized to transact business in this

5

Commonwealth.

6

(3)  The name, street address, telephone number and other

7

contact information of any person that owns 10% or more of

8

the applicant.

9

(4)  The name, street address, telephone number and other

10

contact information of the applicant's compliance person.

11

(5)  A certification that the applicant:

12

(i)  Has a system in place to verify that a person

13

being added to an appraiser panel of the applicant or who

14

will otherwise perform appraisals for the applicant of

15

property located in this Commonwealth is certified and in

16

good standing in this Commonwealth under REACA.

17

(ii)  Has a system in place for the performance of

18

appraisal reviews with respect to the work of all

19

appraisers that are performing appraisals for the

20

applicant of property located in this Commonwealth to

21

determine whether the appraisals are being conducted in

22

conformance with the minimum standards under REACA both

23

on a periodic basis and whenever requested by a client.

24

(iii)  Maintains a detailed record of each request

25

for an appraisal that it receives, the appraiser assigned

26

to perform the appraisal, the fees received from the

27

client for the appraisal and the payment to the

28

appraiser.

29

(6)  Any discipline imposed on the applicant in this

30

Commonwealth or any other state under any law regulating

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1

appraisers, appraisal management companies or real estate

2

brokers or salespersons.

3

(7)  Any other information required by rules and

4

regulations of the board.

5

(c)  Requirements for registration.--The board shall register

6

an applicant as an appraisal management company in this

7

Commonwealth upon:

8

(1)  Receipt of a properly completed application.

9

(2)  Payment of the required fee.

10

(3)  Posting of the required bond.

11

(4)  A determination by the board that the activities of

12

the applicant will be directed and conducted by persons of

13

good moral character as defined in the rules and regulations

14

of the board.

15

(d)  Denial of application.--

16

(1)  If the board finds that there is reason to deny the

17

application for registration, the board shall notify the

18

applicant that the application has been denied and shall

19

afford the applicant an opportunity for a hearing before the

20

board to show cause why the application should not be denied.

21

(2)  All proceedings concerning the denial of an

22

application for registration shall be governed by 2 Pa.C.S.

23

(relating to administrative law and procedure).

24

(e)  Construction.--The acceptance by the board of an

25

application for registration does not constitute the approval of

26

its contents or waive the authority of the board to take

27

disciplinary action under this act.

28

Section 6.  Fees and renewals.

29

(a)  Filing fees.--The fee to file an application for

30

registration or renewal of a registration under this act shall

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1

be $1,000 or such other amounts as are set by the rules and

2

regulations of the board.

3

(b)  Bond.--

4

(1)  In addition to the filing fee, each applicant for

5

registration shall post with the board and maintain a surety

6

bond in the amount of $20,000, or such other amount as shall

7

be set by the rules and regulations of the board.

8

(2)  The bond shall:

9

(i)  Be in the form prescribed by the rules and

10

regulations of the board.

11

(ii)  Accrue to the Commonwealth for the benefit of a

12

claimant against the registrant to secure the faithful

13

performance of the registrant's obligations under this

14

act.

15

(3)  The aggregate liability of the surety shall not

16

exceed the principal sum of the bond.

17

(4)  A party having a claim against the registrant may

18

bring suit directly on the surety bond or the board may bring

19

suit on behalf of the party having a claim against the

20

registrant.

21

(5)  A deposit of cash or security may be accepted in

22

lieu of the bond.

23

(6)  The amount of the bond shall be restored to the full

24

amount required within 15 days after the payment of any claim

25

on the bond.

26

(c)  Renewal.--

27

(1)  Registrations under this act shall be renewed on a

28

biennial basis for persons in good standing.

29

(2)  Failure to timely renew a registration shall result

30

in a loss of authority to operate under this act.

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1

(3)  A request to reinstate a registration shall be

2

accompanied by payment of a penalty of $50 for each month of

3

delinquency.

4

(4)  The contents of an application for renewal shall be

5

prescribed by the rules and regulations of the board.

6

Section 7.  Responsibilities and duties of appraisal management

7

companies.

8

(a)  Conduct of reviews.--All appraisal reviews, as defined

9

by the Uniform Standards of Professional Appraisal Practice,

10

must be conducted by a certified or licensed appraiser in good

11

standing in this Commonwealth or another state.

12

(b)  Records.--

13

(1)  An appraisal management company shall maintain or

14

cause to be maintained:

15

(i)  in the case of a registrant, complete records of

16

its compliance with the certifications required under

17

section 5(b)(5); and

18

(ii)  in all cases, such accounts, correspondence,

19

memoranda, papers, books and other records as shall be

20

required by the rules and regulations of the board.

21

(2)  The records must be retained for the longer of:

22

(i)  five years after their preparation;

23

(ii)  two years after final disposition of any

24

judicial proceeding that involves the actions of the

25

appraisal management company that are the subject of the

26

records; or

27

(iii)  such other period as shall be required by the

28

rules and regulations of the board with respect to a

29

particular class or type of records.

30

(3)  The board may inspect the records required by

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1

paragraph (1) periodically or if the board determines that

2

the records are pertinent to an investigation of a complaint

3

against an appraisal management company.

4

(c)  Compliance person.--

5

(1)  An appraisal management company shall at all times

6

have a compliance person.

7

(2)  A registrant shall file a form with the board

8

certifying:

9

(i)  The identity of its compliance person.

10

(ii)  The individual's acceptance of the

11

responsibilities of a compliance person.

12

(3)  A registrant shall notify the board within 30 days

13

of a change in its compliance person.

14

(4)  An individual registrant who operates as a sole

15

proprietorship is considered the compliance person under this

16

act.

17

(d)  Updating of board records.--If the information contained

18

in a document filed with the board is or becomes inaccurate or

19

incomplete in any material respect, the registrant shall

20

promptly file an amendment correcting the information contained

21

in the document.

22

(e)  Disclosure.--An appraisal management company shall

23

disclose to its client the fees paid for an appraisal separately

24

from any other fees or charges for appraisal management

25

services.

26

(f)  Notice of discipline.--A registrant must notify the

27

board in writing within 30 days after its occurrence of any

28

denial, revocation or suspension of its designation,

29

registration, certificate or license under any law of any

30

jurisdiction other than this Commonwealth regulating appraisal

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1

management companies, the imposition of any other form of

2

discipline under any such law, or the commencement of a

3

disciplinary or enforcement action against the registrant under

4

any such law.

5

(g)  Provision of sales contract.--Whenever an appraisal

6

management company requests an appraiser to perform an

7

appraisal, the appraisal management company must make a

8

reasonable effort to provide in a timely manner to the appraiser

9

a copy of the contract for the underlying transaction, along

10

with legal descriptions and any other documents pertinent to the

11

assignment.

12

Section 8.  Prohibited activities.

13

(a)  Improper influence.--An employee, key person, compliance

14

person or agent of an appraisal management company shall not

15

improperly influence or attempt to improperly influence the

16

development, reporting, result or review of an appraisal,

17

including, without limitation, through the use of intimidation,

18

coercion, extortion, bribery, blackmail, threat of nonpayment or

19

withholding payment for an appraisal or threat of exclusion from

20

future appraisal work.

21

(b)  Other prohibitions.--A registrant or exempt company

22

shall not:

23

(1)  Hire, employ or in any way contract with or pay a

24

person who is not an appraiser and who holds a license under

25

the RELRA to perform a valuation of real estate unless it is

26

a comparative market analysis as defined in section 201 of

27

the RELRA.

28

(2)  Require an appraiser to provide the registrant or

29

exempt company with the appraiser's digital signature or

30

seal.

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1

(3)  Alter, amend or change an appraisal submitted by an

2

appraiser, including, without limitation, by:

3

(i)  removing the appraiser's signature or seal; or

4

(ii)  adding or removing information to or from the

5

appraisal.

6

(4)  Remove an appraiser from an appraiser panel without

7

prior written notice to the appraiser. The notice must

8

include evidence of:

9

(i)  illegal conduct by the appraiser;

10

(ii)  a violation of the minimum reporting standards

11

under the REACA or other applicable statute or

12

regulation;

13

(iii)  substandard performance; or

14

(iv)  otherwise improper or unprofessional behavior.

15

(5)  Enter into a contract or agreement with an appraiser

16

for the performance of appraisals unless the appraiser is

17

certified and in good standing with the board.

18

(6)  Request that an appraiser provide:

19

(i)  an estimated, predetermined or desired valuation

20

in an appraisal; or

21

(ii)  estimated values or comparable sales at any

22

time before the appraiser completes an appraisal.

23

(7)  Except as provided in section 7(g), provide to an

24

appraiser an anticipated, estimated, encouraged or desired

25

value for a property or a proposed or target amount to be

26

loaned to the borrower.

27

(8)  Commit an act or practice that impairs or attempts

28

to impair an appraiser's independence, objectivity or

29

impartiality or solicit an appraiser to violate this act or

30

the RELRA.

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1

(9)  Prohibit an appraiser from recording the fee the

2

appraiser was paid for the performance of an appraisal in the

3

appraisal report.

4

(c)  Construction.--Subsection (a) does not prohibit an

5

appraisal management company from requesting that an appraiser:

6

(1)  Provide additional information about the basis for a

7

valuation.

8

(2)  Correct objective factual errors in an appraisal.

9

(3)  Provide further detail, substantiation or

10

explanation for the appraiser's value conclusion, including,

11

without limitation, the applicability of additional

12

comparables as presented.

13

(d)  Owners and employees.--

14

(1)  Except as provided in paragraph (2), a person that

15

has been denied registration under this act or a similar law

16

of another jurisdiction or that would be disqualified from

17

eligibility to be certified or licensed under the REACA may

18

not be:

19

(i)  a key person or compliance person; or

20

(ii)  directly involved in the provision of appraisal

21

services by an appraisal management company as an

22

employee or in any other capacity.

23

(2)  Paragraph (1) shall cease to apply at such time as a

24

person is subsequently registered under this act or becomes

25

eligible to be certified or licensed under the REACA.

26

Section 9.  Registry of applicants and roster.

27

(a)  Registry.--The board shall keep a register of all

28

applicants for registration showing:

29

(1)  The date of application.

30

(2)  The applicant's name.

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1

(3)  The applicant's business street address.

2

(4)  Whether the registration was granted or denied.

3

(b)  Roster.--The board shall keep a current roster showing

4

for each registrant registered at any time with the board:

5

(1)  Its last known name and street address.

6

(2)  A unique identification number.

7

(c)  Effect and availability of records.--The register and

8

roster shall be prima facie evidence of all matters contained

9

therein. The register and roster shall be kept on file in the

10

office of the board and shall be open for public inspection. The

11

board shall also post the roster on its Internet website.

12

Section 10.  Disciplinary and corrective measures.

13

(a)  Authority of board.--The board may impose disciplinary

14

or corrective action as set forth in subsection (b) upon an

15

applicant, registrant, exempt company, person acting as an

16

appraisal management company, person holding out as an appraisal

17

management company or person advertising or holding out as

18

engaging in or conducting the business of an appraisal

19

management company, for any of the following causes: 

20

(1)  The appraisal management company's application for

21

registration or renewal of registration when filed contained

22

a statement that in light of the circumstances under which it

23

was made is false or misleading with respect to a material

24

fact.

25

(2)  The applicant, registrant, exempt company, its

26

compliance person or key person, has violated or failed to

27

comply with:

28

(i)  This act, or the regulations or guidelines

29

promulgated by the board for the administration and

30

enforcement of this act.

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1

(ii)  The REACA or the regulations or guidelines

2

promulgated by the board for the administration and

3

enforcement of the REACA.

4

(3)  The State Real Estate Commission has found the

5

applicant, registrant, exempt company, compliance person or

6

key person in violation of RELRA or the regulations to

7

administer and effectuate the purposes of the RELRA.

8

(4)  The Department of Banking or a court of competent

9

jurisdiction has found the applicant, registrant, exempt

10

company, compliance person or key person in violation of the

11

provisions of 7 Pa.C.S. Ch.61 (relating to mortgage loan

12

industry licensing and consumer protection) or the Mortgage

13

Bankers and Brokers and Consumer Equity Protection Act. 

14

(5)  The applicant, registrant, exempt company,

15

compliance person or key person has been convicted of:

16

(i)  A felony.

17

(ii)  Within the past ten years, a misdemeanor

18

involving mortgage lending or real estate appraising,

19

breach of trust, moral turpitude or fraudulent or

20

dishonest dealing.

21

(6)  The applicant, registrant, exempt company,

22

compliance person or key person is permanently or temporarily

23

enjoined by a court of competent jurisdiction from engaging

24

in or continuing any conduct or practice involving appraisal

25

management services or operating an appraisal management

26

company.

27

(7)  The applicant, registrant, exempt company,

28

compliance person or key person is the subject of an order of

29

the board or any other state appraisal management company

30

regulatory agency denying, suspending or revoking the

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1

person's privilege to operate as an appraisal management

2

company, or other disciplinary actions by an agency of

3

another jurisdiction responsible for regulating appraisers,

4

mortgage brokers, real estate salespersons or real estate

5

brokers.

6

(8)  The person was not an exempt company or registrant

7

and:

8

(i)  Acted as an appraisal management company.

9

(ii)  Held out as an appraisal management company

10

within this Commonwealth.

11

(iii)  Advertised or held out as engaging in or

12

conducting the business of an appraisal management

13

company

14

(b)  Board action.--When the board finds any of the causes

15

listed in subsection (a) supported by substantial evidence the

16

board may:

17

(1)  Deny, suspend, revoke or refuse to issue or renew

18

the registration of an appraisal management company under

19

this act.

20

(2)  Restrict, reprimand, limit or suspend enforcement of

21

its findings and place the appraisal management company on

22

probation with the right to vacate the probation for

23

noncompliance.

24

(3)  In lieu of imposing a sanction authorized by

25

paragraph (1), the board may order the removal, replacement

26

or restriction of a compliance person or a key person found

27

to have committed any of the violations of subsection (a) as

28

a condition of approving, renewing or retaining an

29

applicant's or registrant's registration.

30

(4)  In lieu of imposing a sanction authorized by

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1

paragraph (1), the board may order a person found to have

2

committed any of the violations of subsection (a) and that

3

owns an interest in or participates in the business of an

4

appraisal management company to divest partially or wholly of

5

such interest or participation as a condition of granting,

6

renewing or retaining an applicant's or registrant's

7

registration.

8

(5)  Levy a civil penalty or costs of investigation under

9

subsection (c) (d) or the act of July 2, 1993, (P.L.345,

<--

10

No.48), entitled "An act empowering the General Counsel or

11

his designee to issue subpoenas for certain licensing board

12

activities; providing for hearing examiners in the Bureau of

13

Professional and Occupational Affairs; providing additional

14

powers to the Commissioner of Professional and Occupational

15

Affairs; and further providing for civil penalties and

16

license suspension."

17

(6)  Require bond or other security in addition to the

18

requirements of section 6 (b) and regulations of the board

19

promulgated pursuant to that subsection.

20

(c)  Criminal penalties.--A person that violates this act

21

commits a misdemeanor of the third degree and shall, upon

22

conviction, be sentenced to pay a fine of up to $1,000 or to

23

imprisonment for not more than 90 days, or both.

24

(d)  Civil penalty.--In addition to any other civil remedy or

25

criminal penalty provided for in this act, the board may levy a

26

civil penalty of up to $10,000 on any person that violates any

27

provision of this act or any person that acts as an appraisal

28

management company, holds out as an appraisal management company

29

in this Commonwealth or advertises or holds out as engaging in

30

or conducting the business of an appraisal management company at

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1

a time when the person is not an exempt company or registered

2

under this act. The board shall levy this penalty only after

3

affording the accused party the opportunity for a hearing, as

4

provided in 2 Pa.C.S. (relating to administrative law and

5

procedure). All civil penalties imposed in accordance with this

6

section shall be paid into the Professional Licensure

7

Augmentation Account.

8

(e)  Procedures.--The investigation and prosecution of

9

disciplinary proceedings under this section shall be conducted

10

by the board under the provisions of the REACA.

11

Section 11.  Effective date.

12

This act shall take effect in 60 days.

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