Appraisal Practice and Professional Standards

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Questions and Answers

Who can access confidential information as per the established guidelines?

Anyone interested in the appraisal

Only approved third-party evaluators

All members of the appraisal association

The client and authorized persons only (correct)

For how long must appraisers retain written records after preparation?

At least two years

At least five years (correct)

At least three years

At least one year

What action is generally prohibited by the Competency Rule for appraisers?

Maintaining a financial interest in a property

Accepting assignments for which they are not qualified (correct)

Appraising properties under direct lender request

Conducting appraisals for qualified properties

Which organization requires that appraisers be selected directly by the lender?

Freddie Mac and Fannie Mae Signup and view all the answers

What is a requirement for membership in professional associations for appraisers?

Demonstrated competence through education and/or testing Signup and view all the answers

What was the status of licensing or certification requirements for appraisers prior to the 1980s?

Few states had licensing or certification requirements Signup and view all the answers

Which is NOT a typical requirement for professional appraisers?

Regular attendance at social events Signup and view all the answers

What types of appraisals are appraisers not required to provide records for?

Pro bono appraisals Signup and view all the answers

What must members of a professional association agree to?

Be bound by standards of professional conduct Signup and view all the answers

What kind of interest must appraisers avoid in the properties they appraise?

Financial interest Signup and view all the answers

What is the primary purpose of the Uniform Standards of Professional Appraisal Practice?

To ensure appraisers conduct valuations according to established standards Signup and view all the answers

Who can provide factual information to an appraiser without attempting to influence the appraisal outcome?

Real estate agents Signup and view all the answers

What is explicitly prohibited in compensation agreements for appraisals?

Contingent compensation based on predetermined results Signup and view all the answers

What is required for an appraisal to be valid under Title XI standards?

It must be conducted by a state-certified or state-licensed appraiser Signup and view all the answers

What do advisory opinions provided by the Appraisal Standards Board reflect?

They are suggestions with no formal authority Signup and view all the answers

What is meant by 'continuing education requirements' for appraisers?

Ongoing training to maintain professional competence Signup and view all the answers

Which of the following is NOT a basic requirement for an appraisal?

Must include property inspection Signup and view all the answers

What is the potential consequence of appraisers accepting bribes to influence their reports?

Penalties and loss of licensure Signup and view all the answers

What is the primary role of the Appraisal Standards Board?

To create and maintain standards for appraisal practice Signup and view all the answers

What can lead to the invalidation of an appraisal?

Insufficient documentation Signup and view all the answers

Study Notes

Professional Associations

Professional associations regulate member conduct through membership requirements
Requirements include demonstrating professional competence and meeting continuing education

FIRREA

FIRREA is the Financial Institutions Reform, Recovery and Enforcement Act
The Uniform Standards of Professional Appraisal Practice were enacted by FIRREA

Appraisal Practice Requirements

Appraisals must be conducted by a state-certified or state-licensed appraiser
Must meet specified standards
Must be in writing

Licensing Standards

Individual states set appraiser licensing standards
Must meet minimum requirements set by the Appraiser Qualifications Board

Pro Bono/Reduced Fee Appraisals

Appraisers are not required to provide pro bono or reduced fee appraisals

Financial Interests

Appraisers must not have a financial interest in the property being appraised

Fannie Mae and Freddie Mac Requirements

Fannie Mae and Freddie Mac require lenders to select and hire the appraiser directly, rather than the transaction parties

Advisory Opinions

Advisory opinions from bodies, like the Appraisal Standards Board, are not legally binding

Uniform Standards of Appraisal Practice (USPAP)

The preamble outlines the document and the rationale behind the Uniform Standards of Appraisal Practice
Compensation agreements contingent on results or predetermined values are not permitted

Confidentiality

Disclosure of confidential information is limited to the client, authorized individuals from the client, and relevant peer review committee members

Record Keeping

Written records must be maintained for at least five years after appraisal preparation

Competency Rule

A general rule that prevents appraisers from handling assignments for which they lack the appropriate qualifications
Exceptions exist where the appraiser takes the necessary actions.

Real Estate Appraisal Profession

A vocation needing specialized knowledge, regulated by industry standards
Memberships require demonstrated competence through prior education, experience or testing, and agreement to comply with professional conduct standards
Members usually gain professional designations

Standards for Appraisers

Prior to the 1980's, there were few state-level certifications for appraisers
The collapse of Savings and Loan industry in the late 80s prompted the need for industry-wide standards
USPAP (Uniform Standards of Professional Appraisal Practice) formed by nine professional associations
USPAP was adopted in 1989
Appraisal Foundation was established to update and encourage stringent educational requirements for appraisals

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Description

This quiz covers the essential aspects of appraisal practice, including licensing standards, professional associations, and compliance with FIRREA. Test your knowledge on the requirements necessary for performing appraisals and the ethical considerations involved. Understand the role of professional competence and financial interests in the appraisal process.