CAR CAR Legal & Liability Considerations 1

Question 1

Under FIRREA, which federal regulatory body is primarily responsible for establishing minimum standards for state-licensed and state-certified appraisers?

Accepted Answer

The Appraisal Subcommittee (ASC) in coordination with The Appraisal Foundation

Answer

FIRREA created the ASC to oversee state appraiser programs and authorized The Appraisal Foundation to set minimum qualifications and USPAP through its Boards.

Question 2

An appraiser reviewer discovers that the appraiser on a federally related transaction is licensed but not certified. Under FIRREA threshold rules, this may be a problem if:

Accepted Answer

The transaction value exceeds the applicable de minimis threshold requiring a certified appraiser

Answer

FIRREA and interagency guidance establish de minimis thresholds above which a certified appraiser (not merely licensed) is required for federally related transactions.

Question 3

What is the primary liability concern for a reviewer who issues a positive review of an appraisal that was later found to be fraudulent?

Accepted Answer

The reviewer may share liability if they failed to exercise the level of competency expected of a reasonable reviewer

Answer

Reviewers owe a duty of care; failing to identify red flags that a competent reviewer should have caught can expose the reviewer to professional and legal liability.

Question 4

Under USPAP Standard 3, what is a reviewer's obligation when they form their own opinion of value that differs from the appraiser's conclusion?

Accepted Answer

The reviewer must comply with Standard 1 and Standard 2 requirements when developing and reporting their own value opinion

Answer

USPAP Standard 3 explicitly states that when a reviewer develops their own value opinion, they must comply with Standards 1 and 2, making the review also an appraisal.

Question 5

What does the term 'scope creep' mean in the context of a review assignment?

Accepted Answer

Performing work beyond the agreed-upon scope without client authorization, which may create uncompensated liability exposure

Answer

Scope creep occurs when a reviewer performs tasks outside the defined assignment conditions, potentially creating unauthorized deliverables and associated liability without compensation.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR CAR Legal & Liability Considerations 1