CAR Legal & Liability Considerations Flashcards
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Read the first 6 CAR Legal & Liability Considerations flashcards as text
What is the legal significance of the Uniform Standards of Professional Appraisal Practice (USPAP) in US appraisal law?
Answer: Many states have adopted USPAP by statute or regulation, making compliance legally mandatory for licensed and certified appraisers
FIRREA requires state licensing programs to meet or exceed USPAP, and most states incorporate USPAP into their appraisal laws, giving it legal force for licensed and certified appraisers.
Which of the following scenarios would most likely constitute appraisal fraud under federal law?
Answer: An appraiser knowingly inflates a value to qualify a buyer for a larger loan at a lender's request
Knowingly inflating value at a lender's direction constitutes mortgage fraud, which is a federal crime under 18 U.S.C. § 1014 and related statutes.
An appraiser reviewer employed by a lender identifies a pattern of inflated appraisals submitted by one AMC. What is the reviewer's legal obligation under Dodd-Frank?
Answer: Report the pattern to the appropriate state appraisal board and potentially to federal regulators as evidence of systemic valuation misconduct
Dodd-Frank and interagency guidance require lenders and their review staff to refer credible evidence of appraisal fraud or misconduct to state appraiser regulatory agencies.
What is the primary difference between negligence and fraud in the context of appraisal liability?
Answer: Negligence involves a failure to meet the standard of care without intent to deceive, while fraud requires knowing misrepresentation for gain
The key distinction is intent: negligence is an unintentional failure to exercise reasonable care, whereas fraud requires a deliberate false statement or omission made to induce reliance.
Under the Fair Housing Act, which of the following appraisal or review practices is prohibited?
Answer: Adjusting property values based on the racial or ethnic composition of a neighborhood
The Fair Housing Act prohibits appraisers and reviewers from considering race, color, national origin, religion, sex, disability, or familial status when developing or reviewing value opinions.
A review appraiser signs a certification in a review report. Under USPAP, what does this signature legally signify?
Answer: The reviewer takes personal responsibility for the conclusions and representations made in the report
USPAP certification language requires the reviewer to personally attest to the report's statements and conclusions, creating professional and legal accountability for the review.