CAR Appraisal Reviewer Compliance & Standards 2 — Questions and Answers
Question 1: Under USPAP, when is a Restricted Appraisal Report appropriate for a review assignment?
- When the client and intended users are limited to the reviewer's employer only
- When the intended use is limited to the client and no other intended users (Correct answer)
- When the property value is below $250,000
- When the assignment involves federally related transactions
Correct answer: When the intended use is limited to the client and no other intended users
A Restricted Appraisal Report is appropriate when use is restricted to the client only, with no other intended users.
Question 2: Which federal regulation requires appraisal reviews for federally related transactions above the appraisal threshold?
- Dodd-Frank Act Section 1471
- FIRREA Title XI (Correct answer)
- Gramm-Leach-Bliley Act
- Community Reinvestment Act
Correct answer: FIRREA Title XI
FIRREA Title XI established appraisal requirements for federally regulated financial institutions, including review requirements for federally related transactions.
Question 3: A reviewer disagrees with the appraiser's comparable selection but the report is otherwise USPAP-compliant. What is the proper course of action?
- Issue a positive review opinion and note no deficiencies
- Issue a negative review opinion and detail the reasons for disagreement (Correct answer)
- Request the appraiser revise the report before issuing any opinion
- Decline the assignment due to scope limitations
Correct answer: Issue a negative review opinion and detail the reasons for disagreement
When a reviewer disagrees with an appraiser's work, a negative review opinion must be issued with specific reasons documented.
Question 4: Which USPAP standard governs the reporting of review results in written form?
- Standard 3
- Standard 4 (Correct answer)
- Standard 5
- Standard 6
Correct answer: Standard 4
Standard 4 governs the communication of appraisal review results in written reports.
Question 5: In a review assignment, when must the reviewer disclose a prior service involving the subject property?
- Only when the prior service was within the past 1 year
- In the certification within the review report (Correct answer)
- Only if the prior service involved the same client
- Only if the reviewer developed a value opinion previously
Correct answer: In the certification within the review report
USPAP requires disclosure of any prior services involving the subject property within the certification of the review report.
Question 6: Which condition allows an appraisal reviewer to assume the characteristics of the subject property without independent verification?
- General assumption
- Hypothetical condition
- Extraordinary assumption (Correct answer)
- Limiting condition
Correct answer: Extraordinary assumption
An extraordinary assumption assumes uncertain information as fact without verification, affecting the assignment results if found to be false.
Question 7: Under the Interagency Appraisal and Evaluation Guidelines, which requirement applies to the selection of appraisers for federally related transactions?
- The appraiser must be selected by the borrower
- The appraiser must be independent from the loan production function (Correct answer)
- The appraiser must be state certified regardless of transaction amount
- The appraiser must carry E&O insurance of at least $1 million
Correct answer: The appraiser must be independent from the loan production function
The Interagency Guidelines require that appraisers be independent from the loan production function to avoid conflicts of interest.
CAR Appraisal Reviewer Compliance & Standards 2
Under USPAP, when is a Restricted Appraisal Report appropriate for a review assignment?