CAR Industry Regulations & Compliance 2 — Questions and Answers
Question 1: Under USPAP, which departure provision allows an appraiser to omit normally required steps when the client agrees in writing?
- Limiting condition provision
- Scope of work rule
- Departure rule (pre-2006) (Correct answer)
- Jurisdictional exception rule
Correct answer: Departure rule (pre-2006)
The Departure Rule (eliminated in the 2006 USPAP edition) allowed appraisers to depart from specific requirements if certain conditions were met and the client agreed.
Question 2: The Dodd-Frank Wall Street Reform Act placed appraisal management companies under the oversight of which federal agencies?
- Only the Federal Reserve
- The OCC and FDIC only
- The federal banking regulators through the ASC (Correct answer)
- The SEC and CFTC jointly
Correct answer: The federal banking regulators through the ASC
Dodd-Frank strengthened AMC oversight by requiring federal banking regulators, coordinated through the ASC, to establish minimum standards for AMC registration.
Question 3: A reviewer identifies that an appraisal used a sales comparison approach but the appraiser selected only foreclosure sales as comparables. Which USPAP standard is most directly violated?
- Standard 1-1(a) — competency
- Standard 1-4(a) — market data analysis (Correct answer)
- Standard 2-1(b) — report content
- Standard 3-1(d) — review scope
Correct answer: Standard 1-4(a) — market data analysis
Standard 1-4(a) requires the appraiser to use comparable sales that are sufficiently similar; systematically selecting distressed sales without analysis violates this requirement.
Question 4: Under the Equal Credit Opportunity Act (ECOA), lenders must provide applicants a copy of the appraisal within how many days of completing the appraisal?
- 3 business days
- 7 business days
- Promptly upon completion and no later than 3 business days before consummation (Correct answer)
- 10 calendar days
Correct answer: Promptly upon completion and no later than 3 business days before consummation
ECOA (Regulation B) requires lenders to provide a copy promptly upon completion, and no later than 3 business days before loan consummation.
Question 5: Which entity publishes the Uniform Standards of Professional Appraisal Practice (USPAP)?
- The Appraisal Subcommittee (ASC)
- The Appraisal Foundation through the Appraisal Standards Board (ASB) (Correct answer)
- The Appraisal Institute
- The Federal Financial Institutions Examination Council (FFIEC)
Correct answer: The Appraisal Foundation through the Appraisal Standards Board (ASB)
The Appraisal Standards Board (ASB) of The Appraisal Foundation is responsible for developing and publishing USPAP.
Question 6: An appraisal review report that contains only a numeric score without any written analysis most likely violates which USPAP requirement?
- The signature requirement of SR 3-2
- The written communication standards under SR 3-2(e) (Correct answer)
- The competency rule
- The ethics rule prohibition on misleading reports
Correct answer: The written communication standards under SR 3-2(e)
USPAP SR 3-2(e) requires that a review report contain the reviewer's opinions and conclusions supported by reasons and explanations.
Question 7: The concept of 'appraiser independence' under the Home Valuation Code of Conduct (HVCC) was later codified permanently by which law?
- The Housing and Economic Recovery Act (HERA)
- The Dodd-Frank Wall Street Reform and Consumer Protection Act (Correct answer)
- The Truth in Lending Act (TILA)
- The Financial Institutions Reform Recovery and Enforcement Act (FIRREA)
Correct answer: The Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd-Frank permanently codified appraiser independence requirements that were originally established under the temporary HVCC.
CAR Industry Regulations & Compliance 2
Under USPAP, which departure provision allows an appraiser to omit normally required steps when the client agrees in writing?