CAR Industry Regulations & Compliance 3 — Questions and Answers
Question 1: Under FIRREA, federally regulated financial institutions are required to use state-certified or state-licensed appraisers for transactions above what threshold (as of the most recent OCC/FDIC rules)?
- $100,000
- $250,000
- $500,000 (Correct answer)
- $400,000
Correct answer: $500,000
The federal banking regulators raised the residential appraisal threshold to $400,000 in 2019, but the commercial real estate appraisal threshold is $500,000.
Question 2: A lender's staff reviewer pressures a fee appraiser to revise value upward to make a loan work. This conduct most directly violates which regulation?
- RESPA Section 8
- Dodd-Frank appraiser independence provisions (15 U.S.C. § 1639e) (Correct answer)
- ECOA Regulation B
- HMDA reporting requirements
Correct answer: Dodd-Frank appraiser independence provisions (15 U.S.C. § 1639e)
Dodd-Frank 15 U.S.C. § 1639e explicitly prohibits coercion, bribery, or intimidation of appraisers to influence valuation results.
Question 3: The Appraisal Subcommittee (ASC) was created under which legislation?
- The Gramm-Leach-Bliley Act
- FIRREA Title XI (Correct answer)
- The Dodd-Frank Act
- The National Housing Act
Correct answer: FIRREA Title XI
FIRREA Title XI (1989) established the Appraisal Subcommittee to oversee state appraiser credentialing programs and the Appraisal Foundation.
Question 4: When performing an appraisal review under USPAP Standard 3, the reviewer must, at minimum, develop which of the following?
- A complete new appraisal of the subject property
- An opinion about the quality of the work under review (Correct answer)
- A reconciled value conclusion independent of the original appraisal
- A determination of the highest and best use
Correct answer: An opinion about the quality of the work under review
Under SR 3-1, the reviewer must develop an opinion about the quality of the work under review and, if required, an opinion of value.
Question 5: Which federal agency has primary enforcement authority over non-bank mortgage lenders for appraiser independence violations?
- The OCC
- The Federal Reserve
- The Consumer Financial Protection Bureau (CFPB) (Correct answer)
- The FDIC
Correct answer: The Consumer Financial Protection Bureau (CFPB)
The CFPB has primary supervisory and enforcement authority over non-bank mortgage lenders for Dodd-Frank consumer protection provisions including appraiser independence.
Question 6: In a desk review, the reviewer evaluates the appraisal report without performing a property inspection. Under USPAP, this is acceptable when the reviewer does which of the following?
- Obtains verbal confirmation of the property condition from the borrower
- Clearly identifies the scope of work, including the lack of inspection, in the review report (Correct answer)
- Relies solely on the original appraiser's property description
- Certifies the property was personally inspected
Correct answer: Clearly identifies the scope of work, including the lack of inspection, in the review report
USPAP requires the reviewer to identify the scope of work actually performed; disclosing that no inspection occurred satisfies this requirement.
Question 7: The Uniform Appraisal Dataset (UAD) standardized appraisal reporting forms were developed through collaboration between which two entities?
- Fannie Mae and Freddie Mac (Correct answer)
- FHA and VA
- The Appraisal Institute and ASB
- HUD and the OCC
Correct answer: Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac jointly developed the UAD to standardize key fields on appraisal report forms used for loans sold to the GSEs.
CAR Industry Regulations & Compliance 3
Under FIRREA, federally regulated financial institutions are required to use state-certified or state-licensed appraisers for transactions above what threshold (as of the most recent OCC/FDIC rules)?