CMC Property Appraisal and Valuation

Question 1

What is the primary purpose of a property appraisal in a mortgage transaction?

Accepted Answer

To establish an objective estimate of the property's market value

Answer

To determine the property's tax assessment value

Answer

To calculate the seller's profit margin

Answer

To set the listing price for the property

Question 2

Which of the following best defines 'market value' in real estate appraisal?

Accepted Answer

The most probable price a property would bring in a competitive, open market under fair conditions

Answer

The price a seller is asking for a property

Answer

The replacement cost of the property minus depreciation

Answer

The assessed value used for property tax purposes

Question 3

What is the Uniform Residential Appraisal Report (URAR)?

Accepted Answer

The standard form (Fannie Mae Form 1004) used for single-family residential property appraisals

Answer

A federal law requiring all appraisals to be standardized

Answer

A database of comparable sales used by appraisers

Answer

A certification required for all licensed appraisers

Question 4

Which federal law established the framework for state licensing and certification of appraisers for federally related transactions?

Accepted Answer

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

Answer

The Truth in Lending Act (TILA)

Answer

The Real Estate Settlement Procedures Act (RESPA)

Answer

The Equal Credit Opportunity Act (ECOA)

Question 5

What does 'highest and best use' mean in the context of property appraisal?

Accepted Answer

The reasonably probable and legal use that is physically possible and results in the highest value for the property

Answer

The most expensive possible use of the property

Answer

The use that produces the highest property tax revenue

Answer

The current use of the property as determined by zoning laws

Question 6

What is an appraisal review in the context of mortgage lending?

Accepted Answer

A process where a qualified reviewer examines an appraisal report to determine its quality and accuracy

Answer

A second appraisal ordered automatically when the first comes in below the purchase price

Answer

The lender's internal assessment of property value based on AVM data

Answer

A government audit of a lender's appraisal ordering practices

Question 7

Which organization publishes the Uniform Standards of Professional Appraisal Practice (USPAP)?

Accepted Answer

The Appraisal Foundation

Answer

The Federal Reserve Board

Answer

The Appraisal Institute

Answer

The Federal Housing Administration