Documentation & Legal Requirements Flashcards
7 cards from real FHA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Documentation & Legal Requirements flashcards as text
An FHA appraiser completes a report and later learns that the borrower is the seller's relative. What is the appraiser's primary ethical and legal obligation?
Answer: Disclose any known relationships that could affect independence and ensure the appraisal was conducted without bias
The appraiser must disclose any relationships that could affect independence and certify the appraisal was completed without bias, consistent with USPAP Ethics Rule requirements.
Under FHA guidelines, what must be documented when an appraiser identifies evidence of prior methamphetamine production in a subject property?
Answer: The property is ineligible for FHA financing until professional decontamination is completed and documented
Properties with evidence of methamphetamine production are ineligible for FHA financing until professional decontamination per applicable state/local standards is completed and documented.
What is the purpose of the Appraiser Independence Requirements (AIR) as they apply to FHA-insured transactions?
Answer: To prevent lender pressure or influence on the appraiser's value conclusion and ensure objective reporting
AIR prohibits lender coercion or pressure that could influence the appraiser's independent conclusion, ensuring the appraisal reflects an objective market value opinion.
When an FHA appraisal is used in connection with a 203(k) rehabilitation loan, what additional documentation must the appraiser include?
Answer: Both an as-is value and an after-improved value based on the approved scope of rehabilitation work
For 203(k) loans, the appraiser must provide both the as-is value and the after-improved (subject-to-completion) value based on the approved rehabilitation scope.
Which statement accurately describes the FHA appraiser's responsibility when the subject property has an underground storage tank (UST)?
Answer: Report its presence and note whether it is active or decommissioned; flag for further evaluation if evidence of leakage exists
The appraiser must report the presence of the UST, note its status, and flag any evidence of leakage or contamination for further environmental evaluation.
According to FHA guidelines, how must an appraiser handle a sales contract that contains an escalation clause when analyzing the contract price?
Answer: Analyze the final contracted price including any escalation amount, and compare it to market evidence
The appraiser must analyze the final contracted price including any escalated amount and evaluate whether it is supported by market evidence.
What certification language is required on every FHA appraisal report as mandated by HUD Handbook 4000.1?
Answer: The FHA-specific certifications found in Handbook 4000.1, in addition to standard USPAP certifications
FHA requires both the standard USPAP certifications and the additional FHA-specific certifications outlined in Handbook 4000.1 to be included in every appraisal report.