Regulatory Framework & Compliance Flashcards

Which FHA requirement governs the appraiser's obligation to identify and report the presence of wood-destroying insects?

Answer: HUD Handbook 4000.1 MPR for termite inspections in applicable geographic areas

HUD Handbook 4000.1 specifies that appraisers must require a termite/wood-destroying insect inspection in geographic areas where such infestations are common.

Under FHA guidelines, an appraiser who discovers a property has no access to a public or private road that meets community standards must:

Answer: Flag the property as ineligible for FHA financing without an easement

FHA requires properties to have adequate street access; properties lacking legal access to a public or private road meeting community standards are generally ineligible for FHA financing.

What is the consequence for an appraiser who submits a fraudulent FHA appraisal report?

Answer: Civil money penalties, removal from the FHA Roster, and potential criminal prosecution

Fraudulent FHA appraisals can result in civil money penalties under FIRREA, removal from the FHA Appraiser Roster, and federal criminal prosecution under the False Claims Act.

FHA's policy regarding appraisals on proposed construction requires the appraiser to:

Answer: Perform two inspections: one on plans and one final inspection before closing

For proposed construction, FHA requires an appraisal based on plans and specifications plus a final inspection (or staged inspections) before the loan closes to verify completion per plans.

When an FHA appraiser notes that a property's well and septic system are too close together, the appraiser must:

Answer: Require a test by a qualified inspector and condition the appraisal on satisfactory results

Inadequate separation between well and septic systems poses a health hazard; FHA requires the appraiser to condition the appraisal on inspection and certification by a qualified professional.

Which of the following is NOT a permissible form of pressure on an FHA appraiser under Appraiser Independence Requirements?

Answer: Threatening to exclude the appraiser from future assignments unless the value meets the contract price

Threatening to blacklist an appraiser unless a target value is met is a direct violation of Appraiser Independence Requirements under Dodd-Frank.

Under FHA's case assignment policy, once an appraisal is attached to an FHA case number, how long does it remain with that case?

Answer: For the life of the case number (180-day validity period)

Once an appraisal is assigned to an FHA case number, it follows the case for the full 180-day validity period and cannot be replaced simply because a new lender takes over the transaction.