FHA Ethical Standards & Professional Conduct 3 — Questions and Answers
Question 1: Which USPAP rule specifically addresses the appraiser's obligation to keep client information confidential?
- The Conduct section of the Ethics Rule
- The Confidentiality section of the Ethics Rule (Correct answer)
- Standard 1 of USPAP
- The Competency Rule
Correct answer: The Confidentiality section of the Ethics Rule
The Confidentiality section of USPAP's Ethics Rule prohibits appraisers from disclosing confidential information or assignment results without client consent.
Question 2: An FHA appraiser completes an appraisal and later receives a request from the seller's attorney for a copy of the report. What should the appraiser do?
- Provide the report since the seller has a financial interest in the property
- Provide the report only if the seller pays a copy fee
- Decline unless the client authorizes disclosure (Correct answer)
- Provide the report to any party involved in the transaction
Correct answer: Decline unless the client authorizes disclosure
Under USPAP's Confidentiality section, the appraiser may only disclose the report to the client or parties the client authorizes.
Question 3: What does the USPAP Record Keeping Rule require appraisers to include in their workfile?
- Only the final signed report
- All data, information, and documentation necessary to support the appraiser's opinions and conclusions (Correct answer)
- A summary of comparable sales only
- The client's loan application and credit report
Correct answer: All data, information, and documentation necessary to support the appraiser's opinions and conclusions
The Record Keeping Rule requires workfiles to contain all data and documentation necessary to support the appraiser's analyses, opinions, and conclusions.
Question 4: Under HUD Mortgagee Letter policies, an FHA appraiser who knowingly provides a fraudulent appraisal may face which consequence?
- A warning letter only for first offense
- Loss of FHA roster eligibility and potential criminal prosecution (Correct answer)
- A $500 fine assessed by the lender
- Mandatory additional USPAP education
Correct answer: Loss of FHA roster eligibility and potential criminal prosecution
Knowingly providing a fraudulent FHA appraisal can result in removal from the FHA appraiser roster, civil money penalties, and referral for criminal prosecution.
Question 5: An appraiser is offered a bonus by the lender for completing FHA appraisals within 24 hours. This arrangement is:
- Acceptable if the appraisals meet USPAP standards
- Prohibited because contingent compensation based on assignment completion compromises independence (Correct answer)
- Acceptable since speed bonuses are common industry practice
- Allowed only if disclosed in the certification
Correct answer: Prohibited because contingent compensation based on assignment completion compromises independence
Contingent compensation tied to the completion or outcome of an assignment is prohibited under USPAP's Management section and FHA independence requirements.
Question 6: Which of the following best describes 'scope of work' as it relates to FHA appraisal ethics?
- The maximum fee the appraiser may charge
- The type and extent of research and analysis needed to produce credible results (Correct answer)
- The geographic area the appraiser is approved to cover
- The number of comparable sales required in the report
Correct answer: The type and extent of research and analysis needed to produce credible results
Scope of work refers to the type and extent of research and analysis required to produce credible assignment results under USPAP's Scope of Work Rule.
Question 7: When must an FHA appraiser disclose a prior service performed on the same property in the current appraisal report?
- Only if the prior service was performed within the past 5 years
- Always, within the past 3 years, regardless of the nature of the service (Correct answer)
- Only if the prior service resulted in a different value conclusion
- Never, as prior services are confidential workfile information
Correct answer: Always, within the past 3 years, regardless of the nature of the service
USPAP requires appraisers to disclose any prior services on the same property within the three years preceding the current assignment.
FHA Ethical Standards & Professional Conduct 3
Which USPAP rule specifically addresses the appraiser's obligation to keep client information confidential?