FHA Regulatory Framework & Compliance 2 — Questions and Answers
Question 1: Under HUD Handbook 4000.1, what is the maximum age of an FHA appraisal before it must be updated or a new appraisal ordered?
- 90 days
- 120 days
- 180 days (Correct answer)
- 365 days
Correct answer: 180 days
FHA appraisals are valid for 180 days from the effective date of the appraisal under HUD Handbook 4000.1.
Question 2: Which federal law requires appraisers to be state-licensed or state-certified for federally related transactions?
- RESPA
- FIRREA (Correct answer)
- TILA
- ECOA
Correct answer: FIRREA
The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 mandated state licensing and certification for appraisers in federally related transactions.
Question 3: When an FHA appraiser identifies a health or safety issue that the seller refuses to correct, what is the appraiser's required action?
- Complete the appraisal with no notation
- Report the condition and make the appraisal subject to repair (Correct answer)
- Decline to complete the appraisal
- Complete the appraisal and notify the buyer directly
Correct answer: Report the condition and make the appraisal subject to repair
The appraiser must note the deficiency and condition the appraisal 'subject to repair' so the lender is aware and can require correction before closing.
Question 4: Which entity maintains the FHA Appraiser Roster and has authority to remove appraisers from it?
- The Appraisal Foundation
- State appraisal boards
- HUD/FHA (Correct answer)
- Fannie Mae
Correct answer: HUD/FHA
HUD/FHA maintains the FHA Appraiser Roster and can remove appraisers who fail to comply with FHA requirements independent of state board actions.
Question 5: Under FHA guidelines, a 'subject to' appraisal means:
- The value is contingent on market conditions
- The appraised value assumes repairs or conditions will be met (Correct answer)
- The appraiser lacks sufficient data
- The property is in a flood zone
Correct answer: The appraised value assumes repairs or conditions will be met
A 'subject to' appraisal provides a value that is conditioned upon the completion of specified repairs, alterations, or conditions before closing.
Question 6: What does the FHA's Minimum Property Requirements (MPR) primarily focus on?
- Aesthetic quality and curb appeal
- Safety, soundness, and security of the property (Correct answer)
- Energy efficiency ratings
- Market comparability
Correct answer: Safety, soundness, and security of the property
FHA Minimum Property Requirements focus on ensuring the property is safe for occupants, structurally sound, and provides adequate security.
Question 7: An appraiser on the FHA Roster who accepts an assignment with a pre-determined value conclusion is violating which principle?
- Competency Rule
- Independence requirement (Correct answer)
- Scope of Work Rule
- Jurisdictional Exception Rule
Correct answer: Independence requirement
Appraiser independence requirements prohibit FHA appraisers from accepting assignments where the value is predetermined, protecting the integrity of the appraisal process.
FHA Regulatory Framework & Compliance 2
Under HUD Handbook 4000.1, what is the maximum age of an FHA appraisal before it must be updated or a new appraisal ordered?