RPA Legal & Regulatory Framework for Appraisals 4 — Questions and Answers
Question 1: Under USPAP's Confidentiality section of the Ethics Rule, an appraiser may NOT disclose confidential information to:
- State enforcement agencies investigating the appraiser
- A duly authorized professional peer review committee
- A third party not identified as an intended user (Correct answer)
- The Appraisal Subcommittee during a federal review
Correct answer: A third party not identified as an intended user
USPAP's Ethics Rule prohibits appraisers from disclosing confidential information to parties other than the client, intended users, persons authorized by the client, or those authorized by due process of law.
Question 2: Which of the following describes the primary difference between a 'client' and an 'intended user' in a USPAP appraisal assignment?
- The client pays for the appraisal; intended users may or may not pay
- The client is the party who engages the appraiser; intended users are those designated to use the report (Correct answer)
- Clients receive the full report; intended users receive only a summary
- There is no functional difference under USPAP
Correct answer: The client is the party who engages the appraiser; intended users are those designated to use the report
Under USPAP, the client is the party who engages the appraiser, while intended users are those identified by the appraiser in the report as parties who will use the appraisal.
Question 3: An appraiser who holds a state-certified general credential may appraise federally related transactions involving residential properties:
- Only if the property is non-complex and below $1 million
- Without restriction as to property type, complexity, or transaction value (Correct answer)
- Only if the intended use is for non-residential purposes
- Only with AMC supervision for residential assignments
Correct answer: Without restriction as to property type, complexity, or transaction value
State-certified general appraisers may appraise all types of real property, including residential properties, without restrictions on complexity or transaction value for federally related transactions.
Question 4: Under the Dodd-Frank Act's appraiser independence requirements, which of the following parties is PROHIBITED from influencing an appraiser's opinion of value?
- A licensed real estate agent providing property information
- A mortgage broker involved in the loan transaction (Correct answer)
- An attorney representing the buyer at closing
- A title company performing the settlement
Correct answer: A mortgage broker involved in the loan transaction
Dodd-Frank's appraiser independence provisions specifically prohibit loan originators, including mortgage brokers, from improperly influencing appraisers through coercion, bribery, or intimidation.
Question 5: In which of the following situations would an appraiser be required to disclose a prior service in an appraisal report under USPAP?
- When the appraiser previously appraised the same property within 3 years (Correct answer)
- When the appraiser is a personal acquaintance of the buyer
- When the appraiser's fee is contingent on the loan closing
- When the appraiser has appraised more than 10 properties in the same neighborhood
Correct answer: When the appraiser previously appraised the same property within 3 years
USPAP requires appraisers to disclose any prior services they performed on the subject property within the prior three years in the certification.
Question 6: A lender orders an appraisal through an Appraisal Management Company (AMC). Under federal law, which entity bears ultimate responsibility for ensuring the appraisal complies with FIRREA requirements?
- The AMC, as the party that selected and managed the appraiser
- The appraiser, as the licensed professional who performed the work
- The federally regulated lender, as the creditor in the transaction (Correct answer)
- The state licensing board where the property is located
Correct answer: The federally regulated lender, as the creditor in the transaction
Under FIRREA Title XI, the federally regulated lending institution bears ultimate responsibility for ensuring that appraisals for federally related transactions comply with the law's requirements.
Question 7: Under USPAP, which statement correctly describes the 'Departure Rule' as it exists in current editions?
- It allows appraisers to depart from any standard with client consent
- The Departure Rule was eliminated from USPAP in 2006 and no longer exists (Correct answer)
- It permits departure from binding requirements when the client is a government agency
- It allows departure from Standards Rules for non-lending assignments
Correct answer: The Departure Rule was eliminated from USPAP in 2006 and no longer exists
The Departure Rule was eliminated from USPAP effective January 1, 2006; USPAP now uses the Scope of Work Rule to address assignment flexibility within credible results.
RPA Legal & Regulatory Framework for Appraisals 4
Under USPAP's Confidentiality section of the Ethics Rule, an appraiser may NOT disclose confidential information to: