BASIC APPRAISAL PRINCIPLES LATEST UPDATED
QUESTIONS AND ANSWERS SURE A+
✔✔Appraiser Qualifications Board (AQB) - ✔✔responsible for creating requirements for
licensure, certification & re-certification of appraisers
✔✔Appraisal Practices Board (APB) - ✔✔formed in 2010 it is responsible for issuing
voluntary guidance on recognized valuation methods & techniques.
✔✔Uniform Standards of Professional Appraisal Practice (USPAP) - ✔✔-developed by
an Ad Hoc Committee in 1986/7 & was copyrighted in 1987 by The Appraisal
Foundation
-January 1989 ASB adopted USPAP as the governing document
-USPAP may be amended, interpreted, supplemented or retired only by the ASB
-Appraisal review, mass appraisal & appraisal of personal property and business all
belong to the appraisal profession and therefore all of these disciplines were included in
USPAP
-Congress recognized USPAP in Title XI of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 (FIRREA)
✔✔Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) -
✔✔-authorized federal financial institution regulatory agencies to reference USPAP in
their regulations. Title XI also authorized USPAP to be the basis for standards for the
states to use in licensing appraisers
-FIRREA, aka the "Savings and Loan Bailout Bill", was passed in 1989 (became
effective in 1991) as a result of the Savings and Loan Crisis
-it created the Appraisal Subcommittee (ASC) which is a federal entity with oversight
authority over the state licensing and certification agencies
-it also resulted in state licensure and certification for real property appraisers
✔✔The 2000s - ✔✔-unprecedented housing and lending boom, interest rates were low
& mortgage money was easy to obtain
-2007 the bubble burst, economic recession & increasing foreclosures led to a dramatic
decrease in property values
-Fannie Mae & Freddie Mac became insolvent & were taken into government
conservatorship in 2008
-2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Financial
Protection Act; for appraisers the most significant reforms were new appraiser
independence requirements, increased powers given to the Appraisal Subcommittee
and a federal mandate that appraisal management companies (AMCs) be regulated
✔✔Advisory Councils to The Appraisal Foundation - ✔✔1) The Appraisal Foundation
Advisory Council (TAFAC): comprised of 75 non-profit organizations and government
entities; it serves to involve the public in the appraisal standards & qualifications
,development process; makes recommendations to the ASB, AQB & BOT regarding
major issues pending before the Board
2) Industry Advisory Council (IAC): gives for-profit entities an opportunity to provide
advice and counsel to The Appraisal Foundation, members include lending institutions,
accounting firms, appraisal companies, etc.
3) International Valuation Council (IVC): provides global info and support to TAF
✔✔The Appraisal Subcommittee - ✔✔-The ASC is a federal entity and has significant
enforcement authority
-created under Section 1103 of Title XI of FIRREA to: monitor state licensure &
certification, maintain national registry of state certified and licensed appraisers eligible
to perform appraisal in federally related transactions, transmit annual report to Congress
& monitor the practices, procedures & activities of The Appraisal Foundation
-funded by an annual National Registry fee charged to each certified and licensed
appraiser
-responsible for auditing the qualification & re-certification criteria in the states and
territories
-Their mission is to ensure that real estate appraisers are sufficiently trained and tested
to assure competency and independent judgment according to uniform high
professional standards and ethics
-members of the ASC are appointed by the OCC, FRB, FDIC, NCUA, HUD, FHFA &
CFPB
✔✔The Fair Housing Act - ✔✔-originally passed in 1968 and amended in 1988
-prohibits discrimination in housing because of: race, origin, religion, sex, familial status
(1 or more persons not yet 18 living with a guardian) & handicap (physical or mental
impairment that limits a person's major life activity)
✔✔Fair Lending - ✔✔-application of the fair lending laws to financial institutions
-everyone should have equal access to credit, based only on their financial
characteristics
-violations may include denying access to credit through: intentional grounds, selective
encouraging or discouraging applications, differential treatment & policies or procedures
which have a differential impact
-Fair lending laws and regulations cover ALL credit transactions unless specifically
excepted (for example, a business loan over $1 million). It is a large umbrella.
✔✔Fair Lending Federal Institutions - ✔✔1) Department of Treasury: OCC, FDIC, FRB
& NCUA
2) Department of Housing and Urban Development (HUD): has regulatory authority in
most civil rights legislation such as the Fair Housing Act (FHA ) and the Equal Credit
Opportunity Act (ECOA)
-If a regulatory agency determines that a "pattern of practice" of discrimination is
exhibited by a lending inst. it is referred to the DOJ; an isolated instance will be referred
to HUD
,✔✔Routine Provider versus Provider on Request - ✔✔-Routine Providers give a copy of
the appraisal report to the applicant in every case (regardless of loan approval); this
practice may increase possibility of a fair lending complaint.
-Provider on Request, lenders give the applicant notice of a right to a copy of the
appraisal report, the consumer has 90 days after the institutions final decision to submit
a written request for a copy of the report
✔✔Equal Credit Opportunity Act (ECOA) - ✔✔-applies to all types of lending
(mortgages, credit cards & business loans)
-appraisers are considered creditors and ECOA applies to the appraisal of all dwellings
(one to four units, condos, co-ops & manufactured homes)
-ECOA applies to first mortgages and all junior liens
-does not apply to vacant land
✔✔HUD - ✔✔-regulates mortgage bankers & brokers dealing with fair lending
-they have authority but only act on a complaint
-current emphasis is one one to four family residential loans. These are covered under
the Fair Housing Act, while ECOA covers all types of loans
-Home Mortgage Disclosure Act requires lending institutions to report annually certain
demo. info on 1-4 res. transactions (applicants race, sex, income, location of property &
whether loan was approved, denied or withdrawn)
-The info is gathered on all home purchase loans, refinances and home improvement
loans
✔✔Fair Lending and Appraisers - ✔✔-appraisers MUST be careful to avoid
discriminatory practices when developing and reporting real property appraisals
-Fannie Mae & Freddie Mac appraisal reports state: Race and the racial composition of
the neighborhood are not appraisal factors
-DO NOT use subjective language ('crime' or 'pride of ownership')
-Ask standard questions in all situations, treat all applicants the same, etc.
✔✔Advantages to joing a Professional Society - ✔✔-specialized education courses
-networking with fellow appraisers
-access to professional journals
-access to seminars
-benefits of national advertising
✔✔Ethics - ✔✔-relating to what is good or bad; having to do with moral -duty and
obligation
-Dr. Albert Schweitzer says: in a general sense, ethics is the name we give to our
concern for good behavior. We feel an obligation to consider not only our own personal
well-being, but also that of others and of human society as a whole. Ethics is a way of
being human.
✔✔Moral - ✔✔relating to the principle of right and wrong
, ✔✔Bias - ✔✔-a preference or inclination that precludes an appraiser's impartiality,
independence or objectivity in an assignment
-bias is not allowed when an individual is performing as an appraiser
✔✔USPAP Compliance - ✔✔An appraiser must comply with USPAP when obligated by
law or regulation or by agreement with the client or intended users. Basically appraisers
should always comply with USPAP
✔✔Is it necessary to certify that the appraiser has not been coerced in the appraisal
report? - ✔✔Not in such blatant terms; however a statement such as, "my engagement
in this assignment was not contingent upon developing or reporting predetermined
results" should be added to each appraisal report.
✔✔Should an appraiser perform an assignment where there might be a conflict of
interest? - ✔✔Yes, as long as the appraiser specifies the particulars in a situation where
they have any present or prospective interest with respect to the parties involved in the
property that is the subject of the report. If the appraiser has an interest but could
provide the service in an ethical, unbiased manner then the appraiser could accept the
assignment as long as the appraiser was competent and properly disclosed the interest.
Essentially the appraiser must be able to perform the assignment without bias.
✔✔Does an appraiser need to disclose prior services performed on the same property?
- ✔✔Yes, if the appraisal was done within 3 years of the date of the acceptance of the
assignment. This is not a violation of the ethics rule on confidentiality.
✔✔Is it ethical for an appraiser to pay a fee to be included on a lender's approved
appraiser list provided the appraiser discloses payment of a fee in his or her appraisal
report? - ✔✔Yes; an appraiser can pay a fee to be on a lender's approved appraiser list,
as long as payment of this fee is appropriately disclosed in the certification section of
every appraisal report prepared for that client.
✔✔Is it ethical for an appraiser to offer a client a reduced fee on an appraisal if the
client's loan does not close?
Would the result be different if the client agreed to pay extra for other assignments? -
✔✔Neither practice would be ethical. Offering a client a reduced fee on an appraisal if
the client's loan does not close is a violation of the Ethics Rule.
✔✔Does an appraiser have to comply with USPAP if they are not charging a fee? -
✔✔Yes, compliance with USPAP is not contingent upon a fee.
✔✔Electronic Data Interchange (EDI) - ✔✔electronic appraisal report including maps,
sketches, photos and digital signatures that can be sent directly to clients
QUESTIONS AND ANSWERS SURE A+
✔✔Appraiser Qualifications Board (AQB) - ✔✔responsible for creating requirements for
licensure, certification & re-certification of appraisers
✔✔Appraisal Practices Board (APB) - ✔✔formed in 2010 it is responsible for issuing
voluntary guidance on recognized valuation methods & techniques.
✔✔Uniform Standards of Professional Appraisal Practice (USPAP) - ✔✔-developed by
an Ad Hoc Committee in 1986/7 & was copyrighted in 1987 by The Appraisal
Foundation
-January 1989 ASB adopted USPAP as the governing document
-USPAP may be amended, interpreted, supplemented or retired only by the ASB
-Appraisal review, mass appraisal & appraisal of personal property and business all
belong to the appraisal profession and therefore all of these disciplines were included in
USPAP
-Congress recognized USPAP in Title XI of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 (FIRREA)
✔✔Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) -
✔✔-authorized federal financial institution regulatory agencies to reference USPAP in
their regulations. Title XI also authorized USPAP to be the basis for standards for the
states to use in licensing appraisers
-FIRREA, aka the "Savings and Loan Bailout Bill", was passed in 1989 (became
effective in 1991) as a result of the Savings and Loan Crisis
-it created the Appraisal Subcommittee (ASC) which is a federal entity with oversight
authority over the state licensing and certification agencies
-it also resulted in state licensure and certification for real property appraisers
✔✔The 2000s - ✔✔-unprecedented housing and lending boom, interest rates were low
& mortgage money was easy to obtain
-2007 the bubble burst, economic recession & increasing foreclosures led to a dramatic
decrease in property values
-Fannie Mae & Freddie Mac became insolvent & were taken into government
conservatorship in 2008
-2010 Congress passed the Dodd-Frank Wall Street Reform and Consumer Financial
Protection Act; for appraisers the most significant reforms were new appraiser
independence requirements, increased powers given to the Appraisal Subcommittee
and a federal mandate that appraisal management companies (AMCs) be regulated
✔✔Advisory Councils to The Appraisal Foundation - ✔✔1) The Appraisal Foundation
Advisory Council (TAFAC): comprised of 75 non-profit organizations and government
entities; it serves to involve the public in the appraisal standards & qualifications
,development process; makes recommendations to the ASB, AQB & BOT regarding
major issues pending before the Board
2) Industry Advisory Council (IAC): gives for-profit entities an opportunity to provide
advice and counsel to The Appraisal Foundation, members include lending institutions,
accounting firms, appraisal companies, etc.
3) International Valuation Council (IVC): provides global info and support to TAF
✔✔The Appraisal Subcommittee - ✔✔-The ASC is a federal entity and has significant
enforcement authority
-created under Section 1103 of Title XI of FIRREA to: monitor state licensure &
certification, maintain national registry of state certified and licensed appraisers eligible
to perform appraisal in federally related transactions, transmit annual report to Congress
& monitor the practices, procedures & activities of The Appraisal Foundation
-funded by an annual National Registry fee charged to each certified and licensed
appraiser
-responsible for auditing the qualification & re-certification criteria in the states and
territories
-Their mission is to ensure that real estate appraisers are sufficiently trained and tested
to assure competency and independent judgment according to uniform high
professional standards and ethics
-members of the ASC are appointed by the OCC, FRB, FDIC, NCUA, HUD, FHFA &
CFPB
✔✔The Fair Housing Act - ✔✔-originally passed in 1968 and amended in 1988
-prohibits discrimination in housing because of: race, origin, religion, sex, familial status
(1 or more persons not yet 18 living with a guardian) & handicap (physical or mental
impairment that limits a person's major life activity)
✔✔Fair Lending - ✔✔-application of the fair lending laws to financial institutions
-everyone should have equal access to credit, based only on their financial
characteristics
-violations may include denying access to credit through: intentional grounds, selective
encouraging or discouraging applications, differential treatment & policies or procedures
which have a differential impact
-Fair lending laws and regulations cover ALL credit transactions unless specifically
excepted (for example, a business loan over $1 million). It is a large umbrella.
✔✔Fair Lending Federal Institutions - ✔✔1) Department of Treasury: OCC, FDIC, FRB
& NCUA
2) Department of Housing and Urban Development (HUD): has regulatory authority in
most civil rights legislation such as the Fair Housing Act (FHA ) and the Equal Credit
Opportunity Act (ECOA)
-If a regulatory agency determines that a "pattern of practice" of discrimination is
exhibited by a lending inst. it is referred to the DOJ; an isolated instance will be referred
to HUD
,✔✔Routine Provider versus Provider on Request - ✔✔-Routine Providers give a copy of
the appraisal report to the applicant in every case (regardless of loan approval); this
practice may increase possibility of a fair lending complaint.
-Provider on Request, lenders give the applicant notice of a right to a copy of the
appraisal report, the consumer has 90 days after the institutions final decision to submit
a written request for a copy of the report
✔✔Equal Credit Opportunity Act (ECOA) - ✔✔-applies to all types of lending
(mortgages, credit cards & business loans)
-appraisers are considered creditors and ECOA applies to the appraisal of all dwellings
(one to four units, condos, co-ops & manufactured homes)
-ECOA applies to first mortgages and all junior liens
-does not apply to vacant land
✔✔HUD - ✔✔-regulates mortgage bankers & brokers dealing with fair lending
-they have authority but only act on a complaint
-current emphasis is one one to four family residential loans. These are covered under
the Fair Housing Act, while ECOA covers all types of loans
-Home Mortgage Disclosure Act requires lending institutions to report annually certain
demo. info on 1-4 res. transactions (applicants race, sex, income, location of property &
whether loan was approved, denied or withdrawn)
-The info is gathered on all home purchase loans, refinances and home improvement
loans
✔✔Fair Lending and Appraisers - ✔✔-appraisers MUST be careful to avoid
discriminatory practices when developing and reporting real property appraisals
-Fannie Mae & Freddie Mac appraisal reports state: Race and the racial composition of
the neighborhood are not appraisal factors
-DO NOT use subjective language ('crime' or 'pride of ownership')
-Ask standard questions in all situations, treat all applicants the same, etc.
✔✔Advantages to joing a Professional Society - ✔✔-specialized education courses
-networking with fellow appraisers
-access to professional journals
-access to seminars
-benefits of national advertising
✔✔Ethics - ✔✔-relating to what is good or bad; having to do with moral -duty and
obligation
-Dr. Albert Schweitzer says: in a general sense, ethics is the name we give to our
concern for good behavior. We feel an obligation to consider not only our own personal
well-being, but also that of others and of human society as a whole. Ethics is a way of
being human.
✔✔Moral - ✔✔relating to the principle of right and wrong
, ✔✔Bias - ✔✔-a preference or inclination that precludes an appraiser's impartiality,
independence or objectivity in an assignment
-bias is not allowed when an individual is performing as an appraiser
✔✔USPAP Compliance - ✔✔An appraiser must comply with USPAP when obligated by
law or regulation or by agreement with the client or intended users. Basically appraisers
should always comply with USPAP
✔✔Is it necessary to certify that the appraiser has not been coerced in the appraisal
report? - ✔✔Not in such blatant terms; however a statement such as, "my engagement
in this assignment was not contingent upon developing or reporting predetermined
results" should be added to each appraisal report.
✔✔Should an appraiser perform an assignment where there might be a conflict of
interest? - ✔✔Yes, as long as the appraiser specifies the particulars in a situation where
they have any present or prospective interest with respect to the parties involved in the
property that is the subject of the report. If the appraiser has an interest but could
provide the service in an ethical, unbiased manner then the appraiser could accept the
assignment as long as the appraiser was competent and properly disclosed the interest.
Essentially the appraiser must be able to perform the assignment without bias.
✔✔Does an appraiser need to disclose prior services performed on the same property?
- ✔✔Yes, if the appraisal was done within 3 years of the date of the acceptance of the
assignment. This is not a violation of the ethics rule on confidentiality.
✔✔Is it ethical for an appraiser to pay a fee to be included on a lender's approved
appraiser list provided the appraiser discloses payment of a fee in his or her appraisal
report? - ✔✔Yes; an appraiser can pay a fee to be on a lender's approved appraiser list,
as long as payment of this fee is appropriately disclosed in the certification section of
every appraisal report prepared for that client.
✔✔Is it ethical for an appraiser to offer a client a reduced fee on an appraisal if the
client's loan does not close?
Would the result be different if the client agreed to pay extra for other assignments? -
✔✔Neither practice would be ethical. Offering a client a reduced fee on an appraisal if
the client's loan does not close is a violation of the Ethics Rule.
✔✔Does an appraiser have to comply with USPAP if they are not charging a fee? -
✔✔Yes, compliance with USPAP is not contingent upon a fee.
✔✔Electronic Data Interchange (EDI) - ✔✔electronic appraisal report including maps,
sketches, photos and digital signatures that can be sent directly to clients
