CGA Regulatory & Fair Housing Compliance 2 — Questions and Answers
Question 1: Under FIRREA, which federal agency has primary oversight authority over appraisers who perform appraisals for federally related transactions?
- The Appraisal Foundation
- The Appraisal Subcommittee (ASC) (Correct answer)
- The Federal Reserve Board
- The Office of the Comptroller of the Currency
Correct answer: The Appraisal Subcommittee (ASC)
The Appraisal Subcommittee (ASC) monitors state appraiser regulatory programs and the Appraisal Foundation under FIRREA.
Question 2: A lender asks an appraiser to 'hit a value' to make a loan work. The appraiser's ethical obligation under USPAP is to:
- Attempt to support the requested value if market evidence permits
- Refuse and report the pressure to the state board immediately
- Decline the assignment and maintain independence (Correct answer)
- Complete the appraisal at the requested value since the lender is the client
Correct answer: Decline the assignment and maintain independence
USPAP's Ethics Rule requires appraisers to protect their independence and decline assignments where predetermined conclusions are required.
Question 3: Which provision of the Fair Housing Act specifically prohibits steering minority buyers away from certain neighborhoods?
- Section 804(a)
- Section 804(b) (Correct answer)
- Section 805
- Section 806
Correct answer: Section 804(b)
Section 804(b) of the Fair Housing Act prohibits discrimination in the terms, conditions, or privileges of the sale or rental of a dwelling.
Question 4: An appraiser using the sales comparison approach notes that comparable sales in a neighborhood are predominantly to one racial group. The appraiser should:
- Adjust for racial composition as a market factor
- Use the sales as comparables without reference to racial composition (Correct answer)
- Seek comparables outside the neighborhood only
- Disclose the racial composition in the report as a value factor
Correct answer: Use the sales as comparables without reference to racial composition
Appraisers must use all relevant market sales as comparables and may not consider racial composition as a value factor.
Question 5: Under Dodd-Frank, the Appraisal Independence Requirements (AIR) prohibit which party from selecting appraisers for mortgage transactions?
- Underwriters
- Loan originators and brokers (Correct answer)
- Appraisal management companies
- Secondary market investors
Correct answer: Loan originators and brokers
AIR under Dodd-Frank prohibits loan originators and brokers from selecting appraisers to prevent undue influence on valuation.
Question 6: A state-certified general appraiser can appraise which category of property for federally related transactions?
- Only residential properties under $400,000
- Only commercial properties
- All types of real property regardless of complexity or value (Correct answer)
- Only properties above the $500,000 residential threshold
Correct answer: All types of real property regardless of complexity or value
A certified general appraiser is authorized to appraise all types of real property without restriction for federally related transactions.
Question 7: Which of the following actions would constitute a violation of the Equal Credit Opportunity Act (ECOA) in the appraisal context?
- Adjusting for a home's proximity to a flood zone
- Noting a property's location in a historically designated district
- Using race of neighborhood residents as a basis for a location adjustment (Correct answer)
- Adjusting for differences in square footage between comparables
Correct answer: Using race of neighborhood residents as a basis for a location adjustment
ECOA prohibits discrimination based on race, and using racial composition as a valuation factor violates this statute.
CGA Regulatory & Fair Housing Compliance 2
Under FIRREA, which federal agency has primary oversight authority over appraisers who perform appraisals for federally related transactions?