CGA Regulatory & Fair Housing Compliance 3 — Questions and Answers
Question 1: The Competency Rule in USPAP requires an appraiser to do which of the following before accepting an assignment they lack competency for?
- Decline all such assignments permanently
- Disclose the lack of competency to the client and take steps to acquire competency (Correct answer)
- Refer the assignment to a certified general appraiser only
- Complete the assignment and note deficiencies in an addendum
Correct answer: Disclose the lack of competency to the client and take steps to acquire competency
The Competency Rule requires disclosure of any lack of knowledge or experience and requires steps to acquire competency prior to completing the assignment.
Question 2: Under the Americans with Disabilities Act (ADA), how should an appraiser treat ADA compliance costs for a commercial property that is non-compliant?
- Ignore compliance costs as they are a legal, not appraisal, matter
- Reflect ADA compliance costs as a negative adjustment to market value (Correct answer)
- Report the non-compliance to the local government
- Assign the cost to the buyer in the appraisal report
Correct answer: Reflect ADA compliance costs as a negative adjustment to market value
ADA non-compliance represents a form of functional obsolescence, and the cost to cure or market penalty should be reflected in the value estimate.
Question 3: The concept of 'redlining' as prohibited by fair housing law refers to:
- Marking flood zone boundaries on appraisal maps
- Denying services to residents of certain areas based on racial or ethnic composition (Correct answer)
- Highlighting comparable sales boundaries in an appraisal report
- Delineating neighborhood boundaries for zoning purposes
Correct answer: Denying services to residents of certain areas based on racial or ethnic composition
Redlining is the illegal practice of denying mortgage loans or insurance to residents of neighborhoods based on racial or ethnic composition.
Question 4: USPAP Standard 1 governs which type of appraisal practice?
- Appraisal review
- Real property appraisal development (Correct answer)
- Mass appraisal development
- Personal property appraisal
Correct answer: Real property appraisal development
USPAP Standard 1 establishes requirements for the development of real property appraisals.
Question 5: When an appraiser accepts an assignment to appraise a property in which they have a personal financial interest, USPAP requires them to:
- Decline the assignment
- Disclose the interest to the client and obtain client consent (Correct answer)
- Complete the appraisal using only objective data
- Transfer the assignment to another appraiser in their firm
Correct answer: Disclose the interest to the client and obtain client consent
USPAP's Ethics Rule permits appraisal of properties in which the appraiser has an interest, but only with full disclosure to and consent of the client.
Question 6: Under fair housing law, which of the following protected classes was added to the original 1968 Fair Housing Act by the 1988 Fair Housing Amendments Act?
- Race and color
- National origin
- Familial status and disability (Correct answer)
- Sex
Correct answer: Familial status and disability
The 1988 Fair Housing Amendments Act added familial status and disability (handicap) to the original seven protected classes.
Question 7: What is the primary purpose of the Uniform Standards of Professional Appraisal Practice (USPAP)?
- To set minimum state licensing fees for appraisers
- To establish ethical and performance standards for appraisers (Correct answer)
- To regulate lender selection of appraisal management companies
- To standardize appraisal fees across all states
Correct answer: To establish ethical and performance standards for appraisers
USPAP establishes ethical obligations and minimum appraisal performance standards to protect the public trust in appraisal practice.
CGA Regulatory & Fair Housing Compliance 3
The Competency Rule in USPAP requires an appraiser to do which of the following before accepting an assignment they lack competency for?