Chapter 1

Question 1

USPAP

Answer 1

Uniform Standards of
Professional Appraisal Practice

Question 2

FIRREA

Answer 2

Financial Institutions Reform,
Recovery and Enforcement Act

Question 3

Appraisal Review

Answer 3

The act or process of developing an opinion about the quality of another appraiser’s work that was performed as part of an appraisal or appraisal review assignment.

Question 4

Appraisal

Answer 4

The act or process of developing an opinion of value; an opinion of value of or pertaining to appraising and related functions, such as appraisal, practice or appraisal services.

Question 5

Appraisal Practice

Answer 5

Valuation services performed by an individual acting as an appraiser, including but not limited to appraisal and appraisal review.

Question 6

Client

Answer 6

The party or parties who engage, by employment or contract, an appraiser in a specific assignment, with a directly or through an agent.

Question 7

Financial Institutions Rreform, Rrecovery and Enforcement Act (FIRREA)

Answer 7

An act passed in 1989 as a comprehensive saving and loan bailout and preventative measure against future S&L insolvency. This actor recognizes USPAP as the industry standard for appraisal and identifies the appraisal foundation as the authority for professional appraisal standards.

Question 8

Uniform Standards of
Professional Appraisal Practice (USPAP)

Answer 8

Defines an appraiser as one who is expected to perform valuation and services competently and in a manner that is independent, impartial, and objective.

Question 9

Step 1 | Problem Identification (Appraisal Process)

Answer 9

1. Identify client and intended users
2. Identify the intended use
3. Identify the purpose of the assignment type of value
4. Identify the effective date of the opinion
5. Identify the relevant characteristics of the property
6. Assignment conditions
   
   1. Extraordinary assumption
   2. Hypothetical conditions

Question 10

Step 2 | SOW (Appraisal Process)

Answer 10

Drafted by the Appraisor after gathering requirements and completing (step 1 problem identification)

Question 11

Step 3 | Applicable Data Collection and Analysis (Appraisal Process)

Answer 11

1. Market Area Data
2. Subject Property Data
3. Comparable Properties Data
4. Market Analysis
5. Highest and Best-use Analysis

Question 12

Step 4 |Applicable of the Approaches to Value (Appraisal Process)

Answer 12

1. Cost
2. Sales Comparison
3. Income Capitalization

Question 13

Step 6 |Report of Defined Value (Appraisal Process)

Question 13

Step 5|Reconcilitation and Final Opinion (Appraisal Process)

Question 13

Determining Scope of Work

Answer 13

Appraiser decides:
* Extent to which a property is identified
* Extent of property inspection
* Type of data to be researched and to what extent
* Type and extent of analysis applied in order to reach opinions or conclusions

Question 13

Valuation services

Answer 13

• Valuation services are performed by a variety of individuals and professionals
  in addition to appraisers

Question 14

Appraisal practice

Answer 14

Appraisal practice is a valuation service provided by an appraiser
* When an appraiser is acting in the role of an appraiser, there are certain
USPAP obligations

Question 15

The ETHICS RULE slide 1

Answer 15

• Sets forth foundational obligations when acting in the role of an appraiser
• Amplifies that an appraiser is required to observe the highest standards of
  professional ethics
• An appraiser “must not misrepresent his or her role when providing valuation
  services that are outside of appraisal practice”

Question 16

The ETHICS RULE slide 2

Answer 16

• Appraisers must not communicate in a misleading or fraudulent manner
• Appraisers must promote and preserve the public trust inherent in appraisal
  practice
• Appraiser must comply with USPAP when obligated by law/regulation or
  agreement, or when performing service as an appraiser

Question 17

The ETHICS RULE slide 3

Answer 17

• Appraisers must not engage in criminal conduct
• Appraisers must always be impartial, objective, and independent
• Appraisers must not advertise for or solicit assignments in a manner that is
  false, misleading, or exaggerated

Question 18

The ETHICS RULE slide 4 |Regarding obligations for performance in an appraisal assignment:

Answer 18

• Appraisers must not perform an assignment with bias or advocate the cause or interest of any party/issue
• Appraisers must not agree to perform assignments conditioned on the reporting of predetermined opinions or conclusions
• Appraisers must not perform assignments in a grossly negligent manner

Question 19

The ETHICS RULE slide 5

Answer 19

• “Appraisers must not use or rely on unsupported conclusions relating to
  characteristics such as race, color, religion, national origin, gender, marital
  status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.”

Question 20

The ETHICS RULE slide 6 | Appraisers must disclose:

Answer 20

• Any current or prospective interest regarding the subject property or the parties involved
• Any services regarding the subject property performed by the appraiser, as an appraiser or in any other capacity, within the three year period immediately preceding the agreement to perform the assignment
• Payment of fees, commissions, or things of value paid in connection
  with the procurement of an assignment

Question 21

The ETHICS RULE slide 7 | An appraiser must not agree to perform an assignment, or have a compensation
arrangement for an assignment, that is contingent on any of the following:

Answer 21

• the reporting of a predetermined result (e.g., opinion of value);
• a direction in assignment results that favors the cause of the client;
• the amount of a value opinion;
• the attainment of a stipulated result (e.g., that the loan closes, or taxes are
  reduced); or
• the occurrence of a subsequent event directly related to the appraiser’s
  opinions and specific to the assignment’s purpose

Question 22

The ETHICS RULE slide 8 | An appraiser must not disclose (1) confidential information or (2) assignment results to anyone other than:

Answer 22

* the client; * parties specifically authorized by the client; * state appraiser regulatory agencies; * third parties as may be authorized by due process of law; or * a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation.

Question 23

The ETHICS RULE slide 9

Answer 23

* An appraiser must take reasonable steps to safeguard access to confidential information and assignment results by unauthorized individuals, whether such information or results are in physical or electronic form. * An appraiser must ensure that employees, co-workers, sub-contractors, or others who may have access to confidential information or assignment results, are aware of the prohibitions on disclosure of such information or results. * A member of a duly authorized professional peer review committee must not disclose confidential information presented to the committee.

Question 24

The COMPETENCY RULE | Competency could apply to the appraiser’s knowledge and experience regarding:

Answer 24

* A specific type of property or asset * A market * A geographic area * An intended use * Specific laws and regulations * An analytical method

Question 25

The COMPETENCY RULE | establishes these requirements:

Answer 25

the ability to properly identify the problem to be addressed; * the knowledge and experience to complete the assignment competently; and * recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.

Question 26

The COMPETENCY RULE | For an appraiser who lacks competency at the onset but would like to perform an assignment, the appraiser must:

Answer 26

* disclose the lack of knowledge and/or experience to the client before agreeing to perform the assignment; * take all steps necessary or appropriate to complete the assignment competently; and * describe, in the report, the lack of knowledge and/or experience and the steps taken to complete the assignment competently.

Question 27

The COMPETENCY RULE | If during the course of an assignment, facts or conditions are discovered that cause the appraiser to realize that he lacks the required knowledge and experience to competently complete the assignment, the appraiser must:

Answer 27

* notify the client, * take all steps necessary or appropriate to complete the assignment competently and * describe, in the report, the lack of knowledge and/or experience and the steps taken to complete the assignment competently