After the required findings and procedures, what action can the Appraisal Subcommittee take against a state appraiser regulatory program that does not meet Title XI requirements?
Correct Answer
C) Stop recognizing that state’s appraiser credentials for covered transactions.
Title XI authorizes nonrecognition of a noncompliant state’s appraiser certifications and licenses after the applicable findings, notice and opportunity for hearing. This affects use of the credentials for covered federally related transactions. It is not literally deletion of a state from a list of individual appraisers, direct federal issuance of state credentials or criminal sentencing. Other statutory oversight or enforcement tools may also be available.
Why This Is the Correct Answer
Option C is correct because 12 U.S.C. § 3347 provides that the Appraisal Subcommittee and federal agencies shall not recognize appraiser certifications and licenses from states whose appraisal policies, practices, funding, staffing or procedures are found inconsistent with Title XI. This nonrecognition follows the required findings and procedures. It affects use of those credentials for covered federally related transactions.
Why the Other Options Are Wrong
Option A: Issue state appraisal credentials directly in place of the state agency.
Option A says the ASC would issue state appraisal credentials directly in place of the state agency. Title XI's remedy is nonrecognition of the state's credentials; credentialing remains a state function, and the ASC does not take over issuing state licenses.
Option B: Replace USPAP with a separate appraisal standard written for that state.
Option B says the ASC would replace USPAP with a separate appraisal standard written for that state. The ASC does not write appraisal standards, and nonrecognition does not substitute a different standard for USPAP.
Option D: Impose federal criminal sentences on the individual appraisers licensed by that state.
Option D says the ASC would impose federal criminal sentences on individual appraisers licensed by that state. The ASC's sanction here is directed at the state program, and criminal sentencing is a court function, not an ASC action.
ASC watches states, not individuals
The ASC monitors state programs, so its strongest tool hits the state program: refusing to recognize that state's licenses and certifications.
How to use: Use this when a question asks what the ASC can do about a deficient state program.
Exam Tip
Match the sanction to the body being supervised: the ASC supervises state programs, so look for an action aimed at recognition of the state's credentials.
Common Mistakes to Avoid
- -Believing the ASC licenses or disciplines individual appraisers
- -Confusing the ASC with the Appraisal Standards Board, which writes USPAP
- -Thinking the ASC can impose criminal penalties
Concept Deep Dive
Analysis
This question tests the sanction available to the Appraisal Subcommittee under Title XI when a state program does not comply. The ASC oversees state programs; it does not license individuals, write standards for a state, or impose criminal sentences. The answer is the statutory nonrecognition of that state's credentials.
Background Knowledge
Title XI of FIRREA created the Appraisal Subcommittee to monitor state appraiser regulatory programs. When a state program is found inconsistent with Title XI after the required findings and procedures, its credentials can lose recognition for federally related transactions. Other statutory oversight tools may also be available.
Real-World Application
Suppose a state agency's staffing and procedures were found inconsistent with Title XI after the required process. Lenders could then be unable to rely on that state's credentials for covered federally related transactions. That would pressure the state to fix its program rather than having federal officials license appraisers directly.
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An appraiser signs, finalizes and electronically transmits a residential appraisal report to the client on March 15. Its value opinion has a March 1 effective date. The client does not open the transmitted report until March 20. What is the report date?
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The special appraisal requirements in Regulation Z §1026.35(c), adopted under Dodd-Frank, concern which covered mortgage category?