According to Title XI, what is the minimum transaction value threshold for requiring a state-licensed or certified appraiser for federally related transactions?
Correct Answer
B) $250,000
Title XI requires that federally related transactions of $250,000 or more must be appraised by a state-licensed or certified appraiser. This threshold was raised from $100,000 to $250,000 in 1994.
Why This Is the Correct Answer
The $250,000 threshold is the current federal requirement under Title XI for federally related transactions to require a state-licensed or certified appraiser. This amount was established through regulatory updates and represents the balance between ensuring appraisal quality for significant transactions while avoiding unnecessary regulatory burden on smaller deals. The threshold applies to most federally related transactions including those involving federally insured depository institutions, and failure to comply can result in civil penalties and other enforcement actions.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 was the original threshold when Title XI was first implemented, but this amount was increased to $250,000 in 1994 to adjust for inflation and reduce regulatory burden on smaller transactions.
Option C: $400,000
$400,000 exceeds the actual threshold and would unnecessarily exclude many transactions that should require professional appraisal oversight under current federal regulations.
Option D: $500,000
$500,000 is too high and would eliminate federal appraisal requirements for many significant transactions that warrant professional oversight to protect federal interests.
Quarter Million Federal Rule
Remember 'Quarter Million' = $250,000. Think 'Federal Quarter' like the coin - when a transaction hits a quarter million, federal appraisal rules kick in.
How to use: When you see Title XI threshold questions, immediately think 'Federal Quarter = Quarter Million = $250,000' to quickly identify the correct answer.
Exam Tip
Don't confuse the $250,000 Title XI threshold with other appraisal-related thresholds that may appear on the exam - focus specifically on 'federally related transactions' as the key phrase.
Common Mistakes to Avoid
- -Confusing the current $250,000 threshold with the original $100,000 threshold
- -Mixing up Title XI thresholds with other regulatory thresholds like de minimis levels
- -Forgetting that the threshold applies specifically to federally related transactions, not all appraisals
Concept Deep Dive
Analysis
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 established federal standards for real estate appraisals used in federally related transactions. The law requires that appraisals for transactions above certain dollar thresholds must be performed by state-licensed or certified appraisers to ensure quality and protect federal financial and public policy interests. This threshold system creates a regulatory framework that balances the need for professional appraisal standards with practical considerations for smaller transactions. The $250,000 threshold represents the current minimum value at which federal oversight requires professional appraisal credentials.
Background Knowledge
Title XI was enacted as part of FIRREA in 1989 following the savings and loan crisis to establish uniform standards for real estate appraisals in federally related transactions. The law created the Appraisal Subcommittee to oversee state appraiser regulatory programs and established minimum qualification criteria for appraisers performing federally related work.
Real-World Application
In practice, this means that when a bank makes a mortgage loan for $250,000 or more, or when a federally insured institution is involved in a real estate transaction at or above this threshold, a state-licensed or certified appraiser must perform the appraisal rather than allowing alternative valuation methods.
More Report Writing Questions
Under FIRREA, which federal agency has the authority to set minimum standards for real estate appraisals in federally related transactions?
What is the minimum transaction threshold for requiring a state licensed or certified appraiser under Title XI for most federally related transactions?
The Dodd-Frank Act established which requirement specifically related to appraisal independence?
Which of the following is NOT a responsibility of the Appraisal Subcommittee (ASC)?
State appraiser regulatory agencies are primarily responsible for which of the following functions?
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