Title XI of FIRREA (12 U.S.C. Chapter 34A) was enacted primarily to:
Correct Answer
D) Protect federal interests via written, standards-based appraisals
Title XI establishes the appraisal framework intended to protect federal financial and public-policy interests in federally related real-estate transactions. It uses state licensing/certification and federal oversight rather than creating one universal federal appraiser license or mandating a single approach.
Why This Is the Correct Answer
Option D is correct because 12 U.S.C. § 3331 states the chapter's purpose is to protect federal financial and public policy interests by requiring appraisals in federally related transactions to be performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose conduct is subject to effective supervision. This choice summarizes that purpose.
Why the Other Options Are Wrong
Option A: Replace all state appraiser licensing with a single federal license
Option A says Title XI replaced all state licensing with a single federal license. Title XI works through state licensing and certification programs under federal oversight rather than creating one federal license.
Option B: Abolish the Appraisal Subcommittee and transfer its duties to states
Option B says Title XI abolished the Appraisal Subcommittee and moved its duties to states. Title XI established the Appraisal Subcommittee to oversee state programs; it did not abolish it.
Option C: Require residential appraisals to rely on the cost approach
Option C says Title XI requires residential appraisals to rely on the cost approach. The statute concerns written, standards-based appraisals by qualified individuals and does not mandate any single approach.
Written, Uniform, Competent, Supervised
Title XI's purpose: protect federal interests with appraisals that are written, follow uniform standards, and are done by competent, supervised appraisers.
How to use: Use these four words to match the statute's purpose in exam choices.
Exam Tip
Title XI uses state licensing with federal oversight; be wary of answers that describe a single federal license or a mandated approach.
Common Mistakes to Avoid
- -Believing Title XI created a national appraiser license
- -Thinking Title XI eliminated the Appraisal Subcommittee
- -Assuming federal law prescribes which approach an appraisal must use
Concept Deep Dive
Analysis
This question tests the purpose of Title XI of FIRREA. The statute's stated purpose is to protect federal financial and public policy interests in real estate transactions by requiring that appraisals in federally related transactions be performed in writing, under uniform standards, by competent and supervised individuals. It relies on state licensing and certification with federal oversight.
Background Knowledge
Title XI was enacted after the savings and loan crisis. It created the Appraisal Subcommittee of the FFIEC to monitor state appraiser regulatory programs and recognizes the Appraisal Foundation's role in setting standards and appraiser qualifications.
Real-World Application
A state appraiser board is reviewed by the Appraisal Subcommittee to confirm its licensing and enforcement program meets federal requirements. This oversight reflects Title XI's framework of state programs under federal monitoring.
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