Under the Dodd-Frank Act, which entity is responsible for establishing appraisal standards for federally related transactions?
Correct Answer
A) Appraisal Standards Board (ASB)
Why this is correct: The Appraisal Standards Board (ASB) of The Appraisal Foundation is the entity charged with establishing USPAP, the enforceable standards for federally related transactions, a role reaffirmed by Dodd-Frank. Why the other choices are wrong: The CFPB enforces consumer financial laws but does not set appraisal standards. The Financial Stability Oversight Council monitors systemic risk. The FHFA oversees Fannie Mae and Freddie Mac but does not set USPAP. Exam tip: For 'who sets USPAP?' the answer is always the ASB.
Why This Is the Correct Answer
The Appraisal Standards Board (ASB) retained its authority to establish, improve, and promote USPAP under the Dodd-Frank Act. The ASB operates under The Appraisal Foundation and has been the designated entity for developing appraisal standards since 1989. The Dodd-Frank Act reinforced this existing structure rather than transferring standard-setting authority to a new entity. While the Act enhanced regulatory oversight through other agencies, the ASB's fundamental role in creating appraisal standards remained unchanged.
Why the Other Options Are Wrong
ASB Always Sets Basic standards
Remember 'ASB Always Sets Basic standards' - the Appraisal Standards Board has ALWAYS been responsible for setting the basic appraisal standards (USPAP), and this didn't change with Dodd-Frank.
How to use: When you see questions about who sets appraisal standards, think 'ASB Always Sets Basic standards' to remember that regardless of other regulatory changes, the ASB maintains its core function of establishing USPAP.
Exam Tip
Don't be confused by the mention of Dodd-Frank - focus on which entity actually creates the standards versus which entities provide oversight or enforcement.
Common Mistakes to Avoid
- -Confusing oversight/enforcement agencies with standard-setting bodies
- -Thinking Dodd-Frank transferred ASB's authority to new agencies
- -Not distinguishing between CFPB's consumer protection role and ASB's standard-setting role
Concept Deep Dive
Analysis
This question tests understanding of the regulatory framework governing appraisal standards under the Dodd-Frank Act. The Dodd-Frank Act, passed in 2010, restructured financial regulation but maintained the existing authority of the Appraisal Standards Board (ASB) to develop and maintain USPAP. While the Act created new oversight bodies and enhanced regulatory supervision, it did not transfer the ASB's core responsibility for establishing appraisal standards. Understanding this distinction between oversight/enforcement versus standard-setting is crucial for appraisers.
Background Knowledge
The Appraisal Foundation was established by Congress in 1987 and includes the Appraisal Standards Board (ASB) which develops USPAP, and the Appraiser Qualifications Board (AQB) which sets minimum qualifications for appraisers. The Dodd-Frank Act enhanced regulatory oversight but preserved the existing structure where ASB maintains responsibility for appraisal standards.
Real-World Application
In practice, appraisers must follow USPAP standards developed by the ASB in all federally related transactions, while various agencies like state boards, CFPB, and others may enforce compliance with these standards through their respective oversight roles.
More USPAP Questions
An appraiser is analyzing three comparable sales with the following data: Sale 1: $350,000 with +$10,000 adjustments; Sale 2: $340,000 with -$5,000 adjustments; Sale 3: $360,000 with -$15,000 adjustments. What are the adjusted sale prices?
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How often must appraisers complete continuing education to maintain their license or certification?
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According to USPAP Standard 2, when must an appraiser include extraordinary assumptions in an appraisal report?
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