What is the minimum threshold for a federally related transaction that requires an appraisal under Title XI?
Correct Answer
B) $250,000
Title XI requires an appraisal for federally related transactions of $250,000 or more. This threshold was raised from the original $100,000 to reduce regulatory burden on smaller transactions while maintaining oversight for larger loans.
Why This Is the Correct Answer
The $250,000 threshold is the current federal requirement under Title XI for when a licensed or certified appraiser must perform an appraisal for federally related transactions. This amount was established through regulatory updates to reflect inflation and reduce unnecessary regulatory burden on smaller loans. The threshold applies to most real estate-related financial transactions involving federally regulated institutions. Transactions below this amount may use evaluations or other valuation methods instead of full appraisals.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 was the original threshold when Title XI was first implemented, but it has since been increased to $250,000 to account for inflation and reduce regulatory burden on smaller transactions.
Option C: $400,000
$400,000 exceeds the actual threshold requirement and would unnecessarily exclude many transactions that should require professional appraisals under current federal regulations.
Option D: $500,000
$500,000 is significantly higher than the actual threshold and would eliminate appraisal requirements for many substantial real estate transactions that warrant professional oversight.
Quarter Million Rule
Remember 'Quarter Million' = $250,000. Think 'Title XI needs a Quarter' - the quarter represents $250,000, which is one-quarter of a million dollars.
How to use: When you see questions about Title XI thresholds, immediately think 'Quarter Million' and look for $250,000 in the answer choices.
Exam Tip
Don't confuse the Title XI threshold with other regulatory thresholds like USPAP requirements or state-specific minimums - focus specifically on what the question is asking about.
Common Mistakes to Avoid
- -Confusing the current $250,000 threshold with the original $100,000 amount
- -Mixing up Title XI requirements with other federal appraisal regulations
- -Assuming the threshold applies to all transactions rather than just federally related ones
Concept Deep Dive
Analysis
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) establishes federal oversight of real estate appraisals for federally related transactions. The law requires licensed or certified appraisers to conduct appraisals for transactions above specific dollar thresholds to protect federal financial regulatory agencies and public trust. The threshold amount determines when a full appraisal versus an evaluation or other valuation method is required. This regulation balances the need for professional appraisal oversight with practical considerations of cost and regulatory burden for smaller transactions.
Background Knowledge
Title XI was enacted as part of FIRREA in 1989 following the savings and loan crisis to ensure quality and independence in real estate appraisals for federally related transactions. The law established state licensing and certification requirements for appraisers and created the Appraisal Subcommittee to oversee state appraiser regulatory programs.
Real-World Application
When a bank originates a residential mortgage for $300,000, Title XI requires a licensed or certified appraiser to perform the appraisal, but for a $200,000 loan, the bank could use an evaluation performed by someone other than a licensed appraiser.
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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