What is the minimum transaction value threshold above which Title XI requires a state-licensed or certified appraiser for federally related transactions involving residential properties?
Correct Answer
B) $250,000
Title XI requires a state-licensed or certified appraiser for federally related transactions involving residential properties with a transaction value of $250,000 or greater. Below this threshold, an evaluation may be acceptable.
Why This Is the Correct Answer
The $250,000 threshold for residential properties under Title XI is a fundamental regulatory requirement that has been in effect since the implementation of FIRREA. This threshold was established to balance the need for professional appraisal services on significant transactions while allowing flexibility for smaller transactions. Any federally related transaction involving residential real estate with a transaction value of $250,000 or more must use a state-licensed or certified appraiser, making this a bright-line rule that lenders and appraisers must follow. Below this threshold, financial institutions may use evaluations or other valuation methods that don't require a licensed appraiser.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 is too low and would create an unnecessary burden on the lending system by requiring licensed appraisers for relatively small residential transactions that pose minimal risk to federal interests.
Option C: $400,000
$400,000 is incorrect and represents a threshold that would be too high, potentially leaving significant residential transactions without the protection of professional appraisal standards required by Title XI.
Option D: $500,000
$500,000 is incorrect and would exclude many substantial residential transactions from the mandatory appraisal requirements, which contradicts the protective intent of Title XI legislation.
Quarter Million Rule
Remember 'Quarter Million = Quarter of a Million = $250,000' - when you reach a quarter million in residential value, you need a licensed appraiser. Think 'Q for Quarter, Q for Qualified appraiser required.'
How to use: When you see any question about Title XI thresholds for residential properties, immediately think 'Quarter Million' and look for $250,000 in the answer choices.
Exam Tip
Title XI threshold questions are common on the exam - memorize the $250,000 residential threshold as it's frequently tested and is a foundational regulatory concept that appears in multiple contexts.
Common Mistakes to Avoid
- -Confusing residential and commercial thresholds under Title XI
- -Thinking the threshold applies to the loan amount rather than transaction value
- -Assuming all federally related transactions require licensed appraisers regardless of value
Concept Deep Dive
Analysis
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) establishes mandatory appraisal requirements for federally related transactions to protect federal financial and public policy interests. The law sets specific transaction value thresholds that determine when a state-licensed or certified appraiser must be used versus when an evaluation might suffice. For residential properties, this threshold is critical because it affects lending practices, consumer protection, and regulatory compliance across all federally insured financial institutions. Understanding these thresholds is essential for appraisers as it directly impacts their business and the types of assignments they may receive.
Background Knowledge
Title XI of FIRREA was enacted in 1989 following the savings and loan crisis to ensure that real estate appraisals used in federally related transactions are performed by qualified, licensed professionals. The law established the Appraisal Subcommittee to oversee state appraiser regulatory programs and set minimum standards for appraisal practice.
Real-World Application
A bank is making a $275,000 mortgage loan on a single-family home. Because this exceeds the $250,000 Title XI threshold, the bank must order an appraisal from a state-licensed or certified appraiser rather than using an internal evaluation or automated valuation model.
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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Previous Question
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?
Next Question
A federally related transaction involves a refinance of a single-family home with a loan amount of $180,000. Which of the following is required under Title XI?