What is the minimum transaction value threshold for requiring a state-licensed or certified appraiser under Title XI for a federally related transaction?
Correct Answer
B) $250,000
Title XI requires that federally related transactions with a transaction value of $250,000 or more must use a state-licensed or certified appraiser. Transactions below this threshold may use alternative valuation methods.
Why This Is the Correct Answer
The $250,000 threshold is specifically mandated by Title XI of FIRREA and its implementing regulations. This amount was established to balance the need for professional appraisal oversight on significant transactions while allowing flexibility for smaller transactions. Federal regulatory agencies including the OCC, Federal Reserve, FDIC, and NCUA have consistently maintained this threshold in their appraisal regulations. Any federally related transaction at or above this amount requires a state-licensed or certified appraiser to perform the valuation.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 would be too low a threshold and would create unnecessary regulatory burden on smaller transactions that don't pose significant risk to federal interests.
Option C: $500,000
$500,000 is double the actual threshold and would leave too many significant transactions without required professional appraisal oversight.
Option D: $1,000,000
$1,000,000 is four times the actual threshold and would exclude the vast majority of residential and many commercial transactions from appraisal requirements.
Quarter Million Rule
Remember 'Quarter Million = Quarter of a Million = $250,000' - Think of it as needing a 'professional quarter-back' (appraiser) when the transaction reaches a quarter million dollars.
How to use: When you see Title XI threshold questions, immediately think 'Quarter Million' and look for $250,000 among the answer choices.
Exam Tip
Title XI threshold questions are common on the exam - always associate $250,000 with federally related transaction requirements and don't confuse it with other regulatory thresholds.
Common Mistakes to Avoid
- -Confusing the $250,000 Title XI threshold with other regulatory thresholds like HMDA reporting requirements
- -Thinking the threshold applies to property value rather than transaction value
- -Assuming all federally related transactions require certified appraisers regardless of amount
Concept Deep Dive
Analysis
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) establishes federal standards for real estate appraisals used in federally related transactions. This legislation was enacted in 1989 following the savings and loan crisis to ensure appraisal quality and protect federal financial and public policy interests. The $250,000 threshold serves as a critical regulatory boundary that determines when formal state-licensed or certified appraisers must be used versus when alternative valuation methods may be acceptable. Understanding this threshold is essential for appraisers as it defines the scope of transactions requiring their professional services and helps financial institutions comply with federal regulations.
Background Knowledge
Title XI was enacted as part of FIRREA in 1989 to establish uniform standards for federal real estate appraisal activities. The law requires that appraisals for federally related transactions be performed by state-licensed or certified appraisers when the transaction value meets or exceeds the established threshold.
Real-World Application
A bank is making a mortgage loan secured by residential property worth $275,000. 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 automated valuation model or broker price opinion.
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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