What is the minimum transaction value threshold for requiring a state-licensed or certified appraiser under Title XI for most federally related transactions?
Correct Answer
B) $250,000
Under Title XI, federally related transactions with a transaction value of $250,000 or more generally require an appraisal performed by a state-licensed or certified appraiser. This threshold was established to ensure professional appraisal standards for significant real estate transactions.
Why This Is the Correct Answer
The $250,000 threshold is specifically established under Title XI regulations for most federally related transactions. This amount represents the minimum transaction value where federal regulators determined that the risk and complexity justify requiring a state-licensed or certified appraiser rather than allowing alternative valuation methods. The threshold applies to most real estate-related financial transactions involving federally regulated institutions, ensuring consistent professional standards across the industry.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 was considered too low a threshold as it would create excessive regulatory burden on routine transactions while not significantly improving risk management for financial institutions.
Option C: $400,000
$400,000 would set the bar too high, leaving many significant transactions without required professional appraisal oversight, potentially increasing risk for federally regulated financial institutions.
Option D: $500,000
$500,000 represents an even higher threshold that would exclude too many substantial real estate transactions from mandatory professional appraisal requirements, undermining the protective intent of Title XI.
Quarter Million Mark
Remember 'Quarter Million = Quality Required' - when a transaction reaches a quarter of a million dollars ($250,000), quality professional appraisal is required under Title XI.
How to use: When you see threshold questions about Title XI, immediately think 'Quarter Million Mark' to recall that $250,000 is the standard threshold for requiring licensed/certified appraisers.
Exam Tip
Focus on the exact dollar amount - $250,000 - as this is a frequently tested regulatory requirement that appears in multiple contexts throughout the exam.
Common Mistakes to Avoid
- -Confusing the $250,000 threshold with other regulatory thresholds like those for complex properties
- -Assuming the threshold applies only to residential properties when it covers most federally related transactions
- -Forgetting that the threshold can vary for certain specialized transaction types
Concept Deep Dive
Analysis
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) establishes federal standards for real estate appraisals in federally related transactions. The $250,000 threshold serves as a critical regulatory boundary that determines when professional appraisal services are mandatory versus when alternative valuation methods may be acceptable. This threshold balances the need for professional oversight on significant transactions while avoiding unnecessary regulatory burden on smaller deals. Understanding this threshold is essential for appraisers as it directly impacts their business opportunities and regulatory compliance requirements.
Background Knowledge
Title XI was enacted as part of FIRREA in 1989 following the savings and loan crisis to establish uniform standards for real estate appraisals in federally related transactions. The law requires that appraisals be performed by state-licensed or certified appraisers when transaction values meet or exceed specified thresholds.
Real-World Application
When a bank processes a mortgage loan for $275,000, Title XI requires that the property appraisal must be performed by a state-licensed or certified appraiser, whereas a $200,000 transaction might allow for alternative valuation methods like automated valuation models or broker price opinions.
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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