Which section of Title XI specifically addresses the establishment of minimum standards for performing federally related real estate appraisals?
Correct Answer
B) Section 1110
Title XI Section 1110, codified at 12 USC 3339, directs the federal financial institutions regulatory agencies to prescribe appropriate appraisal standards for federally related transactions under their jurisdiction. Its stated minimums include generally accepted appraisal standards as evidenced by ASB standards and written appraisals. The statute also allows additional standards needed for safe and sound operations. Section 1113 is a different provision; it is not the cited performance-standards section.
Why This Is the Correct Answer
Option B is correct because Title XI Section 1110, codified at 12 USC 3339, directs the federal financial institutions regulatory agencies to prescribe appropriate appraisal standards for federally related transactions. Its stated minimums include generally accepted appraisal standards as evidenced by the Appraisal Standards Board's standards and a requirement for written appraisals. The agencies may also add standards needed for safe and sound operations.
Why the Other Options Are Wrong
Option A: Section 1112
Option A, Section 1112, is not the provision that sets minimum appraisal performance standards for federally related transactions. Those standards are directed by Section 1110.
Option C: Section 1113
Option C, Section 1113, is a different Title XI provision and is not the cited section on performance standards for federally related appraisals. The standards provision is Section 1110.
Option D: Section 1116
Option D, Section 1116, does not establish the minimum standards for performing federally related appraisals. That role belongs to Section 1110.
Ten sets the standards
Think of 1110 as a perfect ten: the section that sets the standard for how federally related appraisals must be performed.
How to use: Use this when an exam question asks which Title XI section deals with appraisal performance standards.
Exam Tip
Separate who sets performance standards (agencies under Section 1110) from other Title XI topics such as licensing and the Appraisal Subcommittee. Read the stem for the word standards.
Common Mistakes to Avoid
- -Picking Section 1113 or another nearby section number without linking it to performance standards
- -Thinking the Appraisal Subcommittee itself writes the performance standards for federally related appraisals
- -Assuming the federal agencies can only adopt USPAP and cannot add further standards
Concept Deep Dive
Analysis
This question tests whether you can match a specific Title XI section number to its subject. The key words are minimum standards for performing appraisals in federally related transactions, which point to the section that directs the federal financial institutions regulatory agencies to prescribe appraisal standards.
Background Knowledge
Title XI of FIRREA created the federal framework for appraisals in federally related transactions. Section 1110 requires the federal financial institutions regulatory agencies to set appraisal standards, with USPAP serving as the baseline of generally accepted appraisal standards, and allows the agencies to require more.
Real-World Application
A bank's compliance officer asks a staff appraiser why the bank's appraisal policy requires USPAP-compliant written appraisals. The appraiser explains that Title XI Section 1110 directs the bank's federal regulator to prescribe appraisal standards, and the regulator's rules build on USPAP and may add safety-and-soundness requirements.
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