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Preview. Design Course designed to incorporate usage of the actual USPAP document Interactive exercises, real world problems, & a case study are intended to illustrate applications of USPAP. Materials You Will Need. Student Manual USPAP Document, which includes: USPAP

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  1. Preview • Design • Course designed to incorporate usage of the actual USPAP document • Interactive exercises, real world problems, & a case study are intended to illustrate applications of USPAP

  2. Materials You Will Need • Student Manual • USPAP Document, which includes: • USPAP • Advisory Opinions (AO) • Frequently Asked Questions (FAQ)

  3. Overview pg iii • Objectives • Update you on the changes to USPAP effective Jan 1, 2008 through Dec 31, 2009 • Address commonly misunderstood or questioned areas of USPAP • Present real world situations to illustrate applications of USPAP

  4. Announcements • Break times and lunch • Restroom locations • Smoking areas • Telephones • Be considerate of those near you • Please silence your cell phone, pagers, etc. • Attendance sheet • Certificates and evaluation forms

  5. Get Acquainted Instructor <Instructor name> <phone> <email>

  6. Section 1, Part 1 Introduction to USPAP

  7. Introduction Intro - 1 How does USPAPbenefit appraisers? • Common basis for comparison • Reference source for those with little knowledge of appraisal practice • Basis for uniform enforcement • Reason for clients, other intended users, and public to trust services performed by professional appraisers

  8. Introduction Intro - 2 Take a few minutes to write down situations when you thought "Should I accept this assignment?" ------------------------------------------------------------------- ------------------------------------------------------------------- -------------------------------------------------------------------

  9. Introduction pg 1 - 3 History of Appraisal Standards • Influence of historical events • Role of Appraiser • Development of appraisal standards

  10. Introduction pg 1- 5 History of Appraisal Standards • Public acceptance of USPAP • Congress recognized USPAP as the standards of practice for the appraisal profession • In 1989, Title XI of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), authorized federal financial institution regulatory agencies to reference USPAP in their regulations

  11. Introduction pg 1 - 6 History of Appraisal Standards • Public acceptance of USPAP • Executive Branch referenced USPAP in Uniform Relocation Assistance & Real Property Acquisition Policies Act • On Jan 11, 1993, Office of Management and Budget (OMB) Circular A-129, dated 1/11/93, with other federal agencies recognized USPAP

  12. Introduction pg 1 - 6 History of Appraisal Standards • Public acceptance of USPAP • Private industry groupssuch as Fannie Mae, Freddie Mac, Farmer Mac, the Farm Credit Administration, and the Employee Relocation Council reference USPAP and integrate the standards in their policies

  13. Introduction pg 1 - 6 History of Appraisal Standards • Legal Authority & Adoption Process • TAF is a private entity with no legal jurisdiction • USPAP achieves legal authority by . . .

  14. Introduction pg 1 - 6 The Appraisal Foundation • Structure of TAF • Not a government agency • Not an appraisal organization • No members

  15. Introduction pg 1 - 6 The Appraisal Foundation • Structure of TAF • TAF has 2 categories of sponsors • TAF has 3 boards • TAF has 4 advisory councils

  16. pg 1 - 7 Introduction pg 6 Structure of TAF

  17. Introduction pg 1 - 8 The Appraisal Foundation • Role of TAF boards • Board of Trustees (BOT) • The Appraiser Qualifications Board (AQB) • The Appraisal Standards Board (ASB)

  18. Introduction pg 1 - 10 Appraisal Subcommittee (ASC) • Acts in a supervisory role over state boards and appraisers • FIRREA established ASC within FFIEC • ASC has 6 members

  19. Introduction pg 1 - 11 Appraisal Subcommittee (ASC) • ASC not part of TAF, but has authority from FIRREA • FIRREA also authorized ASC to monitor activities of state appraiser licensure and certification agencies

  20. Introduction pg 1 - 11 Appraisal Subcommittee (ASC) • ASC makes annual reports to Congress • ASC funded by appraiser license renewal fees • ASC manages grants to TAF for real property related work of the AQB and ASB

  21. Introduction pg 1 - 11 State Appraiser Licensure and Certification Agencies A. AQB and ASB establish minimum criteria for appraisers and minimum standards for practice B. State regulatory agencies have complete authority for enforcement within certification programs C. States are independent of one another

  22. TAF & FIRREA Introduction pg 1 - 12 pg 6

  23. TAF & FIRREA Introduction pg 1 - 12 pg 6

  24. Section 1, Part 2 When USPAP Applies

  25. When USPAP Applies pg 2 - 13 A. Purpose of USPAP • Promote and maintain a high level of publictrust in professional appraisal practices • Establish minimum requirements for professional appraisal practices

  26. When USPAP Applies pg 2 - 13 B. Who benefits from USPAP • Providers of appraisal services • Users of appraisal services

  27. When USPAP Applies pg 2 - 13 C. When USPAP applies • Compliance required when either the service or appraiser is obligated to comply by • Law • Regulation • Agreement (with the client or other intended users) • When not obligated, appraisers may still choose to comply

  28. When USPAP Applies pg 2 - 14 D. Content of USPAP USPAP addresses ethical and performance obligations of appraisers through . . . • DEFINITIONS • RULES • STANDARDS • Standards Rules 1-10 • Statements

  29. When USPAP Applies pg 2 - 14 E. What services are covered by USPAP • Appraisals • Appraisal reviews • Real property appraisal consulting • Other services when acting as an appraiser

  30. When USPAP Applies pg 2 - 14 • What property types are covered by USPAP • Tangible (real and personal) • Intangible (business interests and others)

  31. When USPAP Applies pg 2 - 14 A. USPAP Compliance • When should an appraiser comply? • Must comply when required by law, regulation, or agreement • Should comply when representing oneself as an appraiser

  32. When USPAP Applies pg 2 - 15 B. Definition of Appraiser One who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective. Comment: Such an expectation occurs when individuals, either by choice or requirement place upon them or upon the service they provide by law, regulation, or agreement with the client or intended users, represent that they comply.

  33. When USPAP Applies pg 2 - 15 • An expectation to act as an appraiser is an obligation to comply with USPAP to . . . • Maintain public trust • Adhere to the definition of an appraiser • Meet expectations of client and other intended users

  34. When USPAP Applies pg 2 - 15 D. Responsibilities regarding user expectations • Identify capacity in which you are performing and inquire about users’ expectations • When providing services outside of appraisal practices, do not misrepresent yourself • When opportunity permits, provide valuation services as an appraiser, or in another capacity, but do not violate public trust

  35. When USPAP Applies pg 2 - 15 E. Definition of “Appraisal” & STANDARD 1 1. Appraisal: (noun) the act or process of developing an opinion of value; an opinion of value. (adjective) of, or pertaining to appraising and related functions such as an appraisal practice or appraisal services.

  36. When USPAP Applies pg 2 - 15 E. Definition of “Appraisal” & STANDARD 1 1. Appraisal: (noun) the act or process . . . Comment: An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g. no more than, not less than) to a previous value opinion or numerical benchmark . . .

  37. When USPAP Applies pg 2 - 16 E. Definition of “Appraisal” & STANDARD 1 • Requirements in STANDARD 1 follow appraisal process, beginning with problem identification This Standard covers all development activities that are different from reporting or communicating, which are covered in STANDARD 2 Development precedes reporting

  38. When USPAP Applies pg 2 - 16 E. Definition of “Appraisal” & STANDARD 1 3. STANDARD 1 requires the appraiser to . . . • Identify problem to be solved • Determine scope of work necessary to solve problem • Correctly complete research & analysis necessary to produce credible results Development is the process of gathering & analyzing info to arrive at an opinion or conclusion

  39. pg 2 - 17 Appraisal Process

  40. When USPAP Applies pg 2 - 18 F. Definition of “Report” & STANDARD 2 1. Report: any communication, written or oral, of an appraisal, appraisal review, or appraisal consulting service that is transmitted to the client upon completion of the assignment.

  41. When USPAP Applies pg 2 - 18 F. Definition of “Report” & STANDARD 2 1. Report: any communication, written . . . Comment: Most reports are written and most clients mandate written reports. Oral report requirements (see Record Keeping) section of the ETHICS RULE are included to cover court testimony and . . . .

  42. When USPAP Applies pg 2 - 18 F. Definition of “Report” & STANDARD 2 2. STANDARD 2 covers final step in appraisal process, both reporting & communicating the value opinion. Communication is the process of transmitting info from one source to another.

  43. When USPAP Applies pg 2 - 18 F. Definition of “Report” & STANDARD 2 3. STANDARD 2 • Addresses the content & level of info required in each reporting option. • Does not dictate the form, format, or style of appraisal reports

  44. When USPAP Applies pg 2 - 18 G. Definition of “Appraisal Review” & STANDARD 3 1. Appraisal Review: the act or process of developing and communicating an opinion about the quality of another appraiser’s work as part of an appraisal . . . Comment: The subject of an appraisal review may be all, or part of a report, a workfile, or a combination of these

  45. When USPAP Applies pg 2 - 18 G. Definition of “Appraisal Review” & STANDARD 3 2. STANDARD 3 address both the development and reporting of an appraisal review

  46. When USPAP Applies pg 2 - 19 G. Definition of “Appraisal Review” & STANDARD 3 3. Two distinctions between an appraisal and appraisal review • Subject of an appraisal review is another appraiser’s work • Opinion about the quality of another appraiser’s work in and of itself is not an opinion of value of the property

  47. When USPAP Applies pg 2 - 19 G. Definition of “Appraisal Review” & STANDARD 3 4. Appraisal review must consider an appraisal’s completeness, adequacy, relevance, appropriateness, and reasonableness

  48. When USPAP Applies pg 2 - 19 G. Definition of “Appraisal Review” & STANDARD 3 • Appraiser must ascertain whether reviewer’s scope of work includes the reviewer’s value opinion • If review assignment includes reviewer’s value opinion, that opinion constitutes an appraisal whether it: • concurs with the opinion of value • differs from the opinion of value

  49. When USPAP Applies pg 2 - 19 G. Definition of “Appraisal Review” & STANDARD 3 • If review assignment includes reviewer’s value opinion, reviewer’s value opinion is a distinct and separate opinion from review process itself

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