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What are the Competency Rules and Requirements?

07/01/2019 1:41 PM | Maureen Connolly (Administrator)

Competency

The “Competency Rule” in the Uniform Standards of Professional Appraisal Practice (USPAP) states that an appraiser must
  1. Be competent to perform the assignment,
  2. Acquire the necessary competency to perform the assignment, or
  3. Decline or withdraw from the assignment.

Competency Requires:

  1. The ability to properly identify the problem to be addressed, and
  2. The knowledge and experience to complete the assignment competently, and
  3. Recognition of, and compliance with laws and regulations that apply to the appraiser or to the assignment…includes familiarity with a specific type of property.

Further, unlike under USPAP’s minimum competency requirement, if the lender intends to sell the mortgage in the secondary market (e.g., Fannie Mae, Freddie Mac, FHA), acquiring the necessary competence while performing the assignment is not allowable. So in that instance, an appraiser must be competent to accept the assignment or must turn it down.

Selling Guide: Fannie Mae Single Family - Published June 28, 2016 B4-1.1/03, Appraiser Selection Criteria Knowledge and Experience:

“Lenders must use appraisers that have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; and, have the requisite knowledge about, and access to, the necessary and appropriate data sources for the area in which the appraisal assignment is located.”

Appraisers that are not familiar with specific real estate markets may not have adequate information available to perform a reliable appraisal.”

“Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility.”


Table source:

Residential Green Valuation Tools – August 19, 2014, Sandra Adomatis, SRA, LEED GA


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