Arizona Supervisory Appraiser Trainee Appraiser Seminar 4 Hours

Arizona Supervisory Appraiser Trainee Appraiser Seminar 4 Hours CE September 6, 2013 Phoenix, AZ

Before We Begin… Thank-you! § Arizona Board of Appraisal – Board Members • • Kevin R. Yeanoplos, Chairperson B. Michael Petrus II, Vice Chairperson Erik Clinite James B. Heaslet. Mark Keller Joe T. Stroud Frank Ugenti Jeff Nolan AZ Supervisory Appraiser / Trainee Appraiser Course 2

Before We Begin… Thank-you! § Arizona Board of Appraisal • • Debra Rudd, Executive Director and staff AZ Supervisory Appraiser / Trainee Appraiser Course 3

Why Are You Here Today? AZ Supervisory Appraiser / Trainee Appraiser Course 4

Why Are You Here Today? a) To satisfy my continuing education requirements b) Because I want to be here c) To hopefully learn something to improve my appraisal practice d) I have no idea why I’m really here AZ Supervisory Appraiser / Trainee Appraiser Course 5

Question: Q: How long have you been active in appraisal practice? a) b) c) d) e) Less than 5 years 5 to 10 years 11 to 15 years 16 to 20 years Greater than 20 years AZ Supervisory Appraiser / Trainee Appraiser Course 6

Announcements § Break times and lunch § Restroom locations § Smoking areas § Telephones § Be considerate of those near you § Please silence your cell phone § Attendance sheet § Certificate and evaluation forms AZ Supervisory Appraiser / Trainee Appraiser Course 7

AZ Supervisory Appraiser / Trainee Appraiser Course 8

Supervisory Appraiser Objectives § Specifically, that the student understands: – AQB minimum qualifications for becoming and remaining a Supervisory Appraiser – Jurisdictional requirements for both the Supervisor and the Trainee Appraisers – Expectations and Responsibilities of being a Supervisory Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 9

Supervisory Appraiser Objectives § Specifically, that the student understands: (continued) – Responsibilities and requirements of a Supervisory Appraiser in maintaining and signing all appropriate Trainee Appraiser experience logs – Expectations and responsibilities of the Trainee Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 10

Trainee Appraiser Objectives § Specifically, that the student understands: – AQB minimum qualifications for becoming a Trainee Appraiser – Jurisdictional requirements for the Trainee Appraiser that may exceed those of the Criteria – AQB minimum qualifications for becoming and remaining a Supervisory Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 11

Trainee Appraiser Objectives § Specifically, that the student understands: (continued) – Processes and roles of the entities involve in establishing qualifications for credentialed appraisers – Expectations and responsibilities of the Trainee Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 12

Trainee Appraiser Objectives § Specifically, that the student understands: (continued) – Qualifications to become a credentialed appraiser – Basics of USPAP – Responsibilities and requirements of a Trainee Appraiser’s role in maintaining and signing all appropriate Trainee Appraiser experience logs AZ Supervisory Appraiser / Trainee Appraiser Course 13

Qualification and Credentialing Entities

Qualification and Credentialing Entities § History – Direct result of the financial institution crisis of the 1980 s – Individuals forming value opinions for loans were not regulated by the states or the federal government AZ Supervisory Appraiser / Trainee Appraiser Course 15

Qualification and Credentialing Entities § History (cont’d) – Congress passed legislation in 1989 (FIRREA); mandated the regulation of real estate appraisers by the states for federallyrelated transactions – Only real property appraisers are regulated AZ Supervisory Appraiser / Trainee Appraiser Course 16

Qualification and Credentialing Entities § The Key Players – Federal Government: The Appraisal Sub. Committee (ASC) oversees the program to ensure it remains consistent with the original intent of Congress. – State Governments: Established regulatory agencies to issue credentials and perform disciplinary actions. AZ Supervisory Appraiser / Trainee Appraiser Course 17

Qualification and Credentialing Entities § The Key Players – Private Sector: The Appraisal Foundation (TAF) provides Standards of Professional Appraisal Practice (ASB) and Appraiser Qualification Requirements (AQB). – Private Sector: Professional Appraisal Organizations (National, State, Local) AZ Supervisory Appraiser / Trainee Appraiser Course 18

The Appraisal Subcommittee § The Appraisal Subcommittee (ASC) has a supervisory role over state boards and appraisers, to ensure that the government has sufficient controls in place over all real estate appraisal activity for federallyregulated banks to protect them from loss – FIRREA established the ASC within the Federal Financial Institutions Examination Council (FFIEC) AZ Supervisory Appraiser / Trainee Appraiser Course 19

The Appraisal Subcommittee § The ASC has six members: • Board of Governors of the Federal Reserve System (FRB) • Office of the Comptroller of the Currency (OCC) • Federal Housing Finance Agency (FHFA) • Federal Deposit Insurance Corporation (FDIC) • National Credit Union Administration (NCUA) • Consumer Financial Protection Bureau (CFPB) AZ Supervisory Appraiser / Trainee Appraiser Course 20

The Appraisal Subcommittee § The ASC has authority from Title XI of FIRREA to monitor TAF actions, including AQB and ASB § Title XI authorizes the ASC to oversee the activities of state appraisal licensure and certification agencies AZ Supervisory Appraiser / Trainee Appraiser Course 21

The Appraisal Subcommittee § ASC operations are funded by statecertified or licensed appraisers through their license renewal payment in the form of a National Registry fee. § The ASC manages grants to The Appraisal Foundation that support realproperty-related work of the AQB and the ASB. AZ Supervisory Appraiser / Trainee Appraiser Course 22

State Appraisal Licensure & Certification Agencies § The AQB and ASB are responsible for establishing minimum criteria and standards for practice for real property appraisers § The state appraiser regulatory agencies have complete authority for enforcement AZ Supervisory Appraiser / Trainee Appraiser Course 23

State Appraisal Licensure & Certification Agencies § States are independent of each other; therefore, it is important that an appraiser understand the specific states’ licensure and certification laws and regulations AZ Supervisory Appraiser / Trainee Appraiser Course 24

State Appraisal Licensure & Certification Agencies § State Appraiser Regulatory Agencies – Typically governed by a board of 5 -9 individuals – Generally appointed by the governor of the state – Public members (non-appraisers) are often also appointed AZ Supervisory Appraiser / Trainee Appraiser Course 25

State Appraisal Licensure & Certification Agencies § State Appraiser Regulatory Agency Responsibilities – Validate qualifications – Issue credentials – Investigate complaints – Perform disciplinary actions AZ Supervisory Appraiser / Trainee Appraiser Course 26

The Appraisal Foundation § The Structure of The Appraisal Foundation (TAF) – Not a government agency (private non-profit) – Not an appraisal organization – No members – Given specific authority by Congress regarding appraisal qualifications and appraisal standards AZ Supervisory Appraiser / Trainee Appraiser Course 27

The Appraisal Foundation § The Appraiser Qualifications Board – Establishes minimum criteria for licensing and certification of qualified appraisers – Defines, issues and promotes criteria – Disseminates Criteria – Creates and maintains the National Appraisal Examination AZ Supervisory Appraiser / Trainee Appraiser Course 28

The Appraisal Foundation § The Appraisal Standards Board – Performs all functions of TAF with respect to USPAP – Exercises all authority and power over USPAP and other communications related to Standards • USPAP establishes standards of professional appraisal practice for the guidance and education of appraisers and users of appraisals AZ Supervisory Appraiser / Trainee Appraiser Course 29

Qualifications for Appraiser Credentials

Qualifications for Appraiser Credentials The RPAQC can be downloaded at: Appraisal. Foundation. org http: //appraisalfoundation. org AZ Supervisory Appraiser / Trainee Appraiser Course 31

Qualifications for Appraiser Credentials § On December 9, 2011, the AQB adopted changes to the Real Property Appraiser Qualification Criteria that will become effective January 1, 2015. These changes represent minimum national requirements that each state must implement no later than January 1, 2015. AZ Supervisory Appraiser / Trainee Appraiser Course 32

Qualifications for Credentials Overview of 2015 Changes § National Uniform Licensing and Certification Examinations – Education and experience must be completed prior to taking the AQB-approved National Uniform Licensing and Certification Examination. AZ Supervisory Appraiser / Trainee Appraiser Course 33

Qualifications for Credentials Overview of 2015 Changes § Background Checks – All candidates for a real property appraiser credential must undergo background screening. – State appraiser regulatory agencies are strongly encouraged to perform background checks on existing credential holders as well. AZ Supervisory Appraiser / Trainee Appraiser Course 34

Qualifications for Credentials Overview of 2015 Changes § College Degree Acceptance and Core Curriculum Requirements – Credit towards qualifying education requirements may be obtained via the completion of a degree program in Real Estate from an accredited degree-granting college or university provided the college or university has had its curriculum reviewed and approved by the AQB. AZ Supervisory Appraiser / Trainee Appraiser Course 35

Qualifications for Credentials Overview of 2015 Changes § Restriction on Continuing Education Course Offerings – Aside from complying with the requirements to complete the 7 -Hour National USPAP Update Course (or its AQB approved equivalent), appraisers may not receive credit for completion of the same continuing education course offering within an appraiser’s continuing education cycle. AZ Supervisory Appraiser / Trainee Appraiser Course 36

Qualifications for Credentials Overview of 2015 Changes § Distance Education Requirements – A written, proctored examination is required for all qualifying education distance course offerings. The term written refers to an examination that might be written on paper or administered electronically on a computer workstation or other device. AZ Supervisory Appraiser / Trainee Appraiser Course 37

Qualifications for Credentials Overview of 2015 Changes AZ Supervisory Appraiser / Trainee Appraiser Course 38

Qualifications for Credentials Overview of 2015 Changes – State-certified Supervisory Appraiser shall be in good standing with the training jurisdiction and not subject to any disciplinary action within the last three (3) years that affects the Supervisory Appraiser’s legal ability to engage in appraisal practice. Shall have been state certified for a minimum of three (3) years prior to being eligible to become a Supervisory Appraiser. AZ Supervisory Appraiser / Trainee Appraiser Course 39

Qualifications for Credentials Overview of 2015 Changes § A Supervisory Appraiser may not supervise more than three Trainee Appraisers at one time, unless a state program in the licensing jurisdiction provides to progress monitoring, supervising certified appraiser qualifications, and supervision oversight requirements for Supervisory Appraisers. AZ Supervisory Appraiser / Trainee Appraiser Course 40

Qualifications for Credentials Overview of 2015 Changes § All qualifying education must be completed within the five (5) year period prior to the date of submission of an application for a Trainee Appraiser credential. § A Trainee Appraiser is permitted to have more than one Supervisory Appraiser. AZ Supervisory Appraiser / Trainee Appraiser Course 41

Qualifications for Credentials Overview of 2015 Changes § Both the Trainee Appraiser and Supervisory Appraiser shall be required to complete a Supervisor/Trainee course that, at a minimum, complies with the specifications for course content established by the AQB. AZ Supervisory Appraiser / Trainee Appraiser Course 42

Qualifications for Credentials Overview of 2015 Changes § The Supervisor/Trainee course must be completed by the Trainee Appraiser prior to obtaining a Trainee Appraiser credential, and completed by the Supervisory Appraiser prior to supervising a Trainee Appraiser. AZ Supervisory Appraiser / Trainee Appraiser Course 43

Qualifications for Credentials 2015 Criteria for ALL Classifications § Appraisers in all classifications shall perform and practice in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). § All credential holders must comply with ongoing requirements for continuing education, and state renewal procedures. AZ Supervisory Appraiser / Trainee Appraiser Course 44

Qualifications for Credentials 2015 Criteria for ALL Classifications § For Qualifying Education (QE) – Class hours may be obtained only where: a) the minimum length of the educational offering is at least 15 hours; and b) the individual successfully completes a proctored, closed-book final examination pertinent to that educational offering. AZ Supervisory Appraiser / Trainee Appraiser Course 45

Qualifications for Credentials 2015 Criteria for ALL Classifications § For Continuing Education (CE) – Appraisers must successfully complete the 7 Hour National USPAP Update Course, or its AQB-approved equivalent, every two calendar years. AZ Supervisory Appraiser / Trainee Appraiser Course 46

Qualifications for Credentials 2015 Criteria for ALL Classifications § For Continuing Education (CE) – Aside from complying with the requirements to complete the 7 -Hour National USPAP Update Course, or its equivalent, appraisers may not receive credit for completion of the same continuing education course offering within an appraiser’s continuing education cycle. AZ Supervisory Appraiser / Trainee Appraiser Course 47

Qualifications for Credentials 2015 Criteria for ALL Classifications § For Continuing Education (CE) – Credit towards the continuing education hour requirements for each appraiser classification may be granted only where the length of the educational offering is at least two (2) hours. AZ Supervisory Appraiser / Trainee Appraiser Course 48

Qualifications for Credentials 2015 Criteria for ALL Classifications § For Continuing Education (CE) – The equivalent of fourteen class hours of instruction in courses or seminars for each year during the period preceding the renewal is required (e. g. , a two-year continuing education cycle would require twenty-eight hours). The class hour requirement can be fulfilled at any time during the cycle. AZ Supervisory Appraiser / Trainee Appraiser Course 49

Qualifications for Credentials 2015 Criteria for ALL Classifications § A new applicant not currently licensed or certified and in good standing in another jurisdiction, shall have up to 24 months, after approval by the state, to take and pass an AQB-approved qualifying examination for the credential. Successful completion of the examination is valid for a period of 24 months. AZ Supervisory Appraiser / Trainee Appraiser Course 50

Qualifications for Credentials 2015 Criteria for ALL Classifications § The verification for experience credit shall include: 1. 2. 3. 4. Type of property Date of report Address of appraised property Description of work performed by the trainee/applicant and scope of the review and supervision of the supervising appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 51

Qualifications for Credentials 2015 Criteria for ALL Classifications § The verification for experience credit shall include (cont’d): 5. Number of actual work hours by the trainee/applicant on the assignment; and 6. The signature and state certification number of the supervising appraiser if applicable. Note: Separate appraisal logs shall be maintained for each supervising appraiser if applicable. AZ Supervisory Appraiser / Trainee Appraiser Course 52

Qualifications for Credentials 2015 Criteria for ALL Classifications § All candidates for a real property appraiser credential must undergo background screening. § In addition to all applicants for new credentials, state appraiser regulatory agencies are strongly encouraged to perform background checks on existing credential holders as well. AZ Supervisory Appraiser / Trainee Appraiser Course 53

Qualifications for Credentials 2015 Criteria for ALL Classifications § State appraiser regulatory agencies shall not issue a real property appraiser credential if: – The applicant has had an appraiser license or certification revoked in any governmental jurisdiction within the five (5) year period immediately preceding the date of application. AZ Supervisory Appraiser / Trainee Appraiser Course 54

Qualifications for Credentials 2015 Criteria for ALL Classifications § shall not issue a credential if: (cont’d) – The applicant has been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, or foreign court: a) during the five (5) year period immediately preceding the date of the application for licensing or certification; or b) at any time preceding the date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering. AZ Supervisory Appraiser / Trainee Appraiser Course 55

Qualifications for Credentials 2015 - Trainee Appraiser § The Trainee Appraiser classification is intended to incorporate any documented non-certified/non-licensed real property appraisers who are subject to the Real Property Appraiser Qualification Criteria. AZ Supervisory Appraiser / Trainee Appraiser Course 56

Qualifications for Credentials 2015 - Trainee Appraiser § The scope of practice for the Trainee Appraiser classification is the appraisal of those properties which the state-certified Supervisory Appraiser is permitted by his/her current credential and that the Supervisory Appraiser is competent to appraise. AZ Supervisory Appraiser / Trainee Appraiser Course 57

Qualifications for Credentials 2015 - Trainee Appraiser § All Trainee Appraisers must comply with the COMPETENCY RULE of USPAP for all assignments. AZ Supervisory Appraiser / Trainee Appraiser Course 58

Qualifications for Credentials 2015 - Trainee Appraiser § There is no examination requirement for the Trainee Appraiser classification, but the Trainee Appraiser shall pass the appropriate end-of-course examinations in all of the prerequisite courses in order to earn credit for those courses. AZ Supervisory Appraiser / Trainee Appraiser Course 59

Qualifications for Credentials 2015 - Trainee Appraiser § As the prerequisite for application, an applicant must have completed 75 creditable hours of qualifying education as specified in the Required Core Curriculum. § All qualifying education must be completed within the five (5) year period prior to the date of submission of a Trainee Appraiser application. AZ Supervisory Appraiser / Trainee Appraiser Course 60

Qualifications for Credentials 2015 - Trainee Appraiser § No experience is required as a prerequisite for the Trainee Appraiser classification. AZ Supervisory Appraiser / Trainee Appraiser Course 61

Qualifications for Credentials 2015 - Trainee Appraiser § The Trainee Appraiser shall be subject to direct control and supervision by a Supervisory Appraiser in good standing, who shall be state-certified. § A Trainee Appraiser is permitted to have more than one Supervisory Appraiser. AZ Supervisory Appraiser / Trainee Appraiser Course 62

Qualifications for Credentials 2015 - Trainee Appraiser § The Supervisory Appraiser shall be responsible for the training, guidance, and direct control and supervision of the Trainee Appraiser by: 1) Accepting responsibility for the appraisal by signing and certifying the appraisal complies with USPAP; 2) Reviewing and signing the Trainee Appraiser appraisal report(s); and AZ Supervisory Appraiser / Trainee Appraiser Course 63

Qualifications for Credentials 2015 - Trainee Appraiser § The Supervisory Appraiser shall be responsible by: (cont’d) 3) Personally inspecting each appraised property with the Trainee Appraiser until the Supervisory Appraiser determines the Trainee Appraiser is competent to inspect the property, in accordance with the COMPETENCY RULE of USPAP for the property type. AZ Supervisory Appraiser / Trainee Appraiser Course 64

Qualifications for Credentials 2015 - Trainee Appraiser § The Trainee Appraiser is permitted to have more than one Supervisory Appraiser, but a Supervisory Appraiser may not supervise more than three (3) Trainee Appraisers, at one time… AZ Supervisory Appraiser / Trainee Appraiser Course 65

Qualifications for Credentials 2015 - Trainee Appraiser § An appraisal experience log shall be maintained jointly by the Supervisory Appraiser and the Trainee Appraiser. It is the responsibility of both the Supervisory Appraiser and the Trainee Appraiser to ensure the appraisal experience log is accurate, current and complies with the requirements of the Trainee Appraiser’s credentialing jurisdiction. AZ Supervisory Appraiser / Trainee Appraiser Course 66

Qualifications for Credentials 2015 - Trainee Appraiser § The state-certified Supervisory Appraiser shall be in good standing in the training jurisdiction and not subject to any disciplinary action within the last three (3) years that affects the Supervisory Appraiser’s legal eligibility to engage in appraisal practice. AZ Supervisory Appraiser / Trainee Appraiser Course 67

Qualifications for Credentials 2015 - Trainee Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 68

Qualifications for Credentials 2015 - LR Appraiser § The Licensed Residential Real Property Appraiser classification applies to the appraisal of non-complex one-to-four residential units having a transaction value less than $1, 000, and complex one-tofour residential units having a transaction value less than $250, 000. AZ Supervisory Appraiser / Trainee Appraiser Course 69

Qualifications for Credentials 2015 - LR Appraiser § Complex one-to-four unit residential property appraisal means one in which the property to be appraised, the form of ownership, or the market conditions are atypical. 1 1 Bank Holding Company Supervision Manual, 12 C. F. R. 225. 63(d) AZ Supervisory Appraiser / Trainee Appraiser Course 70

Qualifications for Credentials 2015 - LR Appraiser § The AQB-approved Licensed Residential Real Property Appraiser examination must be successfully completed. AZ Supervisory Appraiser / Trainee Appraiser Course 71

Qualifications for Credentials 2015 - LR Appraiser § The prerequisites for taking the AQBapproved examination are completion of: 1) One hundred fifty (150) creditable class hours as specified in the Required Core Curriculum; and 2) Completion of 30 semester hours of college level education; and 3) Two thousand (2, 000) hours of qualifying experience in no fewer than twelve (12) months. AZ Supervisory Appraiser / Trainee Appraiser Course 72

Qualifications for Credentials 2015 - LR Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 73

Qualifications for Credentials 2015 - CR Appraiser § The Certified Residential Real Property Appraiser classification qualifies the appraiser to appraise one-to-four residential units without regard to value or complexity. AZ Supervisory Appraiser / Trainee Appraiser Course 74

Qualifications for Credentials 2015 - CR Appraiser § The AQB-approved Certified Residential Real Property Appraiser examination must be successfully completed. AZ Supervisory Appraiser / Trainee Appraiser Course 75

Qualifications for Credentials 2015 - CR Appraiser § The prerequisites for taking the AQBapproved examination are completion of: 1) Two hundred (200) creditable class hours as specified in the Required Core Curriculum; 2) Completion of a Bachelor’s degree, or higher, from an accredited college or university. ; and 3) Two thousand five hundred (2, 500) hours of qualifying experience obtained in no fewer than twenty-four (24) months. AZ Supervisory Appraiser / Trainee Appraiser Course 76

Qualifications for Credentials 2015 - CR Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 77

Qualifications for Credentials 2015 - CG Appraiser § The Certified General Real Property Appraiser classification qualifies the appraiser to appraise all types of real property. AZ Supervisory Appraiser / Trainee Appraiser Course 78

Qualifications for Credentials 2015 - CG Appraiser § The AQB-approved Certified General Real Property Appraiser examination must be successfully completed. AZ Supervisory Appraiser / Trainee Appraiser Course 79

Qualifications for Credentials 2015 - CG Appraiser § The prerequisites for taking the AQBapproved examination are completion of: 1) Three hundred (300) creditable class hours as specified in the Required Core Curriculum; and 2) Completion of a Bachelor’s degree or higher from an accredited college or university and 3) Three thousand (3, 000) hours of qualifying experience obtained in no fewer than thirty (30) months, where a minimum of one thousand five hundred (1, 500) hours must be obtained in nonresidential appraisal work. AZ Supervisory Appraiser / Trainee Appraiser Course 80

Qualifications for Appraiser Credentials AZ Supervisory Appraiser / Trainee Appraiser Course 81

Overview of USPAP

Overview of USPAP § Purpose of USPAP – Promote and maintain a high level of public trust in professional appraisal practices – Establish minimum requirements for professional appraisal practice AZ Supervisory Appraiser / Trainee Appraiser Course 83

Overview of USPAP Stds. 1 -10 § What services are covered by USPAP – Appraisals – Appraisal reviews – Real property appraisal consulting – Other services when choosing to represent oneself as an appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 84

Overview of USPAP § USPAP addresses ethical and performance obligations of appraisers through: – Definitions – Rules – Standards (1 -10) – Standards Rules – Statements AZ Supervisory Appraiser / Trainee Appraiser Course 85

Overview of USPAP § Five Primary Rules – ETHICS RULE – RECORD KEEPING RULE – COMPETENCY RULE – SCOPE OF WORK RULE – JURISDICTIONAL EXCEPTION RULE AZ Supervisory Appraiser / Trainee Appraiser Course 86

Overview of USPAP § ETHICS RULE – Sections of the Rule • Conduct • Management • Confidentiality AZ Supervisory Appraiser / Trainee Appraiser Course 87

Overview of USPAP § Conduct Section – In general conduct you must • • Perform ethically and competently In accordance to USPAP Not engage in criminal conduct Not willfully or knowingly violate RECORD KEEPING RULE AZ Supervisory Appraiser / Trainee Appraiser Course 88

Overview of USPAP § Conduct Section § you must: – perform with impartiality… – not perform assignments with bias – not advocate the cause or interest of any party or issue – not accept assignments that include the reporting of predetermined opinions and conclusions AZ Supervisory Appraiser / Trainee Appraiser Course 89

Overview of USPAP § Conduct Section (cont’d) § you must not: – misrepresent his or her role when providing valuation services that are outside of appraisal practice – use or rely on unsupported conclusions – perform an assignment in a grossly negligent manner AZ Supervisory Appraiser / Trainee Appraiser Course 90

Overview of USPAP ETHICS RULE – Conduct Section § you must not: – communicate assignment results with the intent to mislead or defraud – use or communicate a report that is known by the appraiser to be misleading or fraudulent – knowingly permit an employee or other person to communicate a misleading or fraudulent report AZ Supervisory Appraiser / Trainee Appraiser Course 91

Overview of USPAP ETHICS RULE – Conduct Section § Disclosure obligations - If known prior to accepting an assignment, and/or if discovered at any time during the assignment, an appraiser must disclose to the client, and in the subsequent report certification… AZ Supervisory Appraiser / Trainee Appraiser Course 92

Overview of USPAP ETHICS RULE – Management Section § you must not accept an assignment or compensation contingent on: – Predetermined result – Direction that favors the client – Amount of a value opinion – Attainment of a stipulated result – Occurrence of a subsequent event directly related to value AZ Supervisory Appraiser / Trainee Appraiser Course 93

Overview of USPAP ETHICS RULE – Management Section § you must: – Not advertise for or solicit assignments in a manner that is false, misleading, or exaggerated – affix, or authorize the use of, his or her signature (on an assignment-by-assignment basis), to certify recognition of USPAP responsibilities – Not affix the signature of another appraiser without his or her consent AZ Supervisory Appraiser / Trainee Appraiser Course 94

Overview of USPAP ETHICS RULE - Confidentiality Section § An appraiser must protect the confidential nature of the appraiser-client relationship § Appraiser must act in good faith § Appraiser must be aware of, and comply with laws and regulations AZ Supervisory Appraiser / Trainee Appraiser Course 95

Overview of USPAP ETHICS RULE - Confidentiality Section § Appraiser may disclose to: – Client – Persons specifically authorized y the client – State appraiser regulatory agencies – Third parties as may be authorized by due process of law – A duly authorized professional peer review committee AZ Supervisory Appraiser / Trainee Appraiser Course 96

Overview of USPAP COMPETENCY RULE § An appraiser must: – Be competent to perform the assignment – Acquire the necessary competency to perform the assignment – Decline or withdraw from the assignment AZ Supervisory Appraiser / Trainee Appraiser Course 97

Overview of USPAP RECORD KEEPING RULE § An appraiser must prepare a workfile for each appraisal, appraisal review, or appraisal consulting assignment § A workfile must be inexistence prior to the issuance of any report § An appraiser who willfully or knowingly fails to comply with the RKR is in violation of the ETHICS RULE AZ Supervisory Appraiser / Trainee Appraiser Course 98

Overview of USPAP RECORD KEEPING RULE § An appraiser must retain the workfile for a period of at least five years after preparation or at least two years after final disposition of any judicial proceeding in which the appraiser provided testimony related to the assignment, whichever expires last. AZ Supervisory Appraiser / Trainee Appraiser Course 99

Overview of USPAP SCOPE OF WORK RULE § For each appraisal, appraisal review, or appraisal consulting assignment, an appraiser must: – Identify the problem to be solved; – Determine and perform the necessary SOW – Disclose the SOW in the report AZ Supervisory Appraiser / Trainee Appraiser Course 100

Overview of USPAP SCOPE OF WORK RULE § In an appraisal assignment, identification of the following elements is required: – Client and any other intended users; – Intended use of the opinions and conclusions – Type and definition of value – Effective date – Subject of the assignment and its relevant characteristics – Assignment conditions AZ Supervisory Appraiser / Trainee Appraiser Course 101

Overview of USPAP SCOPE OF WORK RULE § Assignment conditions include: – Assumptions – Extraordinary assumptions – Hypothetical conditions – Laws and regulations – Jurisdictional exceptions – Other conditions that affect the scope of work AZ Supervisory Appraiser / Trainee Appraiser Course 102

Overview of USPAP § Requirements in STANDARD 1 (Real Property) follow appraisal process, beginning with the identification of the problem. § STANDARD 1 covers all the development activities that are distinctly different from the final step, reporting, which is covered in STANDARD 2. AZ Supervisory Appraiser / Trainee Appraiser Course 103

SR 1 -2(a-g) SR 1 -2(h) Appraisal Process SR 1 -3 SR 1 -4 SR 1 -5 SR 1 -6 Std. 2 AZ Supervisory Appraiser / Trainee Appraiser Course 104

Overview of USPAP § 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. AZ Supervisory Appraiser / Trainee Appraiser Course 105

Overview of USPAP § STANDARD 2 covers final step in the real property appraisal process, reporting of the concluded value opinion. This Standard addresses both communication and reporting. Communication involves transmitting information from one source or person to another and is distinctly different from the development process. AZ Supervisory Appraiser / Trainee Appraiser Course 106

When USPAP Applies § STANDARD 2 – Addresses the content and level of information required in each reporting option that communicates results. – Does not dictate the form, format, or style of real property appraisal reports. The substantive content determines if it complies with the reporting options identified in the Standard. AZ Supervisory Appraiser / Trainee Appraiser Course 107

Overview of Supervisory Appraiser Expectations and Responsibilities

Supervisory Appraiser Requirements § Supervisory Appraisers provide a critical role in the mentoring, training and development of future valuation professionals. It is inherently important to strike a proper balance between ensuring Supervisory Appraisers are competent and qualified without making the criteria too stringent and restrictive. AZ Supervisory Appraiser / Trainee Appraiser Course 109

Supervisory Appraiser Expectations and Responsibilities § What are important traits of a good Supervisory Appraiser? – – – – Ethics and honesty (trustworthiness) Competent with a desire to continue to learn Patience Attention to detail Takes responsibility for own actions Respectful Communication skills AZ Supervisory Appraiser / Trainee Appraiser Course 110

Supervisory Appraiser Expectations and Responsibilities § What are important traits of a good Supervisory Appraiser? (cont’d) – Accessible – Promotes a coaching culture – Goal oriented and able to express a mission and/or vision – Etc. AZ Supervisory Appraiser / Trainee Appraiser Course 111

Supervisory Appraiser Requirements § Supervisory Appraisers shall be responsible for the training, guidance, and direct supervision of the Trainee Appraiser by: 1) Accepting responsibility for the appraisal by signing and certifying the appraisal complies with USPAP; 2) Reviewing and signing the Trainee Appraiser appraisal report(s); and AZ Supervisory Appraiser / Trainee Appraiser Course 112

Supervisory Appraiser Requirements § Supervisory Appraisers shall: (cont’d) 3) Personally inspecting each appraised property with the Trainee Appraiser until the Supervisory Appraiser determines the Trainee Appraiser is competent to inspect the property, in accordance with the COMPETENCY RULE of USPAP for the property type. AZ Supervisory Appraiser / Trainee Appraiser Course 113

Supervisory Appraiser Requirements § Supervisory Appraisers shall be statecertified and in “good standing” in the jurisdiction in which the Trainee Appraiser practices for a period of at least three (3) years. AZ Supervisory Appraiser / Trainee Appraiser Course 114

Supervisory Appraiser Requirements § Supervisory Appraisers shall not have been subject to any disciplinary action within any jurisdiction within the last three (3) years that affects the Supervisory Appraiser’s legal eligibility to engage in appraisal practice. AZ Supervisory Appraiser / Trainee Appraiser Course 115

Supervisory Appraiser Requirements § A Supervisory Appraiser subject to a disciplinary action would be considered to be in “good standing” three (3) years after the successful completion/ termination of the sanction imposed against the appraiser. AZ Supervisory Appraiser / Trainee Appraiser Course 116

Supervisory Appraiser Requirements § Supervisory Appraisers shall have been state-certified for a minimum of three (3) years prior to being eligible to become a Supervisory Appraiser. AZ Supervisory Appraiser / Trainee Appraiser Course 117

Supervisory Appraiser Requirements § Supervisory Appraisers must comply with the COMPETENCY RULE of USPAP for the property type and geographic location the Trainee Appraiser is being supervised. AZ Supervisory Appraiser / Trainee Appraiser Course 118

Supervisory Appraiser Expectations and Responsibilities § Whereas a Trainee Appraiser is permitted to have more than one Supervisory Appraiser, Supervisory Appraisers may not supervise more than three (3) Trainee Appraisers at one time… AZ Supervisory Appraiser / Trainee Appraiser Course 119

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – Provide the Trainee Appraiser with a basic understanding of USPAP requirements – Understand the AQB minimum requirements of both the Supervisory Appraiser and Trainee Appraiser, as well as the requirements of the credentialing jurisdiction that may exceed those of the Criteria AZ Supervisory Appraiser / Trainee Appraiser Course 120

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – Provide proper guidance to the Trainee Appraiser when he or she selects a specific credentialing path (i. e. , Licensed Residential, Certified Residential or Certified General) AZ Supervisory Appraiser / Trainee Appraiser Course 121

Supervisory Appraiser Expectations and Responsibilities § Monitor the Trainee Appraiser’s progress in satisfying both the education and experience requirements necessary to achieve his or her selected credentialing path AZ Supervisory Appraiser / Trainee Appraiser Course 122

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – Monitor the Trainee Appraiser’s progress in satisfying both the education and experience requirements necessary to achieve his or her selected credentialing path AZ Supervisory Appraiser / Trainee Appraiser Course 123

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – Verify that the Supervisory Appraiser and Trainee Appraiser are properly documenting all appropriate experience logs AZ Supervisory Appraiser / Trainee Appraiser Course 124

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – accompany the Trainee Appraiser on all inspections until the Trainee Appraiser is competent to conduct inspections independently, and has met all specific requirements pertaining to property inspection established by the credentialing jurisdiction AZ Supervisory Appraiser / Trainee Appraiser Course 125

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – monitor and provide assignments and duties that ensure the Trainee Appraiser is developing an understanding and progression of knowledge and experience of all applicable valuation methodologies and approaches to value AZ Supervisory Appraiser / Trainee Appraiser Course 126

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – verify that the Trainee Appraiser is properly identified and acknowledged in the appraisal report in compliance with USPAP requirements AZ Supervisory Appraiser / Trainee Appraiser Course 127

Supervisory Appraiser Expectations and Responsibilities § The Supervisory Appraiser must: – immediately notify the Trainee Appraiser if the Supervisory Appraiser is no longer qualified to supervise and/or sign the Trainee Appraiser’s experience log AZ Supervisory Appraiser / Trainee Appraiser Course 128

Overview of Trainee Appraiser Expectations and Responsibilities

Trainee Appraiser Expectations and Responsibilities § What are important traits of a good Trainee Appraiser? – – – – Ethics and honesty (trustworthiness) Desire to learn Patience Attention to detail Takes responsibility for own actions Respectful Communication skills Etc. AZ Supervisory Appraiser / Trainee Appraiser Course 130

Trainee Appraiser Expectations and Responsibilities § The Trainee Appraiser must: – develop a basic understanding of the AQB minimum requirements to become a Trainee Appraiser, as well as the requirements of the credentialing jurisdiction that may exceed those of the Criteria AZ Supervisory Appraiser / Trainee Appraiser Course 131

Trainee Appraiser Expectations and Responsibilities § The Trainee Appraiser must: – have an understanding about the importance of selecting an appropriate Supervisory Appraiser. For example…. AZ Supervisory Appraiser / Trainee Appraiser Course 132

Trainee Appraiser Expectations and Responsibilities § For example…. – The Supervisory Appraiser-Trainee Appraiser relationship is a long-term commitment by both parties – The Trainee Appraiser is inherently connected to the “good standing” of the Supervisory Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 133

Trainee Appraiser Expectations and Responsibilities § For example…. – The importance of selecting a Supervisory Appraiser with the experience and competency that best matches the Trainee Appraiser’s selected credentialing path – Options for the Trainee Appraiser if a Supervisory Appraiser is no longer qualified to serve as a Supervisory Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 134

Trainee Appraiser Expectations and Responsibilities § The Trainee Appraiser must: – have an understanding of how to determine if an appraiser is qualified and in good standing to be a Supervisory Appraiser by searching the Appraisal Subcommittee (ASC) National Registry and/or jurisdictional websites AZ Supervisory Appraiser / Trainee Appraiser Course 135

Trainee Appraiser Expectations and Responsibilities § The Trainee Appraiser must: – understand the Supervisory Appraiser must accompany the Trainee Appraiser on all inspections until he or she is competent to conduct inspections independently, and has met all requirements pertaining to property inspection established by the credentialing jurisdiction AZ Supervisory Appraiser / Trainee Appraiser Course 136

Overview of Jurisdictional Requirements Beyond AQB Criteria

Summary of Arizona Requirements § Minimum Continuing Education Course length § Inspection requirements for Supervisory Appraiser and Trainee Appraiser AZ Supervisory Appraiser / Trainee Appraiser Course 138

Questions?

2014 -2015 USPAP Overview § Revisions to the DEFINITIONS of “Assignment Results” and “Scope of Work” § Revisions to the PREAMBLE – When do USPAP Rules and Standards Apply? AZ Supervisory Appraiser / Trainee Appraiser Course 140

2014 -2015 USPAP Overview § Revisions to the ETHICS RULEClarification about disclosure requirement for current or prospective interest and prior services when there is no appraisal or appraisal review § Revisions to the COMPETENCY RULE AZ Supervisory Appraiser / Trainee Appraiser Course 141

2014 -2015 USPAP Overview § Report Options in STANDARDS 2, 8, 10 – Appraisal Report and Restricted Appraisal Report § Revisions to Standards Rule 3 -5 – Date of the report § Retirement of STANDARDS 4 and 5 § Revisions to AO-11 and AO-13 AZ Supervisory Appraiser / Trainee Appraiser Course 142

Definitions § 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. – (cont. next slide) AZ Supervisory Appraiser / Trainee Appraiser Course 143

Definitions § Appraisal: (cont. ) – 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 (e. g. assessed value, collateral value) AZ Supervisory Appraiser / Trainee Appraiser Course 144

Definitions § 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. AZ Supervisory Appraiser / Trainee Appraiser Course 145