What does the Financial Institutions Reform, Recovery, and Enforcement Act require?

The Financial Institutions Reform, Recovery, and Enforcement Act, often referred to as FIRREA, was enacted in 1989 in response to the savings and loan crisis. One of the key components of this legislation is the requirement that federally related transactions must be appraised by appraisers who are either state licensed or certified. This ensures that appraisals meet certain standards and are conducted by qualified professionals, thereby enhancing the reliability and integrity of the appraisal process in relation to federally regulated financial transactions.

This requirement is important because it protects both consumers and lenders by ensuring that appraisals are conducted in a competent manner, using consistent standards. As a result, it helps to maintain stability and trust in the real estate market and the financial institutions involved in these transactions. The act emphasizes the necessity of utilizing qualified appraisers to safeguard the interests of all parties involved in federally related transactions.

The other choices do not align with the stipulations set forth by FIRREA, as they either lack the necessary regulatory framework or suggest requirements that are not applicable under the act. For example, it does not state that non-federally related transactions must be appraised by government employees, nor does it exempt federally related transactions from needing an appraisal.