What federal act requires appraisals in federally related transactions?

The federal act that mandates appraisals in federally related transactions is the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). This act was enacted in response to the savings and loan crisis in the late 1980s and early 1990s and aims to ensure the safety and soundness of financial institutions. FIRREA specifically requires that all federally related transactions involving federally insured institutions must be supported by an appraisal that meets the requirements set forth by the act.

This requirement helps to maintain stability within the financial system by ensuring that properties are valued accurately and transparently, thereby protecting lenders and borrowers alike. In this context, federally related transactions include any transaction where a financial institution is involved in the lending process related to real estate, indicating the act's broad applicability in assessing the value of properties involved in such transactions.

The other federal acts mentioned do not specifically mandate appraisals in federally related transactions. For example, the Real Estate Settlement Procedures Act (RESPA) primarily addresses disclosures and practices associated with the settlement process in real estate transactions rather than specifically focusing on appraisals. Similarly, the Community Reinvestment Act (CRA) focuses on encouraging financial institutions to meet the credit needs of all communities, particularly low- and moderate-income neighborhoods,