CAR CAR Legal & Liability Considerations 2

Question 1

A lender's chief appraiser asks a reviewer to change a review conclusion to make a loan eligible for purchase by a government-sponsored enterprise. How should the reviewer respond?

Accepted Answer

Refuse, as changing a professional conclusion due to pressure violates USPAP appraiser independence requirements

Answer

USPAP prohibits any party from influencing an appraiser or reviewer to provide a misleading opinion, and reviewers must maintain independence regardless of business pressure.

Question 2

Under Regulation B (ECOA), what must a lender do with a copy of the appraisal or valuation used in connection with a credit application?

Accepted Answer

Provide it to the applicant promptly upon completion, and no later than three business days before consummation

Answer

Regulation B requires lenders to provide applicants with a copy of all appraisals and written valuations promptly upon completion, ensuring borrower access to valuation information.

Question 3

When a reviewer identifies a potential USPAP violation in an appraisal, what is their first professional obligation?

Accepted Answer

Document the finding in the review report and notify the client according to the assignment conditions

Answer

The reviewer's primary obligation is to document findings in the review report and fulfill reporting obligations to the client; state board referrals may follow based on the client's direction or the reviewer's judgment about severity.

Question 4

What is the purpose of an engagement letter in a review assignment?

Accepted Answer

It defines the scope of work, deliverables, fees, and assignment conditions to protect both the reviewer and client

Answer

An engagement letter establishes a mutual understanding of the assignment's parameters, reducing disputes about scope, deliverables, and liability boundaries.

Question 5

Under the Homeowners Protection Act (HPA), at what loan-to-value ratio must a lender automatically cancel borrower-paid private mortgage insurance (PMI) on a residential mortgage?

Accepted Answer

78% LTV based on the original amortization schedule

Answer

The HPA mandates automatic PMI termination when the principal balance reaches 78% of the original purchase price or appraised value at origination, based on scheduled amortization.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR CAR Legal & Liability Considerations 2