CAR Legal & Liability Considerations Flashcards
6 cards from real CAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAR Legal & Liability Considerations flashcards as text
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?
Answer: Refuse, as changing a professional conclusion due to pressure violates USPAP appraiser independence requirements
USPAP prohibits any party from influencing an appraiser or reviewer to provide a misleading opinion, and reviewers must maintain independence regardless of business pressure.
Under Regulation B (ECOA), what must a lender do with a copy of the appraisal or valuation used in connection with a credit application?
Answer: Provide it to the applicant promptly upon completion, and no later than three business days before consummation
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.
When a reviewer identifies a potential USPAP violation in an appraisal, what is their first professional obligation?
Answer: Document the finding in the review report and notify the client according to the assignment conditions
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.
What is the purpose of an engagement letter in a review assignment?
Answer: It defines the scope of work, deliverables, fees, and assignment conditions to protect both the reviewer and client
An engagement letter establishes a mutual understanding of the assignment's parameters, reducing disputes about scope, deliverables, and liability boundaries.
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?
Answer: 78% LTV based on the original amortization schedule
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.
A reviewer working for a financial institution is asked to review an appraisal for a portfolio loan. Which interagency guidance most directly governs the institution's appraisal review requirements?
Answer: The Interagency Appraisal and Evaluation Guidelines issued by federal banking regulators
The Interagency Appraisal and Evaluation Guidelines, issued by the OCC, Fed, FDIC, NCUA, and CFPB, govern appraisal review standards for federally regulated financial institutions.