CAR Appraisal Reviewer Risk Assessment 3

Question 1

A field review finds the subject property has a non-permitted addition. What is the primary risk impact for the lender?

Accepted Answer

The collateral value may be overstated because unpermitted space may not be insurable or financeable

Answer

Non-permitted additions may not be covered by insurance or recognized by future buyers, making the appraiser's inclusion of that space in value potentially unsupported.

Question 2

In risk-based appraisal review, a 'red flag' related to the sales comparison approach would include:

Accepted Answer

All comparables are located outside the subject's defined market area without explanation

Answer

Using comparables consistently outside the market area without justification signals poor geographic competency and potentially unsupported value.

Question 3

Which condition most increases the risk that an appraisal is subject to value pressure or coercion?

Accepted Answer

The loan officer provided the appraiser with a copy of the purchase contract

Answer

Providing the contract price to the appraiser can anchor their opinion to the sale price, raising concerns about independence and value pressure.

Question 4

An appraisal review for portfolio risk management purposes differs from a transactional review primarily in that:

Accepted Answer

Portfolio reviews assess risk across multiple assets and may use sampling and statistical analysis

Answer

Portfolio risk reviews evaluate aggregate collateral quality across many loans, often using statistical sampling rather than reviewing every individual appraisal.

Question 5

When a reviewer determines that an appraisal is not credible and cannot be relied upon, the appropriate course of action is to:

Accepted Answer

Report the finding and recommend the client obtain a new appraisal

Answer

The reviewer's role is to assess credibility and report findings; directing the client to obtain a new, independent appraisal is the correct remedy.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR Appraisal Reviewer Risk Assessment 3