CAR Financing & Lending Standards in Appraisal Review 2 — Questions and Answers
Question 1: Fannie Mae's Selling Guide designates which form as the standard report for a single-family residential appraisal of a detached property?
- Form 1004 (Uniform Residential Appraisal Report) (Correct answer)
- Form 1025 (Small Residential Income Property Appraisal Report)
- Form 1073 (Individual Condominium Unit Appraisal Report)
- Form 2055 (Exterior-Only Inspection Residential Appraisal Report)
Correct answer: Form 1004 (Uniform Residential Appraisal Report)
Fannie Mae Form 1004, the Uniform Residential Appraisal Report, is the standard form for single-family detached residential properties.
Question 2: When reviewing a condominium appraisal for lending purposes, which comparable selection approach best satisfies GSE guidelines?
- All comparables must be from the same floor of the building
- Comparables should primarily come from within the same project or competing condominium projects (Correct answer)
- All comparables must be sold within six months regardless of location
- Comparables must be within a one-mile radius of the subject
Correct answer: Comparables should primarily come from within the same project or competing condominium projects
GSE guidelines require that condominium comparables be drawn primarily from within the same project or truly competing projects to reflect the correct market segment.
Question 3: Under FHA appraisal requirements, the appraiser must specifically identify and report:
- Only major structural defects that exceed $5,000 in repair costs
- Health and safety issues that affect the property's habitability and marketability (Correct answer)
- Cosmetic deficiencies that affect curb appeal
- Only items related to the foundation and roof
Correct answer: Health and safety issues that affect the property's habitability and marketability
FHA requires appraisers to identify and report health and safety conditions because FHA-insured loans must meet Minimum Property Requirements (MPR) protecting occupants.
Question 4: The 'as-is' value in a lending appraisal refers to:
- The projected value after all planned renovations are complete
- The property's market value in its current condition as of the effective date of the appraisal (Correct answer)
- The assessed value established by the local tax authority
- The replacement cost value of the improvements
Correct answer: The property's market value in its current condition as of the effective date of the appraisal
'As-is' value reflects the property's market value in its present condition on the effective date, without assuming any future improvements or changes.
Question 5: A lender submits additional comparable sales to an appraiser and requests reconsideration of value. Under AIR and USPAP, the appraiser should:
- Automatically revise the value upward to support the loan amount
- Reject the request as it constitutes improper influence under AIR
- Objectively evaluate the new comparables and respond with appropriate analysis (Correct answer)
- Forward the request to the state appraisal board without responding
Correct answer: Objectively evaluate the new comparables and respond with appropriate analysis
A reconsideration of value request is permissible when it provides legitimate market data; the appraiser must objectively evaluate the information and document their response.
Question 6: The primary purpose of an appraisal review in the mortgage lending process is to:
- Confirm the property meets flood zone requirements
- Verify that the appraisal supports the loan amount and complies with applicable guidelines and regulations (Correct answer)
- Establish the tax assessed value for the property
- Replace the original appraisal with the reviewer's independent opinion
Correct answer: Verify that the appraisal supports the loan amount and complies with applicable guidelines and regulations
In mortgage lending, appraisal review confirms that the appraisal is credible, supports the collateral value for the loan, and complies with lender, GSE, and regulatory requirements.
Question 7: VA appraisals for home loans are conducted by fee appraisers who are assigned through:
- Direct selection by the borrower from a VA-approved list
- Direct selection by the originating lender
- A VA fee panel rotation system that assigns appraisers by geography (Correct answer)
- Employment directly within VA regional offices
Correct answer: A VA fee panel rotation system that assigns appraisers by geography
The VA assigns appraisals through a rotation system from its fee panel to ensure independence and geographic competency, not through lender or borrower selection.
CAR Financing & Lending Standards in Appraisal Review 2
Fannie Mae's Selling Guide designates which form as the standard report for a single-family residential appraisal of a detached property?