CAR Risk Management & Mitigation 2

Question 1

When an appraiser uses an extraordinary assumption that significantly affects value, the appraisal reviewer should primarily assess whether the assumption:

Accepted Answer

Is supported by market evidence or disclosed as speculative

Answer

Extraordinary assumptions must be supported by available evidence or clearly disclosed as speculative, per USPAP requirements.

Question 2

A lender requests a desk review of an appraisal. The reviewer identifies that the subject property's neighborhood is in rapid transition but the appraiser made no mention of this. This omission is best characterized as:

Accepted Answer

A scope of work deficiency

Answer

Failing to analyze and report a neighborhood in transition represents a scope of work deficiency that could materially affect the credibility of the value conclusion.

Question 3

Which condition most increases collateral risk for a mortgage lender reviewing an appraisal?

Accepted Answer

Market time for the subject type exceeds six months

Answer

Extended marketing time indicates weak demand, which increases collateral risk because the property may be difficult to sell if the lender must foreclose.

Question 4

An appraisal review reveals the appraiser reconciled by simply averaging the three comparable sales without weighting. The primary risk this introduces is:

Accepted Answer

A value conclusion not supported by market logic

Answer

Mechanical averaging ignores each comparable's relative reliability and similarity, producing a value unsupported by reasoned market analysis.

Question 5

A reviewer notices an appraisal was completed two months after the effective date stated in the report. Under USPAP, this is known as a:

Accepted Answer

Retrospective appraisal

Answer

A retrospective appraisal has an effective date prior to the date the appraisal is completed.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR Risk Management & Mitigation 2