Loan Officer Appraisal and Property Valuation Flashcards
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Read the first 7 Loan Officer Appraisal and Property Valuation flashcards as text
What is an Automated Valuation Model (AVM)?
Answer: A computer-based tool that estimates property value using statistical models and public data
An AVM uses statistical algorithms, comparable sales data, and public records to generate property value estimates without a physical inspection, often used for low-risk refinances or portfolio reviews.
Under the Higher-Priced Mortgage Loan (HPML) appraisal rule, which loan triggers additional appraisal requirements?
Answer: A first-lien loan with an APR exceeding the Average Prime Offer Rate (APOR) by 1.5 percentage points or more
A first-lien HPML is a loan whose APR exceeds the APOR by 1.5 percentage points or more, triggering additional appraisal and inspection requirements under Regulation Z.
What is a 'Reconsideration of Value' (ROV)?
Answer: A formal request for the appraiser to review their opinion based on additional data or factual corrections
A Reconsideration of Value is a structured request asking the appraiser to reconsider their value conclusion based on additional comparable sales data or corrections to factual errors in the report.
Under the Dodd-Frank Act's appraiser independence requirements, which of the following actions is PROHIBITED?
Answer: Pressuring or coercing an appraiser to reach a predetermined value
Dodd-Frank explicitly prohibits lenders, loan officers, and their agents from coercing, influencing, or otherwise pressuring appraisers to produce a specific value or to approve a loan.
What is the primary role of an Appraisal Management Company (AMC)?
Answer: An intermediary that manages the appraisal ordering process between lenders and independent appraisers
An AMC serves as an independent intermediary between lenders and appraisers, managing order placement, tracking, quality review, and delivery to maintain appraiser independence from the loan production staff.
When a property appraises below the agreed purchase price, which party typically has the most leverage to renegotiate the transaction?
Answer: The buyer, who can renegotiate, pay the gap in cash, or exercise an appraisal contingency
A buyer with an appraisal contingency can renegotiate the price, cover the appraisal gap out of pocket, or walk away from the contract, giving them significant leverage when the appraisal falls short.
What is the primary purpose of the Uniform Standards of Professional Appraisal Practice (USPAP)?
Answer: To set ethical obligations and minimum performance standards for appraisers
USPAP establishes the ethical requirements and minimum standards of professional practice that appraisers must follow when conducting appraisals, especially in federally related transactions.