Appraisal independence rules and property valuation concepts as they apply to mortgage lending decisions tested on the SAFE Act exam.
30 cards · basic cards · AI-written, checked twice. Edit anything.
- What is the primary purpose of the SAFE Act?
Show answer
To establish a nationwide licensing and registration system for mortgage loan originators to protect consumers and reduce fraud.- What is appraisal independence?
Show answer
The requirement that appraisers remain free from pressure or influence that could compromise the accuracy of their property valuation.- Who is defined as a loan originator under the SAFE Act?
Show answer
A person who takes a residential mortgage loan application or offers or negotiates loan terms.- Can a loan originator order an appraisal directly?
Show answer
Yes, but must do so through a neutral third party or appraisal management company to maintain appraisal independence.- What is a customary and reasonable fee?
Show answer
An appraisal fee that is consistent with fees charged for comparable appraisals in the same geographic area and market.- What is prohibited pressure on an appraiser?
Show answer
Any influence, threat, or incentive intended to bias an appraiser toward a predetermined value outcome.- What must an appraiser establish at the beginning of an assignment?
Show answer
The scope of work, which defines the extent of the appraisal process, the extent of research, and the type of report.- What is a comparable property in appraisal?
Show answer
A recently sold or listed property with similar characteristics and location that helps establish the subject property's market value.- Name the three approaches to property valuation.
Show answer
Sales comparison approach, cost approach, and income approach.- What is the sales comparison approach?
Show answer
A valuation method that estimates property value by comparing it to similar properties recently sold in the same market area.- What is the cost approach?
Show answer
A valuation method that estimates value by calculating the cost of land plus the cost to construct an equivalent building, minus any depreciation.- What is the income approach?
Show answer
A valuation method used primarily for income-producing properties that estimates value based on the income the property generates.- What is reconciliation in property appraisal?
Show answer
The process of analyzing the results from each valuation approach and weighing them to determine a final estimate of value.- What are adjustments in comparable property analysis?
Show answer
Quantitative or qualitative changes made to comparable property sale prices to account for differences with the subject property.- What is the effective date of value in an appraisal?
Show answer
The date as of which the appraiser's opinion of value applies, typically the date of the property inspection.
FlashKeepers