Appraisal independence rules and property valuation concepts as they apply to mortgage lending decisions tested on the SAFE Act exam.
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- What is the primary purpose of the SAFE Act?
- To establish a nationwide licensing and registration system for mortgage loan originators to protect consumers and reduce fraud.
- What is appraisal independence?
- 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?
- A person who takes a residential mortgage loan application or offers or negotiates loan terms.
- Can a loan originator order an appraisal directly?
- 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?
- 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?
- 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?
- 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?
- 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.
- Sales comparison approach, cost approach, and income approach.
- What is the sales comparison approach?
- 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?
- 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?
- 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?
- 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?
- 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?
- The date as of which the appraiser's opinion of value applies, typically the date of the property inspection.
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