Question 4
Domain 2: Mortgage Loan Origination ActivitiesUnder appraiser independence requirements (AIR), which of the following is PROHIBITED?
Correct answer: B
Explanation
Appraiser independence requirements prohibit anyone with a financial interest in the loan from influencing the valuation process. A loan officer selecting a specific appraiser for a transaction is prohibited because AIR requires appraisers to be chosen without coercion, pressure, or interference from loan production staff.
Why each option is right or wrong
A. Using an appraisal management company (AMC) to select appraisers
B. A loan officer selecting a specific appraiser for a transaction
Under the Appraiser Independence Requirements in 12 C.F.R. § 1026.42(c), a creditor and its loan production staff may not influence the selection of an appraiser or the value assigned to the property. The rule specifically bars anyone with a financial interest in the transaction from directing, selecting, or otherwise interfering with the appraiser assignment, so a loan officer naming a particular appraiser for a loan file is impermissible.
C. The lender paying for the appraisal on behalf of the borrower
D. Ordering a second appraisal when the first value seems too low