A data collector begins measuring a home for a desktop appraisal before the bank has engaged anyone for the assignment. What do the Interagency Guidelines advise?
Correct Answer
C) Work should not start until the institution selects and engages someone
To avoid the appearance of any conflict of interest, appraisal or evaluation development work should not commence until the institution has selected and engaged a person for the assignment.
Why This Is the Correct Answer
Option C is correct because the Interagency Guidelines state that, to avoid the appearance of any conflict of interest, appraisal or evaluation development work should not commence until the institution has selected and engaged a person for the assignment. Measuring the home is part of development, so it should wait for engagement.
Why the Other Options Are Wrong
Option A: Work may begin once the bank indicates that an order is likely to follow
Option A lets work begin once the bank indicates an order is likely to follow. A likely order is not an engagement, and the guidelines call for selection and engagement before work starts.
Option B: The data collected may be reused for any later assignment on the home
Option B says the data collected may be reused for any later assignment on the home. Nothing supports unlimited reuse, and data gathered before engagement raises the very conflict concern the guidelines address.
Option D: The data collector must be the same appraiser who signs the report
Option D says the data collector must be the same appraiser who signs the report. The issue in the guidelines is the timing of engagement, not a requirement that the collector and signer be the same person.
Engage first, measure second
No measuring, inspecting or analyzing until the institution has selected and engaged someone for the assignment.
How to use: Use this order to judge any question about when valuation work may begin.
Exam Tip
Watch for phrases like an order is likely; under the guidelines, only an actual engagement starts the work.
Common Mistakes to Avoid
- -Starting work on an informal promise of an order
- -Assuming previously collected data can be reused freely
- -Confusing the engagement-timing rule with a signer requirement
Concept Deep Dive
Analysis
This question tests the Interagency Guidelines on when development work may start. To avoid the appearance of any conflict of interest, appraisal or evaluation work should not begin until the institution has selected and engaged a person for the assignment. A data collector measuring the home before engagement is starting too early.
Background Knowledge
The Interagency Guidelines emphasize that institutions, not borrowers or loan production staff, should select and engage appraisers and evaluators. Starting work before engagement can suggest the valuation was arranged to suit a transaction, which undermines independence.
Real-World Application
A loan officer asks a data collector to measure a home in advance to speed things up. The bank's appraisal department declines, completes the engagement through its normal process, and only then dispatches the collector.
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