In a transaction covered by Regulation Z’s valuation-independence rule, a loan officer asks the appraiser to replace accurate unfavorable language solely so the loan will be approved. Which response is appropriate?
Correct Answer
B) Refuse a misleading change while remaining willing to consider factual corrections or additional information
A covered person must not coerce or improperly influence a valuation. The appraiser must preserve accurate, impartial analysis and reject a change made solely to obtain loan approval. The rule permits requests to correct factual errors, explain conclusions, or consider appropriate additional information; those legitimate requests differ from pressure to mislead.
Why This Is the Correct Answer
Option B is correct because the appraiser must keep the analysis accurate and impartial and refuse a change made solely to obtain loan approval. Regulation Z allows requests to consider additional, appropriate property information, correct factual errors, or explain conclusions, because those do not supplant the appraiser's independent judgment. Refusing the misleading change while staying open to legitimate requests follows both principles.
Why the Other Options Are Wrong
Option A: Make the requested change because loan approval determines accuracy
Option A, making the change because loan approval determines accuracy, is wrong. Accuracy depends on the facts and analysis, not on whether the loan is approved.
Option C: Change the conclusion if the loan officer promises future assignments
Option C, changing the conclusion if the loan officer promises future assignments, is wrong because it lets a promise of work drive the result, which is improper influence and conflicts with the appraiser's independence.
Option D: Hide the original unfavorable language in the workfile and report the conclusion the loan officer wants
Option D, hiding the original language in the workfile and reporting the loan officer's preferred conclusion, is wrong because it produces a misleading report. Keeping the accurate version in the workfile does not cure misleading the intended users.
Facts welcome, pressure refused
New facts and error corrections are welcome; pressure to change accurate findings is refused.
How to use: Use this to sort lender requests into permitted and prohibited categories.
Exam Tip
The best answer usually refuses the improper change while still accepting legitimate requests, rather than refusing all contact or giving in.
Common Mistakes to Avoid
- -Refusing to consider legitimate additional comparable sales
- -Believing workfile notes cure a misleading report
- -Treating loan approval as a measure of accuracy
Concept Deep Dive
Analysis
This question tests the line between improper influence and legitimate requests under Regulation Z's valuation-independence rule. Asking an appraiser to drop accurate unfavorable language just to get a loan approved is pressure to mislead. Requests to correct factual errors or consider additional appropriate information remain permitted.
Background Knowledge
Regulation Z, at 12 CFR 1026.42, prohibits covered persons from coercing or improperly influencing a person who prepares a valuation. It also lists permitted actions, such as asking the appraiser to consider additional appropriate property information, to provide further detail, or to correct errors. USPAP separately requires that reports not be misleading.
Real-World Application
A loan officer asks an appraiser to remove a note about foundation cracks so the loan will clear underwriting. The appraiser refuses, but offers to review any repair invoice or engineer's report the borrower can provide.
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