A lender pressures for a quick, cheap appraisal on a federally related loan. What do the Interagency Guidelines say about cost and speed?
Correct Answer
D) Cost or delivery speed should not improperly shape the scope
The Guidelines say an institution should not allow lower cost or speed of delivery to inappropriately influence its appraisal ordering procedures or the appraiser’s determination of the scope of work.
Why This Is the Correct Answer
Option D is correct because the Interagency Guidelines state that an institution should not allow lower cost or speed of delivery to inappropriately influence its appraisal ordering procedures or the appraiser's determination of the scope of work for a federally related transaction. The scope must be driven by what is needed for credible results, not by a lender's push for a cheap, quick report.
Why the Other Options Are Wrong
Option A: Cost and speed should be the main factors in setting the scope
Option A says cost and speed should be the main factors in setting the scope. The Guidelines say the opposite: lower cost or faster delivery should not inappropriately influence the scope of work.
Option B: The appraiser should shorten the scope to meet the lender’s deadline
Option B says the appraiser should shorten the scope to meet the lender's deadline. Letting delivery speed drive the scope is exactly the influence the Guidelines say should not shape the scope of work.
Option C: The lender may set the scope of work directly for the appraiser
Option C says the lender may set the scope of work directly for the appraiser. The scope of work is the appraiser's determination, and the Guidelines are concerned with keeping cost and speed pressure out of that determination.
Fast and cheap don't steer
Cost and speed can be discussed, but they should not steer the scope of work.
How to use: Use this phrase when a question pairs lender pressure with scope-of-work decisions.
Exam Tip
Answers that let a client's budget or deadline dictate the scope of work are typically wrong on independence questions.
Common Mistakes to Avoid
- -Believing the lender sets the appraiser's scope of work
- -Cutting the scope to meet a deadline
- -Treating cost as the main factor in setting scope
Concept Deep Dive
Analysis
This question tests appraiser independence and scope of work under the Interagency Appraisal and Evaluation Guidelines. The Guidelines direct institutions not to let lower cost or faster delivery inappropriately influence ordering procedures or the appraiser's scope decisions. The answer is the option that protects the scope from cost and speed pressure.
Background Knowledge
The Interagency Appraisal and Evaluation Guidelines set expectations for regulated institutions on appraisal programs and appraiser independence. Scope of work must be sufficient to produce credible results, and cost or turnaround pressure should not compromise it.
Real-World Application
A loan officer asks an appraiser to skip comparable research to close a federally related loan by Friday. The appraiser explains that the scope must support credible results and offers a realistic delivery date instead.
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Previous Question
An appraiser researching competition from builders finds 160 new-construction closed sales in the prior period and 216 in the current period. What is the percent change in new-construction closed sales?
Next Question
While working on an appraisal of a new house in a tract subdivision, an appraiser measures new-home supply in the market area on the Census Bureau's definitions. Builders report 150 speculative houses permitted, under construction or completed with no sales contract signed or deposit accepted, 15 houses with signed sales contracts, and 20 platted lots with no permit issued and no work begun. Sales contracts have held steady, with 75 signed over the past 5 months, including those 15 houses. What months' supply is indicated?