For a higher-priced mortgage loan subject to 1026.35(c)(3), with no applicable exception to the interior-visit requirement, what appraisal requirement applies?
Correct Answer
B) A written appraisal by a certified or licensed appraiser with an interior visit
For a covered transaction without an applicable exception,1026.35(c)(3) requires a written appraisal by a certified or licensed appraiser who conducts a physical interior visit. The rule contains defined coverage and exemptions, including special manufactured-home treatment; it must not be generalized to every mortgage. Additional-appraisal requirements depend on specified acquisition/resale facts and exceptions rather than a universal $400,000 threshold.
Why This Is the Correct Answer
Option B is correct because 1026.35(c)(3) requires a written appraisal performed by a certified or licensed appraiser who conducts a physical visit of the interior of the property securing the loan. The question states that no exception to the interior-visit requirement applies, so this rule controls.
Why the Other Options Are Wrong
Option A: A ten-year USPAP workfile retention period for the appraisal file
Option A, a ten-year USPAP workfile retention period, is wrong because the higher-priced mortgage rule addresses who performs the appraisal and the interior visit, and USPAP retention is not ten years.
Option C: A Certified General appraiser only, whatever the type of property involved
Option C, a Certified General appraiser only whatever the property type, is wrong because the rule calls for a certified or licensed appraiser, not exclusively a Certified General appraiser.
Option D: A second appraisal because the loan amount exceeds $400,000, with no other test
Option D, a second appraisal because the loan exceeds $400,000 with no other test, is wrong because the additional-appraisal requirement depends on specified acquisition and resale facts and exceptions, not a loan-amount threshold.
Higher price, inside look
A higher-priced mortgage gets a written appraisal by a licensed or certified appraiser who goes inside.
How to use: Use this to pick the interior-visit option for covered higher-priced loans.
Exam Tip
The second-appraisal rule depends on resale and acquisition facts, not a dollar amount; avoid options linking it to a loan-size threshold.
Common Mistakes to Avoid
- -Assuming only Certified General appraisers may perform these appraisals
- -Linking the second-appraisal requirement to a loan-amount threshold
- -Applying the rule to every mortgage rather than covered higher-priced loans
Concept Deep Dive
Analysis
This question tests the Regulation Z appraisal requirement for higher-priced mortgage loans under 1026.35(c)(3). When no exception applies, the creditor needs a written appraisal by a certified or licensed appraiser who physically visits the interior. Separate this from USPAP retention rules, credential-level myths and the additional-appraisal rule.
Background Knowledge
Higher-priced mortgage loans carry extra consumer protections under Regulation Z, including appraisal requirements. Covered loans generally need a full interior appraisal, and certain flips (property resold within set periods at higher prices) can trigger a second appraisal, subject to exemptions such as special manufactured-home treatment.
Real-World Application
A borrower with a high APR loan is buying a single-family home, and the lender confirms the loan is a covered higher-priced mortgage with no exemption. The lender orders a written appraisal from a licensed appraiser who inspects the interior, then checks the seller's acquisition history to see whether a second appraisal is needed.
More USPAP Questions
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A client asks an appraiser to raise a completed report’s value conclusion by $15,000 solely to match the contract price, without providing new evidence. What should the appraiser do?
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