Under Fannie Mae’s Appraiser Independence Requirements, which participant is prohibited from selecting the appraiser for a particular loan appraisal?
Correct Answer
C) A loan originator who is part of mortgage production
Fannie Mae AIR restricts mortgage-production staff and other defined Restricted Parties from selecting or influencing appraiser selection. The seller or a specifically authorized independent third party handles selection under the requirements. Fannie also restricts acceptance of appraisals selected, retained or directly compensated by borrowers and specified other third parties; borrower selection must not be presented as a permissible alternative in this same program. Investor AIR and Regulation Z have related but distinct scope and provisions.
Why This Is the Correct Answer
Option C is correct because a loan originator is part of mortgage production, and AIR restricts production staff from selecting the appraiser. Independence is compromised when loan production staff choose who performs the valuation for a specific transaction. Selection must come from a function independent of loan production.
Why the Other Options Are Wrong
Option A: A properly independent qualified appraisal-selection employee
Option A, a properly independent qualified appraisal-selection employee, is wrong because an employee independent of loan production is exactly the kind of person permitted to select appraisers.
Option B: A properly authorized AMC complying with AIR
Option B, a properly authorized AMC complying with AIR, is wrong because an authorized independent AMC is a permitted way to select the appraiser.
Option D: The seller’s authorized independent appraisal function
Option D, the seller's authorized independent appraisal function, is wrong because the seller's independent appraisal function is permitted to handle selection under AIR.
Production doesn't pick
Production doesn't pick: whoever originates or produces the loan does not choose the appraiser. The seller's independent appraisal function or an authorized independent party such as a compliant AMC does. Use this to find the restricted party in appraiser-selection questions.
How to use: Use this to identify the restricted party in appraiser-selection questions.
Exam Tip
When options describe parties as independent or properly authorized, they are usually permitted; the production-linked party is the restricted one.
Common Mistakes to Avoid
- -Thinking a loan originator may pick the appraiser if the appraiser is qualified
- -Believing an AMC can never select appraisers under AIR
- -Treating borrower-selected appraisals as a permitted alternative under AIR
Concept Deep Dive
Analysis
This question tests appraiser-selection independence under Fannie Mae's Appraiser Independence Requirements. Mortgage-production staff, such as loan originators, are restricted from selecting or influencing appraiser selection. Selection is handled by the seller's independent function or an authorized independent party such as a compliant AMC.
Background Knowledge
Appraiser independence rules aim to prevent people whose pay or goals depend on loan production from influencing the valuation. Both the Interagency Guidelines and Fannie Mae AIR separate appraiser selection from loan production, though they differ in scope and detail.
Real-World Application
A loan officer emails the appraisal desk asking that a particular appraiser be assigned because he is fast and usually hits value. The appraisal desk, independent of production, declines and assigns from its panel under its own rotation.
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