A mortgage broker discovers that an appraiser they frequently use has been providing consistently high valuations that help deals close. The broker never directly instructs the appraiser on value but continues to use this appraiser exclusively. Under AIR, this practice is:
Correct Answer
C) Prohibited as it creates an improper incentive structure
Under the Appraiser Independence Requirements (AIR), any practice that creates improper incentives for appraisers to inflate values is prohibited, even without direct pressure. Exclusive use of appraisers who consistently provide favorable valuations violates the spirit of appraiser independence.
Why This Is the Correct Answer
Under the Appraiser Independence Requirements (AIR), any practice that creates improper incentives for appraisers to inflate values is prohibited, even without direct pressure. Exclusive use of appraisers who consistently provide favorable valuations violates the spirit of appraiser independence.
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During the application process, an MLO realizes that a borrower would qualify for a government program with better terms, but the MLO's company doesn't offer that program type. What does good faith require?
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A mortgage company implements a 'quality bonus' system where MLOs receive additional compensation if their loans have fewer than 2 conditions at underwriting. The bonus amount is the same regardless of loan size or type. This compensation structure: