In a training scenario, the person preparing the valuation would be paid more if the value is higher. What action best follows the rule?
Correct Answer
D) Remove the value-based compensation conflict
Why this is correct: This question tests the same core rule as the previous appraisal question: appraisal independence under 12 CFR 1026.42(d). Compensation that varies based on the property value outcome is strictly prohibited because it biases the appraiser. The only compliant action is to remove that compensation conflict before using the appraisal. Why the other choices are wrong: "Discuss a target value with the appraiser to keep the transaction alive" is wrong because it constitutes improper influence and coercion. "Order a second appraisal solely because the first value was too low" is wrong if the sole purpose is to seek a higher value; this is considered "appraisal shopping" and is prohibited. "Withhold the valuation copy until closing if the applicant does not ask" is wrong because, as noted earlier, applicants have a right to receive appraisal reports promptly. Exam tip: The rule is clear: an appraiser's pay must never be tied to the value conclusion. If you see this structure, you must fix the compensation arrangement.
Why This Is the Correct Answer
The correct response is "Remove the value-based compensation conflict" because Lines 215-219; 12 CFR 1026.42(d).
Why the Other Options Are Wrong
Option A: Discuss a target value with the appraiser to keep the transaction alive.
This choice is not the best answer because it applies the wrong file step for appraisal and valuation independence; the governing rule is tested by the correct option.
Option B: Order a second appraisal solely because the first value was too low.
This choice is a tempting shortcut, but it conflicts with appraisal and valuation independence because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option C: Withhold the valuation copy until closing if the applicant does not ask.
This choice is not the best answer because it applies the wrong file step for appraisal and valuation independence; the governing rule is tested by the correct option.
Memory Technique
appraisal and valuation requirements: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For appraisal and valuation independence questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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