A compliance review finds that the person preparing the valuation would be paid more if the value is higher. What should the MLO do next?
Correct Answer
B) Remove the value-based compensation conflict
Why this is correct: The rule under 12 CFR 1026.42(d) is clear: compensation for a valuation cannot be contingent on the value conclusion. This is a fundamental conflict of interest. When such a conflict is identified, the MLO must ensure it is corrected before the valuation is used. Therefore, the next step is to remove the value-based compensation conflict. Why the other choices are wrong: Routing reconsideration requests through sales staff instead of the allowed valuation process improperly interferes with the appraiser's independence. Using production pressure to influence the appraiser delivery date or conclusion is prohibited coercion. Discussing a target value with the appraiser is direct, prohibited influence to achieve a predetermined value. Exam tip: The rule is absolute: no value-based compensation. The required action is always to eliminate that conflict.
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: Route reconsideration requests through sales staff instead of the allowed valuation process.
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: Use production pressure to influence the appraiser delivery date or conclusion.
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 D: 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.
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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