In a file escalation meeting, the supervisor sees facts tied to FIRREA Appraisal Requirements. What should the file reflect?
Correct Answer
A) Resolve valuation independence concerns before relying on the appraisal
Why this is correct: FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act) and the accompanying appraisal independence rules (like those in Dodd-Frank) prohibit improper influence on the appraiser. If there are concerns about the independence or objectivity of the valuation (e.g., pressure on the appraiser, conflicts of interest), the lender cannot rely on that appraisal for underwriting. The file must reflect that these concerns were resolved before the appraisal was used to make a credit decision. Why the other choices are wrong: "Withhold the valuation copy until closing if the applicant does not ask" is wrong because regulations typically require providing a copy of the appraisal report promptly after completion, regardless of whether the applicant asks. "Remove unfavorable valuation comments before giving the report to the applicant" is wrong because altering an appraisal report is illegal and violates independence rules. "Ask the appraiser to ignore a condition issue so the loan can meet timing" is wrong because this is direct coercion and a clear violation of appraisal independence standards. Exam tip: Appraisal independence is sacred. Never influence the appraiser's value or condition assessment. Resolve independence concerns before proceeding.
Why This Is the Correct Answer
The correct response is "Resolve valuation independence concerns before relying on the appraisal" because Appraisal handling requires valuation independence and timely valuation copies.
Why the Other Options Are Wrong
Option B: 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.
Option C: Remove unfavorable valuation comments before giving the report to the applicant.
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: Ask the appraiser to ignore a condition issue so the loan can meet timing.
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.
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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