A compliance exception review raises an Appraisal Requirements question for the MLO. What answer should guide the file?
Correct Answer
C) Remove value-based compensation or retaliation pressure
Why this is correct: Appraisal independence rules (under the Dodd-Frank Act) prohibit anyone with an interest in the transaction from coercing, influencing, or pressuring an appraiser. Compensation cannot be tied to a predetermined value, and appraisers must be free from retaliation. "Remove value-based compensation or retaliation pressure" directly addresses this core independence requirement. Why the other choices are wrong: "Withhold the valuation copy until closing if the applicant does not ask" is wrong because regulations (like the ECOA Valuation Rule) require providing a copy of the appraisal report promptly upon completion, or at least three days before closing, 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; the report must be provided to the applicant in its entirety. "Ask the appraiser to ignore a condition issue so the loan can meet timing" is wrong because this is a clear attempt to influence the appraiser's judgment, violating independence rules. Exam tip: Appraisal rules protect independence and ensure borrower access. Any action that influences the value, alters the report, or delays the borrower's receipt is a violation.
Why This Is the Correct Answer
The correct response is "Remove value-based compensation or retaliation pressure" because Appraisal handling requires valuation independence and timely valuation copies.
Why the Other Options Are Wrong
Option A: 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 B: 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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