Appraiser Independence for Dummies

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APPRAISER INDEPENDENCE REGULATIONS (AIR’s) apply only to appraisals performed for lending institutions. Appraiser Independence Regulations are basically lender requirements. These regulations do not apply to appraisals used for the Relocation industry. They do not apply to individuals who need appraisals for divorce or to settle an estate. If you need to know what a property is worth, call us direct. We’ll tell you whether or not these new regulations apply to you.

APPRAISER INDEPENDENCE REGULATIONS basically say “No person can attempt to influence the appraiser in any way”. If you are a lender, how you communicate your appraisal request is of critical importance to be HR 4173 compliant.

The appraisal request cannot come from any “Mortgage Loan production staff” member. Clearly loan officers, processors, production managers fall into this category. No appraisal requests from these individuals. Loan production staff members are not allowed to have any substantive communications with the appraiser concerning the property value, condition, etc.

The appraisal request cannot have a “target” value indicated anywhere. This includes comments like “the property owner believes the property to be worth $$$$$” or “it’s on the tax rolls for $$$$$” or “the current loan balance is”. Any such comments (either on the original order or in any additional communications) makes the request non-compliant.

Obviously any appraisal request with a comment such as “If it looks like the value is less than $$$$$, please stop the appraisal process” is not AIR compliant.

There is one exception. If the transaction is a sale, the agencies require the appraiser is furnished a copy of the sales contract.

The lender is responsible for appraiser payment. The appraiser is not allowed to collect his fee from the borrower, Realtor or any other entity.

Requesting a second appraisal requires a reasonable belief by the lender the original appraisal flawed or tainted.

The lender will quality control test ten percent of the appraisals used by the lender.

The lender has a written policy policies and procedures implementing Appraiser Independence Regulations.

And finally, the lender will certify, represent and warrant the appraisal report was obtained in a manner that is compliant with Appraiser Independence Regulations.

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Mike Brubaker