Uw Training - Appraisal Review Quiz
- 1.
The Underwriter is not responsible for reviewing the appraisal report as long as CoreLogic issues a “Pass” rating.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the underwriter is responsible for reviewing the appraisal report regardless of the rating issued by CoreLogic. The underwriter's role is to assess the risk associated with the loan and ensure that the property's value is accurately determined. Therefore, they need to review the appraisal report to make an informed decision.Rate this question:
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- 2.
Underwriting the Borrower’s credit worthiness is more important than reviewing the appraisal report.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because both underwriting the borrower's creditworthiness and reviewing the appraisal report are equally important in the lending process. Underwriting involves assessing the borrower's ability to repay the loan based on their credit history, income, and other factors. On the other hand, reviewing the appraisal report is crucial to determine the value of the property being used as collateral for the loan. Both aspects are essential in evaluating the risk and making informed lending decisions.Rate this question:
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- 3.
The reason SPM utilizes Appraisal Management Centers (AMCs) is to ensure the Appraiser Independence Requirements (AIR) compliance regulations are being met.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
SPM utilizes Appraisal Management Centers (AMCs) to ensure compliance with the Appraiser Independence Requirements (AIR) regulations. These regulations are in place to maintain the independence and impartiality of appraisers, ensuring that their assessments are unbiased and accurate. By using AMCs, SPM can effectively manage the appraisal process and ensure that it is conducted in accordance with these regulations, thereby upholding the integrity of the appraisal process.Rate this question:
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- 4.
Appraisers are no longer able to rate the property’s quality against the standards for that neighborhood.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Appraisers are no longer able to rate the property's quality against the standards for that neighborhood. This means that appraisers are no longer allowed to compare the property being appraised to the quality standards of the surrounding neighborhood. This could be due to changes in regulations or guidelines for appraisers. As a result, the appraisers may have to rely on other factors and criteria to determine the value of the property.Rate this question:
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- 5.
USPAP compliance is optional for federal, state and local agencies, appraisal services and appraisal trade associations.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
USPAP compliance is not optional for federal, state, and local agencies, appraisal services, and appraisal trade associations. These entities are required to adhere to the Uniform Standards of Professional Appraisal Practice (USPAP) in order to ensure ethical and professional appraisal practices. Failure to comply with USPAP can result in disciplinary actions and penalties.Rate this question:
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- 6.
An appraisal report needs to state the property’s value based on a detailed physical description of the property, its surroundings and the methods use to estimate the property value.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
An appraisal report is a document that provides an estimate of the value of a property. In order to accurately determine the value, the report must include a detailed physical description of the property, including its surroundings. Additionally, the report should outline the methods that were used to estimate the property value, such as comparable sales or income approach. Therefore, the statement that an appraisal report needs to state the property's value based on a detailed physical description of the property, its surroundings, and the methods used to estimate the property value is true.Rate this question:
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- 7.
The appraisal report must be an impartial opinion that states the market value on the exact date of the inspection.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The appraisal report must be an impartial opinion because it needs to provide an unbiased evaluation of the market value. This ensures that the report is fair and accurate. Additionally, stating the market value on the exact date of the inspection is important because market values can fluctuate over time, so it is crucial to provide an up-to-date assessment.Rate this question:
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- 8.
The DOMs (Days on the Market) is only required for purchase transactions.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because the DOMs, which stands for Days on the Market, refers to the number of days a property has been listed for sale before it is sold. Therefore, it is relevant only in the context of purchase transactions, as it helps potential buyers gauge the popularity and demand of a property. For rental transactions, the concept of DOMs is not applicable, as it is not a measure of the property's availability for rent.Rate this question:
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- 9.
Fair Market Value (FMV) is the price someone is willing to pay.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because Fair Market Value (FMV) is not solely based on the price someone is willing to pay. It is determined by the current market conditions, supply and demand, and the agreed-upon value between a willing buyer and a willing seller, both of whom are knowledgeable about the item being sold. It is not solely dependent on an individual's willingness to pay a certain price.Rate this question:
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- 10.
The appraiser doesn’t need to use the USPS postal address for the subject property as long as he/she can rationalize the reason for doing such.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the appraiser is required to use the USPS postal address for the subject property. The USPS postal address is the official address recognized by the postal service and is necessary for accurate identification and location of the property. The appraiser cannot simply rationalize or provide a reason for not using the USPS postal address.Rate this question:
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- 11.
Rural properties do not significantly increase in value like urban or suburban properties and because the demand is not as great, they are more sensitive to economic down turns or value declines.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Rural properties tend to have slower appreciation rates compared to urban or suburban properties. This is because the demand for rural properties is generally lower, resulting in less competition and slower price growth. Additionally, rural properties are more susceptible to economic downturns or declines in value due to their limited appeal and market size. Therefore, the statement that rural properties do not significantly increase in value like urban or suburban properties and are more sensitive to economic downturns is true.Rate this question:
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- 12.
Red Flag issues present in an appraisal report need not be addressed if the LTV is below the product guideline requirement.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Red Flag issues in an appraisal report should always be addressed, regardless of the loan-to-value (LTV) ratio. These issues could indicate potential risks or problems with the property, such as structural issues or environmental hazards. Ignoring these issues could lead to future complications and financial losses for the lender. Therefore, it is important to address any red flags, regardless of the LTV ratio.Rate this question:
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- 13.
The Sales Comparison Approach is the most commonly used approach to evaluate residential property.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The Sales Comparison Approach is the most commonly used approach to evaluate residential property because it involves comparing the property being appraised to similar properties that have recently sold in the same area. This approach takes into account factors such as location, size, condition, and amenities to determine the fair market value of the property. By comparing the subject property to recent sales, appraisers can make adjustments for any differences and arrive at an accurate valuation. This approach is widely accepted and used by real estate professionals and lenders in determining property values.Rate this question:
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- 14.
The “owner of record” section of the appraisal report is an optional field and needs not be completed by the appraiser for refinance transactions.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The "owner of record" section of the appraisal report is not an optional field for refinance transactions. It is necessary for the appraiser to complete this section to provide accurate information about the current owner of the property being appraised. Failing to complete this section could result in incomplete and inaccurate appraisal reports, which could affect the outcome of the refinance transaction.Rate this question:
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- 15.
Only closed sales can be used for the 3 main comps on an appraisal report.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because in an appraisal report, the 3 main comps refer to the three comparable properties that are used to determine the value of the subject property. These comps are typically recent closed sales of similar properties in the same area. Only closed sales can provide accurate and reliable data for comparison purposes, as they represent actual transactions and reflect the market value at the time of sale. Therefore, only closed sales can be used as the main comps in an appraisal report.Rate this question:
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- 16.
When an appraisal report reflects comps with extended DOM's, the Underwriter should: (Please select the best answer)
- A.
Disregard the information because it is not relevant to a refinance transaction
- B.
Refer to and evaluate the appraiser’s comments for the comps’ extended market time
- C.
Disregard the information if the comps photo’s and corresponding adjustments indicate they are inferior properties than the subject property
- D.
All of the Above
- E.
None of the Above
Correct Answer
B. Refer to and evaluate the appraiser’s comments for the comps’ extended market timeExplanation
The correct answer is "Refer to and evaluate the appraiser’s comments for the comps’ extended market time." This is because extended days on the market (DOM) for comparables can indicate potential issues with the properties or the market itself. By referring to and evaluating the appraiser's comments on the extended market time, the underwriter can gain a better understanding of the factors that may have contributed to the extended DOM and make a more informed decision on the loan application.Rate this question:
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- 17.
It is important that the appraiser receives a full and complete copy of the purchase contract because he or she: (Please select the best answer)
- A.
Wants to bring the appraised value in to match the purchase price on the contract since that is the price the buyer is willing to pay
- B.
Is responsible to ensure the Seller of the property matches public records and needs to review the terms of the contract, concessions, financing assistance and the type of sale
- C.
Is responsible to ensure the purchase contract is written up on the correct form with all applicable disclosures attached
- D.
All of the above
- E.
None of the above
Correct Answer
B. Is responsible to ensure the Seller of the property matches public records and needs to review the terms of the contract, concessions, financing assistance and the type of saleExplanation
The appraiser needs to receive a full and complete copy of the purchase contract because they are responsible for ensuring that the Seller of the property matches public records. They also need to review the terms of the contract, concessions, financing assistance, and the type of sale to accurately assess the value of the property. This information is crucial for the appraiser to make an informed decision and provide an accurate appraisal.Rate this question:
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- 18.
Rural properties may be difficult to comp because: (Please select the best answer)
- A.
Typically the property has a large site
- B.
Distances of comps to subject property are greater than urban or suburban properties, especially when acreage is involved
- C.
Very small towns or sparsely populated areas may not have any recent sales available or properties that are truly similar to subject
- D.
All of the above
- E.
None of the above
Correct Answer
D. All of the aboveExplanation
Rural properties may be difficult to comp because they typically have a large site, which can make it challenging to find comparable properties with similar characteristics. Additionally, the distances of comps to the subject property are often greater in rural areas, especially when acreage is involved. Lastly, very small towns or sparsely populated areas may not have any recent sales available or properties that are truly similar to the subject property. Therefore, all of the above reasons contribute to the difficulty of comparing rural properties.Rate this question:
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- 19.
The neighborhood boundary section of the appraisal report is: (Please select the best answer)
- A.
Not important because the comps on page 2 and the appraised value is all the Underwriter needs to review
- B.
Not really needed to because the 1004MC is more accurate and reliable
- C.
Should be typical to its surroundings and the comps used in the appraisal report should be within the same neighborhood as it describes neighborhood characteristics, Housing trends, Price and Age ranges and land uses
- D.
All of the Above
- E.
None of the Above
Correct Answer
C. Should be typical to its surroundings and the comps used in the appraisal report should be within the same neighborhood as it describes neighborhood characteristics, Housing trends, Price and Age ranges and land usesExplanation
The neighborhood boundary section of the appraisal report should be typical to its surroundings and the comps used in the appraisal report should be within the same neighborhood as it describes neighborhood characteristics, housing trends, price and age ranges, and land uses. This is important because it provides an accurate representation of the neighborhood and helps the underwriter understand the market conditions and value of the property being appraised. The 1004MC may provide some information, but it may not capture all the necessary details about the neighborhood. Therefore, the neighborhood boundary section is necessary for a comprehensive appraisal report.Rate this question:
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- 20.
When an appraisal indicates very few adjustments in the sales comparison analysis, it indicates: (Please select the best answer)
- A.
That the comps are similar to the subject property
- B.
The subject may be an under-improvement for the neighborhood
- C.
The subject may be an over-improvement for the neighborhood
- D.
The property is not acceptable to lend on
Correct Answer
A. That the comps are similar to the subject propertyExplanation
When an appraisal indicates very few adjustments in the sales comparison analysis, it indicates that the comps are similar to the subject property. This means that the properties used for comparison in the appraisal are similar in terms of size, location, condition, and other relevant factors to the subject property being appraised. The fewer adjustments needed to make the comps comparable to the subject property, the more accurate and reliable the appraisal is considered to be.Rate this question:
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- 21.
When an appraiser “brackets” a property means that the appraiser is: (Please select the best answer)
- A.
Documenting identical comps through paired sales analysis
- B.
Using comps with higher as well as lower sales prices than subject property
- C.
Identifying potential Health and Safety issues
- D.
Describing foundation structure
Correct Answer
B. Using comps with higher as well as lower sales prices than subject propertyExplanation
The correct answer is "Using comps with higher as well as lower sales prices than subject property." When an appraiser "brackets" a property, it means they are considering comparable properties with both higher and lower sales prices than the subject property. This helps to establish a range of values and provide a more accurate appraisal. By including both higher and lower comps, the appraiser can account for any unique features or deficiencies in the subject property and ensure a fair evaluation.Rate this question:
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- 22.
Examples of functional obsolescence include: (Please select the best answer)
- A.
A house with only 1 bathroom located on a different floor than the bedrooms
- B.
Lack of a master bedroom (E.G. all bedrooms are the same size)
- C.
Tandem or captive bedrooms that can only be accessed through another room without a hallway
- D.
All of the above
- E.
None of the above
Correct Answer
D. All of the aboveExplanation
Functional obsolescence refers to features or characteristics of a property that make it less desirable or less functional compared to other properties. In this case, all the examples listed - a house with only 1 bathroom located on a different floor, lack of a master bedroom, and tandem or captive bedrooms that can only be accessed through another room without a hallway - can be considered as instances of functional obsolescence. These features may decrease the overall appeal and functionality of the property, making it less desirable in the market.Rate this question:
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- 23.
The first three comps on the comparable sales grid must be: (Please select the best answer)
- A.
Current Listings
- B.
Closed Sales
- C.
Pending Sales
- D.
All of the above
- E.
None of the above
Correct Answer
B. Closed SalesExplanation
The first three comps on the comparable sales grid must be closed sales because they provide the most accurate and reliable information about the market value of a property. Current listings may not reflect the actual selling price, and pending sales are not yet finalized. Closed sales, on the other hand, represent completed transactions with actual sale prices, making them the most suitable comps for determining the value of a property.Rate this question:
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- 24.
View Adjustments made to the subject property can be described as: (Please select the best answer)
- A.
None
- B.
Typical
- C.
Average
- D.
All of the above
- E.
None of the above
Correct Answer
E. None of the aboveExplanation
The correct answer is "None of the above" because the question is asking for a description of the adjustments made to the subject property, and none of the options provided (None, Typical, Average, All of the above) accurately describe the adjustments.Rate this question:
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- 25.
When appraisal discrepancies are discovered, the UW is expected to: (Please select the best answer)
- A.
Order a Second Appraisal report
- B.
Decline the loan file because this is unacceptable
- C.
Reconcile the discrepancies through the applicable AMC or VA appraiser
- D.
Order a Desk Review
- E.
Order a Field Review
Correct Answer
C. Reconcile the discrepancies through the applicable AMC or VA appraiserExplanation
The correct answer is to reconcile the discrepancies through the applicable AMC or VA appraiser. This means that when appraisal discrepancies are found, the underwriter (UW) should work with the appropriate appraisal management company (AMC) or the Department of Veterans Affairs (VA) appraiser to resolve the differences and come to a consensus. This is the best course of action as it allows for a thorough review and resolution of the discrepancies before making a decision on the loan file. Ordering a second appraisal report, declining the loan file, or ordering a desk or field review may not be necessary or appropriate in this situation.Rate this question:
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Current Version
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Mar 17, 2023Quiz Edited by
ProProfs Editorial Team -
Sep 08, 2014Quiz Created by
Patrick Payne
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