Uniform Standards of Professional Appraisal Practice (USPAP) Practice Exam

What must a lender do regarding the appraiser in a federally regulated lending transaction?

1. The lender must engage the appraiser directly.

2. The lender can appoint someone else to engage the appraiser.

3. The appraiser can directly engage with the borrower.

4. The appraiser may readdress the report without lender involvement.

The correct answer is: The lender must engage the appraiser directly.

In a federally regulated lending transaction, the lender is required to engage the appraiser directly to ensure that the appraisal process remains unbiased and that the appraiser's independence is maintained. This direct engagement helps prevent any potential conflicts of interest that could arise if someone other than the lender were to hire the appraiser. By having a direct relationship, the lender ensures that the appraiser operates without undue influence from third parties, particularly those with vested interests in the transaction. This practice aligns with the requirements established by regulations aimed at promoting transparency and impartiality in the appraisal process, ultimately protecting the interests of both the lender and the borrower. Other options suggest scenarios that would compromise the independence and objectivity of the appraiser. For example, appointing someone else to engage the appraiser or allowing the appraiser to liaise directly with the borrower could introduce biases and conflicts. Similarly, having the appraiser readdress the report without lender involvement could undermine the integrity of the appraisal process, leading to questions about accuracy and neutrality. Thus, engaging the appraiser directly is crucial for maintaining compliance with federal regulations and ensuring trust in the appraisal outcome.