CAR Communication & Documentation 3 — Questions and Answers
Question 1: A review appraiser discovers the original appraiser failed to analyze a recent foreclosure sale that sold for 20% below the concluded value. This omission is best categorized as:
- A minor deficiency that does not require documentation
- A significant error of omission that should be noted in the review (Correct answer)
- An acceptable practice since distressed sales are typically excluded
- A violation requiring mandatory report to state regulators
Correct answer: A significant error of omission that should be noted in the review
Failing to analyze a potentially relevant comparable sale is a significant error of omission that must be documented in the review report.
Question 2: The term 'workfile' as used in USPAP review assignments refers to:
- The client's loan file associated with the reviewed property
- Documentation necessary to support the reviewer's opinions, conclusions, and review report (Correct answer)
- The original appraiser's file submitted for review
- A standardized government form used in federally related transactions
Correct answer: Documentation necessary to support the reviewer's opinions, conclusions, and review report
A workfile contains the documentation necessary to support the reviewer's opinions and conclusions, as well as copies of the review report.
Question 3: When a review report must be transmitted electronically, the reviewer's certification should:
- Be omitted since electronic signatures are not recognized under USPAP
- Contain a clear electronic signature or be accompanied by a separately signed certification (Correct answer)
- State that the electronic version supersedes any prior paper version
- Include only the reviewer's state license number without a signature
Correct answer: Contain a clear electronic signature or be accompanied by a separately signed certification
Electronic review reports must include a valid electronic signature or a separately executed signed certification to satisfy USPAP requirements.
Question 4: When reviewing a 1004MC Market Conditions Addendum, a reviewer should primarily assess whether:
- The form was completed using the lender's preferred software
- Market trend conclusions are consistent with the data presented on the form (Correct answer)
- The appraiser used at least 12 months of comparable data
- The form was attached as the last page of the appraisal report
Correct answer: Market trend conclusions are consistent with the data presented on the form
The reviewer should verify that the market trend conclusions drawn on the 1004MC are logically supported by the data entered on the form.
Question 5: A review appraiser's certification in a review report must include:
- The appraiser's social security number for identity verification
- A statement that the reviewer has no undisclosed interest in the property (Correct answer)
- The original appraiser's license number and expiration date
- Confirmation that the reviewer agrees with all the original appraiser's conclusions
Correct answer: A statement that the reviewer has no undisclosed interest in the property
USPAP requires the review appraiser's certification to include a statement disclosing any interest or bias that could affect the review outcome.
Question 6: When documenting the reconciliation of multiple value indications in a review, the reviewer should:
- Always select the median of the approaches as the final conclusion
- Evaluate the relative reliability and applicability of each approach for the property type (Correct answer)
- Document only the approach that produces the highest indicated value
- Limit reconciliation comments to a single sentence
Correct answer: Evaluate the relative reliability and applicability of each approach for the property type
Proper reconciliation requires the reviewer to assess and document the relative credibility and relevance of each valuation approach used.
Question 7: Which type of review report format provides the most detail and is most appropriate for complex, high-value, or litigation-related assignments?
- Restricted appraisal review report
- Appraisal review report (Correct answer)
- Self-contained review report
- Summary review report
Correct answer: Appraisal review report
An appraisal review report provides detailed disclosure of data, analysis, and conclusions, making it suitable for complex or litigation-related review assignments.
CAR Communication & Documentation 3
A review appraiser discovers the original appraiser failed to analyze a recent foreclosure sale that sold for 20% below the concluded value.
This omission is best categorized as: