Appraiser Independence Requirements FAQ

No. Real estate agents and other third parties can be valuable sources of information. Conversations in which real estate agents or other third parties on behalf of the lender attempt to influence the development, reporting, result, or review of an appraisal are prohibited.

No. AIR is specific to a "mortgage origination transaction,” and servicing or portfolio management activities are not "mortgage origination transactions." However, the basic principles should be applied to protect the process and mitigate risk.

Compliance with AIR is part of each GSE’s operational review of the lender. By selling the loan to a GSE, the lender represents and warrants compliance with that respective GSE’s selling requirements, including compliance with AIR.

Yes. Lenders may use a pre-approved list or panel to select a residential appraiser, provided that: (1) any employees of the lender tasked with selecting appraisers for the list are independent of the loan production staff; and (2) the loan production staff is not involved in selecting an appraiser off the list for a particular appraisal assignment. See AIR section IV. D

AIR section I.B.(9) addresses the removal of an appraiser from a list of qualified appraisers in connection with influencing or attempting to influence the outcome of an appraisal. Also see sections IV.A.(2), IV.D. and VIII.

The lender must review its systems to ensure that the appraiser selection process is in compliance with AIR.

The term “restricted parties” refers to the loan production staff who are responsible for generating loan volume or approving loans, as well as their subordinates. This would include an employee whose compensation is based on loan volume or the closing of a loan transaction. Employees responsible for the credit administration function or credit risk management are not considered loan production staff. See AIR section IV.A.(1).

No. Restricted parties cannot participate at any level. These actions have to be completed by parties that are independent of loan production. See section IV.A.(2).

Yes, if their immediate supervisor is not a member of the mortgage production staff or otherwise participates in the lender’s mortgage production process and is not considered a restricted party. See AIR sections IV. and VIII.

No. No one is allowed to provide a list or a panel of appraisers to use for loans involving a specified mortgage broker, real estate agent, or loan officer. See AIR sections I.B.(9) and IV.A.

Yes. In-house appraisers may be used in accordance with AIR section V.

No. A lender may order appraisals directly from an individual appraiser, appraisal company, or an AMC.

No. A mortgage broker may not have any involvement in selecting a protected party. See section IV.A.(2).

Question: If a lender has an approved group of AMCs, is it acceptable for a mortgage broker to independently select from that group if it’s done on an established timetable or eligibility window, and not on an individual loan basis? For example, every 120 days the mortgage broker has the opportunity to switch to a different approved AMC.

Answer: No. A mortgage broker may not have any involvement in selecting a protected party. See section IV.A.(2).

Yes. A lender may direct a mortgage broker to use a web portal in this manner so long as the web portal does not allow the mortgage broker to have control of picking the AMC as noted in AIR sections I.B.(10) and IV.A.

Requesting an appraisal is providing the information necessary for the placement of an appraisal order, i.e., property type, address, and contact information to access the property. Ordering an appraisal involves the selection and engagement of the Independent Party that will manage the appraisal process and/or perform the appraisal, which is not allowed.

A Restricted Party may request an appraisal order using applicable systems as long as the Restricted Party does not have control or input over the selection of the independent party. Providing required information (e.g. property type, address, and contact information for access to the property) to facilitate the placement of an appraisal order is acceptable. Refer to Q1 (Restricted Parties) for differences in requesting an appraisal versus ordering an appraisal.

No. If the lender works with more than one AMC, the lender must select the AMC. The mortgage broker cannot select from a list of approved AMCs. See section IV.A.(2).

No. AIR does not allow a lender to accept an appraisal that was ordered by a mortgage broker, loan officer, or real estate agent as noted in AIR section IV.A.(2)

No. The lender may not use a list provided by a mortgage broker or any other restricted party. See sections I.B.9 and IV.A.(2).

No. AIR prohibits mortgage brokers from ordering appraisal services. See section IV.A.(2).

No. AIR prohibits lenders from relying on an appraisal if the mortgage broker had a role in selecting, retaining, or compensating the appraiser. See section IV.A.2.

Yes. A lender may accept an appraisal transfer from a different lender in accordance with the requirements of AIR sections VI. and VIII., all Freddie Mac Selling Guide requirements, and related documents.

No. Lender B may buy a closed loan from Lender A and sell the loan to the GSE without a new appraisal if Lender B can represent and warrant that any appraisal conducted in connection with the loan conforms to AIR sections VI. and VIII., all Freddie Mac Selling Guide requirements and related documents.

Yes. the lender or any third party specifically authorized by the lender shall be responsible for providing for payment of all compensation to the appraiser. See AIR section IV.B.

No. AIR does not prohibit a borrower from providing payment to an AMC acting as an agent of the Seller; however, the borrower may not pay the appraiser directly for an appraisal.

We define “closing” as the date the borrower executes the loan documents.

No. Communications with an appraiser regarding corrections of factual errors may be made by anyone on the staff of the lender, or on the staff of an authorized third party. See AIR section IV.A.

Anyone who is not part of loan production staff or who is not compensated on a commission basis upon successful completion of a loan or anyone who does not report, ultimately, to any officer of the lender not independent of the loan production staff or process, may have communications with an appraiser relating to or having an impact on valuation, including ordering, or managing an appraisal assignment. See AIR section IV.A.(2).(c).

No. It is the lender’s responsibility to ensure that loans it purchases with intent to deliver to the GSEs comply with AIR and all Freddie Mac Selling Guide requirements.

Yes. A seller must have in place policies and procedures to ensure-compliance with AIR. See AIR section VIII.

Section VIII of AIR requires Sellers to adopt written policies, procedures and disciplinary rules and implement adequate training programs to ensure compliance with AIR. As a best practice, lenders should include in their policies, procedures, and disciplinary rules a process for addressing AIR compliance complaints.