Scope of Appraisal Indepndence Requirements (A.I.R.) which addresses the relationship between the lender and the appraiser and makes appraiser independence a Federal Law under the The Truth In Lending Act (TILA).

Compliance Requirements
As of October 15, 2010, lenders are required to be in compliance with the A.I.R. as Freddie Mac and Fannie Mae will no longer accept mortgages that are not in compliance with the new law created by the Dodd Frank Wall Street and Consumer Protection Act.

Loan Origination Only                                                                                                                                                                                                                                                                                A.I.R. applies to the loan origination process only, not to processes involving foreclosure/REO, workouts, or any other loss mitigation processes.

Code Adoption
Lenders sellingoans to Fredie and Fannie are required to represent and warrant that, as of October 15, 2010, they have adopted measures to comply fully with the policies and procedures of A.I.R., and to represent and warrant that appraisals are obtained in a manner consistent with the A.I.R.

Selection of Appraisers
Lenders are not permitted to accept appraisals from appraisers retained by a mortgage broker or real estate agent. They may use appraisal management companies, as long as they comply with A.I.R. requirements.

Ordering Appraisals
Appraisers must be:
• in compliance with the terms of the A.I.R
• certified or licensed in the state in which the property is located
• familiar with the local market in which the property is located
• competent to appraise the subject property type
• have access to data needed to develop a credible appraisal

Who Can Order Appraisals
Appraisals cannot be ordered by members of the lender's production staff
who:
• are compensated on a commission basis
or
• report to any officer of the lender not independent of the loan production staff.

Separation of Authority
Lenders must establish separation of appraisal activities from loan production activities. Written policies and procedures must be developed to ensure independence.

Correction of Errors
The lender is allowed to contact the appraiser to provide additional information or to explain the basis for valuation. If factual errors are discovered in an appraisal report, the lender may request that they be corrected

Broker Use of Online Ordering
Lenders are allowed to direct mortgage brokers to use a Web portal set up by the lender or by the lender’s authorized agent to request an appraisal.

Communication With REALTORS
A.I.R. does not prohibit the appraiser from communicating with the realtor involved in the subject transaction.

Borrower’s Copy
The lender must provide the borrower with a copy of the appraisal report at least three days prior to the loan closing unless the borrower waives the requirement.

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