Property Valuation
In Michigan, 'appraisal independence' requirements under Dodd-Frank and HVCC require that:
AAppraisers work directly with loan officers to ensure accurate values
BLenders maintain a separation between production staff and the appraisal process to prevent pressure on appraisers✓ Correct
CAppraisers must be from out of state for objectivity
DAll appraisals must be reviewed by a second appraiser
Explanation
Appraisal independence requirements (Dodd-Frank, HVCC) prohibit lenders' production staff (loan officers, etc.) from directly selecting, hiring, or pressuring appraisers.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
State-Specific Concepts
Continuing Education
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