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Question 1

What must the MLO use to order or communicate with an appraiser?

Answer 1

Appraisal Management Company (AMC) The MLO is not allowed to have direct contact with the appraiser. The AMC works as a neutral 3rd party.

Question 2

Appraisal Adjustments

Answer 2

No two properties are valued the same. For this reason, appraisers adjust the sales price of the comparable based on how it compares to surrounding properties.

Question 3

Cost Approach

Answer 3

The appraiser determines the value of the property by adding the estimated value of the land to the current cost of constructing a reproduction or replacement, the subtracts appreciation.

Question 4

Income Approach

Answer 4

Used to appraise an investment or multi-unit property. Uses the earning potential of the property to determine the value.

Question 5

Appraisal Independence Requirements (AIR)

Answer 5

Part of Reg Z. Developed by Fannie, Freddie, FHFA, and others to protect mortgage investors, home buyers, and the housing market.

Prohibits direct and indirect contact with the appraisal company and the appraiser.

Question 6

Title

Answer 6

A collective term for all a borrower’s legal rights to own, use, and dispose of land. The title includes all previous ownership, uses, and transfers. A title company must complete a title search to transfer real estate legally.

Question 7

Title Report

Answer 7

Generated report that shows the chain of title. (The chain of title is the chain of sales and transfers and every transfer of ownership that has occurred.)

The title report also shows easements or restrictive covenants on the property. Also includes tax information such as outstanding liens on the property.

Question 8

Easement

Answer 8

A legal right to use another’s land for a specific limited purpose.

Question 9

Restrictive covenant

Answer 9

A clause in a deed or lease to real property that limits what the owner of the land or lease can do with the property.

Question 10

Encroachment

Answer 10

An intrusion on someone else’s land or property.

Question 11

Deed

Answer 11

Goes with a title. It is an instrument that conveys a grantor’s interest, if any, in real property.

Question 12

Tenancy in common

Answer 12

Form of co-ownership with two or more persons having an undivided interest in the entire line, but no right to survivorship.

Question 13

Right to survivorship

Answer 13

Means that the property passes automatically to the co-owners when one co-owner dies.

Question 14

Joint Tenancy

Answer 14

Each co-owner has equal undivided interest in the land with right of survivorship

Question 15

Tenancy by Entirety

Answer 15

A co-ownership that involves only owners who is a husband and wife. Equal undivided shares.

Question 15

Tenancy by Entirety

Answer 15

A co-ownership that involves only owners who is a husband and wife. Equal undivided shares.

Question 16

Lien

Answer 16

Security for a debt that gives the creditor, or lienholder, the right to foreclose on the property if the debt is not paid.

Liens do not prevent transfer. Can be voluntary or involuntrary

Question 17

Involuntary Lien

Answer 17

Liens placed without the consent of the property owner.
Examples include:
Mechanics liens
Tax liens
Judgment liens
Attachment liens