Loan Security Valuation Flashcards
1
Q
What different loan security purposes do you value for? How does your approach differ for each?
A
2
Q
Talk me through the lending credit risk management process
A
3
Q
What role does risk management have in property lending decision?
A
4
Q
What are key differences between a loan security valuation and a valuation for another purpose?
A
5
Q
How do lenders use the valuation report to determine the suitability of
the property for lending?
A
6
Q
How do you determine your competence to undertake loan security valuations?
A
7
Q
What effect does council tax (or other taxes) have on the value of a property?
A
8
Q
What factors could influence a lender’s decision to proceed?
A
9
Q
How is lending controlled?
A
10
Q
What risk analysis techniques are used?
A
11
Q
What is personal credit scoring / credit risk analysis / risk predictive
modelling?
A
12
Q
How do lenders identify risk?
A
13
Q
What is the purpose of an audit department? How do you work with yours?
A
14
Q
What is mortgage fraud? When may it occur?
A
15
Q
How do you reduce the risk of mortgage fraud?
A
16
Q
What is an SAR and when might you submit one?
A
17
Q
What is the role of debt finance in property?
A
18
Q
What types of debt are you aware of? When might they be used?
A
19
Q
What due diligence would you carry out for a loan security valuation?
A
20
Q
What financial products are relevant to your market?
A
21
Q
What negligence caselaw are you aware of relevant to your duty of care?
A
22
Q
Explain the duty of care you owe to an owner occupier and commercial
BTL investor. What caselaw relates to this?
A
23
Q
What do you understand by the Smith v Bush and Scullion v Bank of
Scotland cases?
A
24
Q
What do you understand by the Harris v Wyre Forest DC case?
A
25
Explain the industry-wide process to value tall building. What height of building does this relate to? Why has this process been introduced?
26
What is the External Wall Fire Review? How does this work?
27
What do EWS 1 forms no longer need to be used for?
28
How would you complete a EWS 1 form?
29
How would you value a building over 18m where materials are thought to
be potentially combustible?
30
What RICS guidance relates to how you would approach the valuation of
a multi-occupancy high rise building with combustible cladding? How would you decide which approach to take in this type of valuation?
31
What is a FRAEW?
32
How would you consider a FRAEW on a secured lending instruction?
33
What is a FRAEW produced under?
34
What is PAS 9980?
35
What other considerations would you make on a secured lending
valuation of a multi-occupancy high rise building?
36
What issues are you aware of in relation to mortgage lending and spray
foam insulation?
37
Explain your understanding of how a lender might consider nontraditional forms of construction.
38
Explain what RICS guidance has been published relating to secured
lending valuations of residential blocks of flats. What does this Guidance Note say about EWS1 forms and when they are required due to visible cladding? When is the guidance effective from?
39
What RICS guidance relates to residential leasehold properties and
secured lending valuation? What principles from this are you aware of?
40
What sections of the Red Book and the UK National Supplement should
this guidance be read alongside?
41
How do you comply with VPGA 2 of the Red Book Global?
42
Explain what VPGA 2 says about previous or current involvement.
43
What type of involvement might result in a conflict of interest?
44
If you were instructed by a party who is not the intended lender, e.g., a
prospective borrower or broker, how would you record this in your terms
of engagement?
45
Do you need to enquire whether the subject property has been subject to
a recent transaction or provisionally agreed price, if so – why?
46
What do the terms ‘mark to model’ and ‘mark to market’ mean?
47
When might you agree a special assumption in a secured lending valuation?
48
Explain the additional reporting and disclosure requirements set out by
VPGA 2.
49
How would you apply VPGA 2 to a property that is, or will be, owneroccupied / held as an investment / intended to be or the subject of
development or refurbishment?
50
How have you applied UK VPGA 10, 11, 12 or 13 (depending on specific
valuation and asset type)?
51
What does the UK National Supplement say about the use of the DRC method?
52
How would you formalise any communication channels with the borrower?
53
What is a panel agreement?
54
Explain your understanding of the RICS Residential Mortgage Valuation
Specification. Where would you find this?
55
How do you reconcile any differences between the 2014 and current UK
National Supplement editions when referring to the RICS Residential
Mortgage Valuation Specification?
56
If you provide advice on residential mortgages, what FCA guidance are
you regulated by?
57
What is a regulated mortgage contract defined as?
58
Under a regulated mortgage contract, what is residential property
defined as?
59
What is the role of the FCA in relation to secured lending?
60
What is the role of the valuer under UK VPGA 11?
61
What is Projected Market Value (PMV) defined as?
62
What are the specific requirements of UK VPGA 11 when adopting PMV
as a basis of value?
63
Is PMV a projection or a forecast?
64
Does PMV require the valuer to adopt a special assumption?
65
What does UK VPGA 11 say about the extent of a valuer’s inspection and
investigations? In this respect, is the valuer expected to investigate roof voids and under floor voids?
66
Should the valuer move furniture and floor coverings?
67
Should the valuer test services?
68
Should the valuer consider the EPC rating?
69
What additional requirements relate to the inspection of a flat or maisonette?
70
How should you record a lender’s instruction to provide a valuation
without internal inspection?
71
What level of investigations are required by the valuer into legal, planning
and environmental matters?
72
What assumptions does UK VPGA 11 require the valuer to make without
verification, unless limited enquiries reveal otherwise?
73
Explain some of the reporting requirements set out by UK VPGA 11.
74
How should the valuer treat incentives in a secured lending valuation?
75
How would a valuer report an insurance replacement cost if requested by
the lender? How would you adhere to the BCIS guidelines in doing so?
76
Explain the valuation basis where a property is the subject of possession
proceedings following default
77
What length of unexpired lease term does the RICS guidance refer to? Why does it not relate to unexpired lease lengths below this?
78
What factors might affect the valuation of a leasehold property according
to the RICS Guidance Note? What assumptions might be made in this type of secured lending valuation?
79
What special assumption might be agreed and why, with the lender client?
80
What methods are available to value a leasehold property and when/why
might you adopt each?
81
When would you use a leasehold relativity graph?
82
How would the absence of a new build warranty affect value and security
for lending purposes?
83
How would you deal with speculative development value in a mortgage
valuation?
84
Explain your understanding of Section 13 of Building Societies Act 1986 in
relation to inspection for a mortgage valuation
85
How would you inspect a loft for a mortgage valuation?
86
Would you inspect the drains during a mortgage valuation inspection?
87
For a leasehold property, would you need to inspect the common areas
for a mortgage valuation?
88
When might a property be declined for secured lending purposes based
on condition?
89
What other reasons may lead to a property being declined for secured
lending purposes?
90
What does 'secured lending' mean?
91
How would you report on the impact of a defective property being
repaired in a secured lending valuation?
92
How could an unrepaired property affect mortgagability?
93
How would a repaired property, but not under a certified scheme, affect
mortgagability?
94
Explain how you would value a MMC residential property for secured
lending purposes
95
Who provides warranties for MMCs and how would you report on these
to a lending client?
96
Why did the Bank of England withdraw the affordability test?
## Footnote
Level 1
97
Talk me through a loan security valuation you have carried out
## Footnote
Level 2
98
How have you incorporated lender’s specific requirements into a
valuation?
99
What research have you undertaken into factors affecting risk?
100
What factors have you come across that affect the ability to obtain
finance?
101
How have you dealt with the situation where a lender’s requirements
differ to those of the Red Book?
102
Talk me through Terms of Engagement you have agreed. How have you complied with valuation standards within these?
103
What research have you carried out into factors affecting valuation
certainty?
104
What local / wider market factors have affected a valuation you have
carried out?
105
Tell me about when you have valued a property subject to a special
assumption.
106
Tell me about how you would report to lenders / NCA about potential
fraud or suspicious activity
107
Did you review the leases at Swan Court and what, if anything was the
impact?
108
Was condition a factor at Swan Court and how did you assess it?
What other factors came into your SWOT analysis at East Street, Chichester?
109
Did you consider the wider retail market in your valuation of East Street, Chichester and what comments did you make?
110
What local factors did you consider in your valuation of East Street, Chichester?
## Footnote
Level 2
111
Tell me about when you have provided complex reasoned quantitative
valuation advice to clients in the form of compliant valuation reports
## Footnote
Level 3
112
Tell me about when you have used a SWOT analysis, commented on loan
terms, commented on future performance of the investment or
commented on the influences of the wider market
113
Describe the complex reasoning behind your recommendations to client
in order to mitigate risk
114
Tell me about a specific valuation report you have provided in accordance
with valuation standards.
115
How have you incorporated a valuation comparable matrix, sensitivity
analysis or other evidence of valuation methodology and approach into a
valuation report?
116
Talk me through a specific valuation report you have provided in
accordance with valuation standards, incorporating appropriate narrative
on the strengths and weaknesses of the investment, marketability if the
lender was to re-possess and the risks involved in lending in the property
in relation to the loan terms.
117
How have you identified and explained the risk profile of property and
how it affects clients’ needs in terms of advice, i.e. why do they need
advice?
118
Explain your valuation advice on a property’s suitability for secured
lending.
119
Explain your reasoned advice where properties are not considered
suitable for secured lending due to Red Book or lenders’ requirements.
120
What was the nature of the cracks at Victoria Road and why did they
concern you?
121
Did you obtain an EPC assessment at Victoria road and what did it say?
122
What were the issues with the rear boundary and how did you go about
obtaining the legal advice?
123
How different were the borrowers and BCIS costs at Hollands Lane?
124
What finance assessment did you make in your residual for Hollands Lane?
125
How close were your valuations of Hollands Lane and which would you have relied on should they have been very different?
