Loan security valuation Flashcards
What different loan security purposes do you value for?
- Resi mortgages
- BTL mortgages
- Commercial loans
- Short term finance
- Secured loans
How does your approach differ for different loan types?
Different loan types often have different requirements. For example, short term finance often is used for refurb works which requires comments on proposed works.
Talk me through the lending credit risk management process.
- Identify borrowers and loan types.
- Establish a credit policy and lending criteria.
- Review loan applications and underwrite borrowers.
- Assess credit risk using credit scores and data.
- Approve loans based on creditworthiness.
- Set loan terms, interest rates, and fees.
- Formalize agreements and disburse funds.
- Continuously monitor borrower performance.
- Mitigate risks and take remedial actions.
What role does risk management have in property lending decision?
Risk management dictactes lenders policy and how and what they grant loans on
What are key differences between a loan security valuation and a valuation for another purpose?
How do lenders use the valuation report to determine the suitability of the property for lending?
How do you determine your competence to undertake loan security valuations?
What effect does council tax (or other taxes) have on the value of a property?
What factors could influence a lender’s decision to proceed?
How is lending controlled?
What risk analysis techniques are used?
What is personal credit scoring / credit risk analysis / risk predictive modelling?
How do lenders identify risk?
What is the purpose of an audit department?
How do you work with yours?
What is mortgage fraud?
Intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.
When may it occur?
How do you reduce the risk of mortgage fraud?
What is an SAR and when might you submit one?
What is the role of debt finance in property?
What types of debt are you aware of?
When might they be used?
What due diligence would you carry out for a loan security valuation?
What financial products are relevant to your market?
What negligence caselaw are you aware of relevant to your duty of care?
Explain the duty of care you owe to an owner occupier and commercial BTL investor.
What caselaw relates to this?
What do you understand by the Smith v Bush and Scullion v Bank of Scotland cases?
hat do you understand by the Harris v Wyre Forest DC case?
Explain the industry-wide process to value tall buildings.
What height of building does this relate to?
Why has this process been introduced?
What is the External Wall Fire Review?
How does this work?
hat do EWS 1 forms no longer need to be used for?
How would you complete a EWS 1 form?
How would you value a building over 18m where materials are thought to be potentially combustible?
hat 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?
What is a FRAEW?
How would you consider a FRAEW on a secured lending instruction?
What is a FRAEW produced under?
What is PAS 9980?
What other considerations would you make on a secured lending valuation of a multi-occupancy high rise building?
What issues are you aware of in relation to mortgage lending and spray foam insulation?
Explain your understanding of how a lender might consider non- traditional forms of construction.
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?
What RICS guidance relates to residential leasehold properties and secured lending valuation?
What principles from this are you aware of?
What sections of the Red Book and the UK National Supplement should this guidance be read alongside?
How do you comply with VPGA 2 of the Red Book Global?
Explain what VPGA 2 says about previous or current involvement.
What type of involvement might result in a conflict of interest?
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?
Do you need to enquire whether the subject property has been subject to a recent transaction or provisionally agreed price, if so – why?
What do the terms ‘mark to model’ and ‘mark to market’ mean?
When might you agree a special assumption in a secured lending valuation?
Explain the additional reporting and disclosure requirements set out by VPGA 2.
How would you apply VPGA 2 to a property that is, or will be, owner- occupied / held as an investment / intended to be or the subject of development or refurbishment?
How have you applied UK VPGA 10, 11, 12 or 13 (depending on specific valuation and asset type)?
What does the UK National Supplement say about the use of the DRC method?
How would you formalise any communication channels with the borrower?
What is a panel agreement?
Explain your understanding of the RICS Residential Mortgage Valuation Specification.
Where would you find this?
How do you reconcile any differences between the 2014 and current UK National Supplement editions when referring to the RICS Residential Mortgage Valuation Specification?
If you provide advice on residential mortgages, what FCA guidance are you regulated by?
What is a regulated mortgage contract defined as?
Under a regulated mortgage contract, what is residential property defined as?
What is the role of the FCA in relation to secured lending?
What is the role of the valuer under UK VPGA 11?
What is Projected Market Value (PMV) defined as?
What are the specific requirements of UK VPGA 11 when adopting PMV as a basis of value?
Is PMV a projection or a forecast?
Does PMV require the valuer to adopt a special assumption?
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?
Should the valuer move furniture and floor coverings?
Should the valuer test services?
Should the valuer consider the EPC rating?
What additional requirements relate to the inspection of a flat or maisonette?
How should you record a lender’s instruction to provide a valuation without internal inspection?
What level of investigations are required by the valuer into legal, planning and environmental matters?
What assumptions does UK VPGA 11 require the valuer to make without verification, unless limited enquiries reveal otherwise?