Nationwide Mortgage Licensing System (NMLS) Practice Exam

Regarding appraisals, who bears the responsibility if issues arise?

1. The appraiser

2. The borrower

3. The lender

4. The mortgage broker

The correct answer is: The lender

In the context of appraisals, the lender bears the primary responsibility if issues arise. This is because the lender is the party that orders the appraisal as part of the mortgage underwriting process to determine the property's value before approving a loan. They need to ensure that the appraisal is accurate and meets all regulatory requirements since it directly impacts their decision on the loan amount and risks undertaken. If an appraisal is flawed or the property value is improperly assessed, the lender is typically accountable for addressing these discrepancies, which may include requesting a review or challenge of the appraisal findings. Additionally, the lender must comply with various regulations established by agencies that oversee the mortgage industry, which further emphasizes their responsibility in ensuring that appraisals are conducted properly and fairly. While the appraiser conducts the assessment and the borrower and mortgage broker may have roles in the process, the ultimate liability for any issues that may arise from the appraisal falls on the lender. This accountability is crucial for maintaining the integrity of the lending process and consumer protection.