West Virginia Mortgage Law Practice Test

A mortgage broker or lender must document in writing the reasons for using an appraiser:

1. Affiliated with the lending institution

2. Located more than 75 miles from the subject property

3. Recommended by the borrower

4. Without appropriate certification

The correct answer is: Affiliated with the lending institution

A mortgage broker or lender is required to document in writing the reasons for using an appraiser who is affiliated with the lending institution to ensure transparency and compliance with regulations. Utilizing an appraiser affiliated with the lender can present potential conflicts of interest, as the appraiser may have a vested interest in the outcome of the appraisal. By documenting the rationale for this selection, the lender demonstrates due diligence and adherence to best practices, reducing any perception of bias in the appraisal process. This helps to maintain the integrity of the lending process and fosters trust among stakeholders. In contrast, the other options do not carry the same implications of transparency and regulatory compliance. Using an appraiser located more than 75 miles from the subject property might reflect a logistical decision but does not inherently require documentation specific to the affiliation. Similarly, an appraiser recommended by the borrower may not necessitate written documentation regarding the reasons for selection, as the borrower’s recommendation can be based on their preferences rather than regulatory concerns. Lastly, hiring an appraiser without appropriate certification clearly violates legal requirements and would typically not be permissible regardless of the documentation process, meaning it doesn’t fall into the same category of needing justification.