In a federally regulated transaction, who is ultimately responsible for the appraisal process?

In a federally regulated transaction, the lender is ultimately responsible for the appraisal process. This responsibility stems from regulatory requirements that ensure the integrity and objectivity of the appraisal. The lender's role includes selecting a qualified appraiser and ensuring that the appraisal conforms to applicable standards, including USPAP (Uniform Standards of Professional Appraisal Practice).

While the appraiser conducts the actual appraisal and provides an unbiased assessment of the property’s value, it is the lender who is accountable for ensuring that the process meets all regulatory standards and guidelines. This oversight is crucial as it helps protect both the lender and the borrower, ensuring that the valuation is fair and accurate, which in turn supports the loan decision-making process.

In contrast, the borrower and the mortgage broker play different roles in the transaction—primarily, the borrower seeks the financing and the mortgage broker facilitates the loan process, but neither holds the ultimate responsibility for the appraisal itself. The lender's obligation is reinforced by the emphasis on maintaining a reliable and unbiased appraisal process to mitigate risk and ensure compliance with federal regulations.