Chapter 2: Appraisal (or Property Inspection) Documentation

The lender must disclose to the appraiser any and all information about the subject property that it is aware of, if the information could affect either the marketability of the property or the appraiser's opinion of the market value of the property.  Specifically, the lender must make sure that it provides the appraiser with all appropriate financing data and sales concessions for the subject property that will be, or have been, granted by anyone associated with the transaction.  Generally, this can be accomplished by providing the appraiser a copy of the complete, ratified sales contract for the property that is to be appraised.  If the lender is aware of additional pertinent information that is not included in the sales contract, it should inform the appraiser.  Information that must be disclosed includes:

•    settlement charges;

•    loan fees or charges;   

•    discounts to the sales price;

•    payment of condominium/PUD fees;

•    interest rate buydowns, or other below-market-rate financing;

•    credits or refunds of the borrower's expenses;    

•    absorption of monthly payments;    

•    assignment of rent payments; and  

•    nonrealty items that were included in the transaction.

The lender must also disclose to the appraiser any information about an environmental hazard in or on the subject property or in the vicinity of the property that it obtains from the borrower, the real estate broker, or any other party to the transaction so the appraiser can consider any influence the hazard may have on the value and marketability of the property.