For LAPP lenders, VA requires
the QC audit system to review mortgage loan files to
evaluate the adequacy and quality of
the lender's staff appraisal reviews.
This QC system must be independent of the lender’s
loan production operation.
The lender must furnish VA with
findings and information
about the system on request.
Reviews of the staff appraisal reviewer's work
may be performed by an independent party or an independent
internal audit division that reports directly to the
for QC personnel. QC reviewers
should possess a basic familiarity with appraisal
theory and techniques, and the ability to prescribe
appropriate corrective actions when they identify problems
appraisal review process.
The QC plan must require desk reviews of each
staff appraisal reviewer's
appraisal reviews on a routine basis, monthly
size. The sample size
should be no less than five percent of the staff appraisal
reviewer's LAPP cases processed monthly, or a
minimum number of cases—for example, five cases.
There must be a procedure for expanding the scope of
the reviews if a pattern of
deficiencies is identified.
QC reviews should consider the
overall quality of the staff appraisal reviewer's
appraisal review, the acceptability
of the property in light of VA minimum property requirements
and the appropriateness of the reasonable value
The QC system must provide assurance that all current
pertinent VA regulations,
directives and other releases are maintained and immediately
available to quality control personnel and staff appraisal
notification. The QC system must provide
for written notification of deficiencies cited as a result
of audits or reviews at least quarterly to the
lender's senior management or chief executive
action. The QC system must require senior management
to promptly initiate and document actions to correct
deficiencies and provide staff appraisal reviewers
with corrective instructions.
of fee panel appraisals.
In addition to reviews of the staff appraisal reviewer's
random field reviews of VA fee panel
appraisals should be performed. These reviews can be
done by the staff appraisal reviewer or an independent
appraiser on a contract basis. The
plan must require formally reporting any substantive
negative findings to the VA regional office
where the appraiser is a member of the fee panel.