Glossary of Terms
Appraisal Independence Requirements (AIR) are federal requirements and related investor policies designed to prevent parties with a financial interest in a mortgage transaction from improperly influencing a property's valuation. The federal requirements were established following the 2008 financial crisis through the Dodd-Frank Act and implemented in part through Regulation Z, with additional requirements found in investor guidelines.
In practice, AIR separates valuation functions from loan production. Parties involved in originating or closing a loan generally cannot pressure an appraiser to reach a particular value or improperly influence the selection of the appraiser. Lenders may use an appraisal management company or another qualified third party to manage the selection process.
For borrowers, these protections help ensure the appraisal reflects the appraiser's independent judgment. If a borrower believes relevant information was overlooked, a documented reconsideration of value can provide a process for submitting additional supporting data.