If your home purchase sailed through the appraisal and lending process without a hitch, you might not have known (nor cared) that the appraiser sent to appraise the home had to first be approved by the lender.

But if, at the eleventh hour, it was discovered that the appraiser hadn't been previously used by the lender and therefore wasn't yet "approved" to appraise property for that lender, the sale would come to a screeching halt---until the appraiser could complete a ream of paperwork for the lender to review and approve of (complete with sample appraisals as documentation.)

Just what documentation is required, and why do lenders deem "approval" to be so important? Although requirements will vary from lender to lender and loan-type to loan-type, most approval processes require that the appraiser submit a multi-page biography plus samplings of his/her previous appraisal work. These samples should reflect values in the same geographic area as those of the subject property (which is the real estate the lender will be hiring the appraiser to evaluate.)

For example, it's not unusual for an appraiser to be required to submit a sample appraisal of a single-family home, a condo, and a multi-family structure (like a duplex.) This gives the lender an overview of the quality of work the appraiser does, but also an idea of property values in the area where the new appraisal is being made. If the appraisal samplings are not within a certain range of time (usually the past six months) the appraiser may have to comment on why more current comparable appraisals were not available. The idea is to know the quality of work the appraiser has performed as well as the type of overall marketplace the subject property is in.

But it's not just the lender who must approve of the appraiser and his/her work. The investor purchasing the completed loan must also be satisfied that this appraiser knows his craft and the marketplace where the loan is being made. These investors include the major players of Fannie Mae, Freddie Mac and Ginnie Mae in the secondary market.

Whether or not an appraiser is approved with a certain lender is not a question a buyer needs to worry about. But as more mortgage loans are made by companies interstate as well as via the internet, approving appraisers may become a more common transaction roadblock---one that the lending industry will undoubtedly find a remedy for.