86 Review Stress? Your Quick Guide to a Flawless Appraisal Report

Staring down an 86 review? This underwriter’s guide transforms a high-stakes task into a streamlined, error-proof process for guaranteed appraisal compliance.

The Problem: Navigating the Pressure of the 86 Appraisal Review

The arrival of a Form 86, the formal Request for Additional Information, often triggers a cascade of stress and uncertainty in the mortgage underwriting process. It signals a potential roadblock, a question of value or methodology that threatens to delay or derail a loan closing. This isn’t just a simple request; it’s a formal challenge that requires a precise, well-documented, and defensible response. The core problem lies in the inherent friction between the appraiser’s independent valuation and the lender’s stringent risk mitigation requirements. An underwriter’s request for clarification can feel like a critique of professional judgment, while for the underwriter, it’s a necessary step to ensure compliance and protect against future loan buybacks. This dynamic creates a high-pressure environment where miscommunication can flourish and timelines can quickly unravel.

The Ambiguity of “Additional Information”

A significant challenge with the 86 review is the potential for vague or open-ended questions from the underwriter. A request to “reconsider the comparables” or “explain the market adjustment” can leave an appraiser guessing at the underlying concern driving the request. This ambiguity forces a reactive approach, often leading to responses that miss the mark. This lack of clarity is a primary source of inefficiency. It initiates a frustrating cycle of back-and-forth communication that consumes valuable time for all parties involved. The pressure mounts as rate locks approach expiration and borrowers demand updates, turning a procedural step into a significant bottleneck in the lending pipeline.

• Vague Requests: Lenders may ask for “better” comps without defining the specific criteria they find lacking in the original report.
• Subjective Interpretations: An underwriter’s view of a neighborhood boundary or a property’s condition may differ from the appraiser’s on-site assessment.
• Unstated Concerns: The 86 form may not fully articulate the root cause of the underwriter’s hesitation, such as a concern about rapid market appreciation or a specific lender overlay.
• Documentation Gaps: The request may stem from a perceived lack of sufficient commentary or data in the original report to support the appraiser’s conclusions.

Communication Breakdowns and Delays

When an 86 review is initiated, the direct line of communication is often severed, replaced by a formal, and sometimes slow, process through an Appraisal Management Company (AMC) or a portal. This structured communication, while necessary for compliance, can strip the conversation of essential context. Nuance is lost, and the ability to have a quick, clarifying conversation is eliminated. Each message, request, and response becomes a formal entry in the loan file, adding layers of time to the process. What could potentially be a five-minute phone call to clarify a specific data point becomes a multi-day exchange of documents. These delays are not just inconvenient; they have tangible financial and relational consequences for everyone involved in the transaction.

The Evidence: The High Cost of a Flawed Review

A poorly managed 86 review process extends far beyond simple frustration; it inflicts measurable damage on timelines, budgets, and professional relationships. The delays and errors associated with these reviews introduce significant financial and compliance risks that can undermine the profitability and integrity of a loan. The consequences are not isolated, creating a ripple effect that impacts the lender, appraiser, and ultimately, the borrower. The most immediate impact is on the closing timeline. Every day a loan is stalled in the appraisal review stage represents a potential cost. These costs accumulate quickly, turning a standard transaction into a financial liability and a customer service failure.

Financial Repercussions of Delays

The financial sting of a delayed closing is sharp and multifaceted. Rate lock extensions are a common and direct cost, often borne by the borrower or the lender, eroding goodwill and profit margins. For real estate investors or buyers with contingent sales, a delay can jeopardize the entire transaction, leading to lost deposits and potential legal disputes. Furthermore, operational costs for the lender increase as loan officers and processors must dedicate additional time to managing the stalled file. This is time that could be spent on new, revenue-generating business. The opportunity cost of a tied-up pipeline is a hidden but significant financial drain.

The Ripple Effect on Stakeholder Relationships

Beyond the numbers, a contentious 86 review process erodes the trust between key partners. Lenders may begin to view certain appraisers as difficult or unreliable, potentially reducing the volume of work they send them. Appraisers, in turn, may feel that their professional expertise is constantly being questioned, leading to defensive and less collaborative responses. This breakdown in partnership is detrimental to long-term business success. A smooth, efficient lending process relies on a foundation of mutual respect and clear communication. When the 86 review becomes a battleground, it damages the professional ecosystem and makes future transactions more difficult.

• Borrower Frustration: Delays and uncertainty lead to a poor customer experience, damaging the lender’s reputation.
• Lender-Appraiser Strain: Frequent, poorly articulated 86 requests can lead to appraisers declining future orders from a specific lender or AMC.
• Real Estate Agent Dissatisfaction: Agents whose deals are delayed may steer future clients toward lenders known for a more efficient process.
• Internal Team Stress: Loan officers and processors are caught in the middle, managing an anxious client while waiting for the review to be resolved.

The Solution: The Underwriter’s Definitive 86 Review Checklist

To transform the 86 review from a contentious obstacle into a streamlined process, a systematic and proactive approach is essential. This checklist provides a clear framework for both the appraiser responding to the request and the underwriter evaluating the submission. By focusing on precision, documentation, and clarity, you can eliminate ambiguity and accelerate resolution. The goal is not simply to answer the questions but to anticipate the underlying concerns and provide a response so thorough that it leaves no room for further inquiry. This requires moving beyond a defensive posture to one of proactive, detailed problem-solving. A well-crafted response builds confidence and strengthens the loan file against future scrutiny.

Step 1: Deconstruct the Request with Precision

Before writing a single word of the response, the first step is to perform a detailed analysis of the underwriter’s request. Do not take the questions at face value; instead, seek to understand the “why” behind each one. Is the concern related to a specific comparable, a market trend, or a unique property feature?

1. Identify the Core Issue: Read through the entire 86 request and summarize the primary concern in a single sentence. Is it about value, property condition, data sources, or a specific adjustment?
2. Categorize Each Question: Group the underwriter’s questions into logical categories (e.g., Comparable Selection, Market Conditions, Adjustments, Zoning). This helps structure your response.
3. Translate Vague Language: Convert ambiguous requests like “Please provide better comps” into specific, actionable tasks, such as “Identify comparables that are more similar in age, square footage, and condition.”
4. Check for Lender Overlays: Cross-reference the request with the lender’s specific underwriting guidelines or “overlays.” The issue may be a compliance requirement unique to that institution.

Step 2: Assemble Comprehensive and Relevant Data

Your response is only as strong as the evidence that supports it. This step involves gathering all necessary documentation to address the underwriter’s concerns directly and empirically. The objective is to provide overwhelming, objective proof for your conclusions.

• Re-evaluate Comparables: If comps are questioned, conduct a new search. Look for sales that have closed since the original report date or explore a slightly wider search radius if necessary, always providing a clear explanation for any deviation.
• Gather Market Data: Supplement your analysis with additional charts, graphs, or statistics from the MLS or other reliable third-party sources to support your market condition adjustments.
• Provide Photographic Evidence: If the issue relates to condition, upgrades, or a specific site feature, include new, clearly labeled photos in your addendum. A picture can often resolve a dispute more effectively than a paragraph of text.
• Include Supporting Documents: Attach relevant documents such as building permits, zoning information, or plat maps that directly address the underwriter’s questions.
• Cite Your Sources: Clearly state where your data comes from. Citing specific MLS numbers, document recording numbers, or data service providers adds significant credibility to your response.

Step 3: Craft a Clear and Concise Response

The final step is to present your findings in a professional, organized, and easy-to-understand format. The structure of your response should mirror the underwriter’s questions, making it simple for them to review and approve. Avoid emotional or defensive language; let the data speak for itself.

1. Use a Formal Addendum: Always present your response in a formal addendum to the original appraisal report.
2. Restate and Answer: Begin each section by restating the underwriter’s exact question. Follow it immediately with your direct, fact-based answer.
3. Narrate Your Process: Briefly explain the steps you took to arrive at your answer. For example, “In response to the request for additional comparables, a new search of the MLS was conducted using the following revised parameters…”
4. Summarize Your Conclusion: End the addendum with a clear and definitive statement confirming that, after careful review and consideration of the additional data, your original opinion of value remains valid, or if it has changed, state the new value and provide a clear reconciliation.

The Outcome: From Stress to Streamlined Compliance

Adopting a structured, evidence-based approach to the 86 review process fundamentally changes its nature and outcome. It shifts the dynamic from a stressful, adversarial exchange to a collaborative and efficient validation of data. The result is a stronger, more defensible loan file and a smoother path to closing for all stakeholders. This refined process not only resolves the immediate issue but also builds a foundation of trust and professionalism. When underwriters receive consistently thorough and well-supported responses, their confidence in the appraiser’s work grows, potentially reducing the frequency of future 86 requests. The long-term benefit is a more predictable and reliable lending pipeline.

Achieving Faster Loan Closings

The most immediate and impactful outcome of a streamlined 86 review is a significant reduction in closing delays. By providing a comprehensive and clear response the first time, you eliminate the frustrating back-and-forth that plagues so many transactions. This directly translates to faster turn times and happier clients. A well-managed review process prevents files from languishing in the underwriting queue. It ensures that the appraisal component of the loan package is finalized quickly, allowing the file to move forward to closing without unnecessary friction.

• Reduced Revision Cycles: A thorough initial response prevents follow-up questions and additional revision requests.
• Minimized Rate Lock Risk: Faster resolutions decrease the likelihood of costly rate lock extensions.
• Improved Pipeline Velocity: Loan officers can close files more quickly, increasing their capacity and commission potential.
• Enhanced Borrower Experience: Clients experience a smooth, professional process without the anxiety of unexplained delays.

Building a Defensible and Audit-Proof Loan File

A meticulously documented response to an 86 review does more than just satisfy the immediate underwriter; it fortifies the loan file against future scrutiny. In the event of a post-closing audit or a request for loan repurchase, the appraisal addendum serves as a critical piece of evidence.

This documentation demonstrates that due diligence was performed and that the valuation was carefully considered and supported by robust data. It creates a clear paper trail that protects both the appraiser and the lender from compliance-related risks.

Frequently Asked Questions about 86 review

What’s the most efficient first step when I receive a Form 86?

Begin by thoroughly analyzing the specific points raised in the request. Isolate each item and cross-reference it with the original appraisal report. This initial diagnostic step prevents miscommunication and ensures your query to the appraiser is precise and targeted, addressing only the required information.

How should I structure my communication with the appraiser to get a clear and compliant response?

Formulate your request as a series of clear, numbered questions, each corresponding to a specific point from the Form 86. Avoid subjective language or suggesting a desired outcome. Stick to objective requests for clarification, additional data, or commentary on specific report elements. This structured approach simplifies the appraiser’s task and yields a more direct, usable response.

What’s the protocol if the appraiser’s response doesn’t fully satisfy the 86 request?

If the initial response is incomplete or evasive, a single, concise follow-up is appropriate. Reiterate the specific, unanswered point from the original request. If a satisfactory answer is still not provided, escalate the issue according to your lender’s established policy, which may involve ordering a field review or consulting a senior underwriter or chief appraiser.

How can I best document the resolution of an 86 review for the loan file?

Create a comprehensive summary in the loan origination system’s notes. This entry should include the date the 86 was received, the specific points of concern, a log of all communications with the appraiser, and a clear statement of how the appraiser’s final response resolves each point. Attach all relevant documentation, including the Form 86 and the appraiser’s addendum, to create a clear audit trail.

Rachel Evans

For me, shooting is a science of consistency. While I primarily hand-load my own match ammo, I regularly test factory loads like those from LAX Ammo. My reviews involve meticulous data collection on group sizes at 300+ yards, chronograph data, and examination of brass for reloading potential.