416.08

Capitalization Rate Derivation

For any required Capitalization Rate DerivationCapitalization Rate DerivationIndependent determination of the appropriate capitalization rate for a specific Property. , the ServicerServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:

  • comply with Part II, Chapter 2: Valuation and Income, Section 202.02A: Appraiser Selection; and
  • ensure the Capitalization Rate DerivationCapitalization Rate DerivationIndependent determination of the appropriate capitalization rate for a specific Property. :
    • includes:
      • a capitalization rate derivation; 
      • market analysis; 
      • sales comparables; and
      • an analysis of property-specific characteristics;
    • describes capitalization rate pressures;
    • evaluates factors applying upward or downward pressure on capitalization rates, including:
      • market volatility; 
      • investor demand;
      • property supply; and
      • rental growth projections;
    • is signed by the AppraiserAppraiserPerson engaged to estimate a Property’s market value per USPAP. ;
    • includes the Appraiser'sAppraiser'sPerson engaged to estimate a Property’s market value per USPAP. qualifications; and
    • is certified by the AppraiserAppraiserPerson engaged to estimate a Property’s market value per USPAP. to conform with current USPAPUSPAPUniform Standards of Professional Appraisal Practice requirements.