Is Reviewing Valuations a Tool for Curtailment of Professional Opinions?: A Perspective of a Reviewer Based on Valuations for Secured Lending Purpose

Abstract

This paper delves into the pivotal role of valuation reviews in mortgage lending, dispelling misconceptions prevalent among private practice valuers. Drawing on the International Valuation Standards Framework, the study emphasizes the importance of qualified and ethical valuers in producing credible reports. Leveraging the author's extensive experience in the state sector and as a valuation reviewer for leading banks, the paper provides insights into fourfold review techniques—Administrative (Compliance) Review, Desk Review, Field Review, and Technical Review. These techniques ensure the accuracy, appropriateness, and adherence to Generally Accepted Valuation Principles, as per International Valuation Standards. In addition, the paper explores the technical background of mortgage valuations, highlighting nine key principles followed by valuers and examining Sri Lanka Valuation Standard-07. This paper also includes ten compelling case studies, covering diverse scenarios such as legal principles, wasting assets, building limits, accuracy of calculations, and valuation challenges associated with cattle farms and apartment buildings under construction. The paper reinforces the crucial role of valuation reviews in maintaining the integrity of mortgage valuations and the inclusion of ten case studies adds practical insights, covering a spectrum of scenarios and reinforcing the argument for adherence to regulatory standards and client requirements.