Page 404
Topic 4. Withdrawal of LAPP Authority
LAPP is a Privilege
The authority to determine value under LAPP is a privilege delegated to lenders at VA’s discretion. Lenders maintain this privilege by complying with all applicable LAPP-related VA requirements.
Withdrawal or Amendment for Proper Cause
VA can amend or withdraw the special privilege of LAPP authority from a lender for proper cause. This applies to both supervised and nonsupervised lenders with automatic authority that have been granted LAPP authority.
Withdrawal Time Period
LAPP authority can be withdrawn for a specific or indefinite period of time.
Examples of Withdrawal for Proper Cause
The following is a non-inclusive list of examples of proper cause that can form a basis for withdrawal of LAPP authority.
Technical incompetence
Conduct demonstrating insufficient knowledge of industry-accepted appraisal principles, techniques and practices and/or the inability to adequately apply them in reviewing appraisal reports and making value determinations for VA purposes.
Page 405
Substantive or repetitive errors
A substantive error is one which significantly involves the value determination or condition of the property. In the aggregate, nonsubstantive errors which are frequently repeated may also indicate that LAPP case reviews are being performed in a careless or negligent manner.
Disregard for VA requirements
Continued disregard for the VA requirements and procedures outlined in VA regulations, guidelines, instructions or applicable laws, after the problem has been brought to the lender's attention.
Failure to meet qualification requirements
The lender or the lender’s staff appraisal reviewer (SAR) no longer meets the basic LAPP qualification requirements (see Chapter 15).
Civil judgments and convictions
Notice of Sanction
Generally, VA will provide written notice at least 30 days prior to imposition of the sanction to
the lender’s staff appraisal reviewer (SAR)
the lending officer responsible for the quality of the SAR’s work, and
any other appropriate official(s).
Note: VA’s notice provides the basis for the sanction and information on how to exercise appeal rights.
Government at Immediate Risk
VA is not required to give 30 days’ notice if the Government’s interests are exposed to immediate risk from the lender’s activities. The withdrawal is effective immediately in such cases.
Determining Reasonable Value and Issuing CRVs
Once LAPP authority is withdrawn, VA must
make all determinations of reasonable value for the lender, and
issue the Certificates of Reasonable Value (CRVs).
Note: For any withdrawal longer than 90 days, the lender must reapply to VA to participate in LAPP.
Imposition of Probationary Period
As an alternative, VA may impose a probationary period for a specified period to further evaluate LAPP-related performance. During that period, the VA office, at its discretion, may require
VA review of appraisal reports and lender notices of value
VA staff issuance of the lender’s VA value notices
increased VA quality control review of the lender's LAPP cases, or
other measures designed to monitor and improve performance.
Page 406
Other Sanctions
Withdrawal or amendment of a lender’s LAPP authority does not preclude VA from
also withdrawing automatic processing authority, or
taking debarment or suspension action against the lender for the same cause.
Relationship With Other Program Participants
Lenders with their LAPP authority withdrawn do not appear in GSA’s List of Parties Excluded From Federal Procurement and Nonprocurement Programs.
Other program participants may still transact VA business with these lenders.
Exception: Lenders may appear on the GSA list if another sanction is imposed against them. In such cases, other program participants may be prohibited from transacting business with them.
Responsbilities of Lender
As long as LAPP authority is withdrawn, it is the lender’s responsibility to ensure that VA, and not the lender
makes all determinations of reasonable value, and
issues CRVs on its loans.