CR Equity Ai Appraisal & Title (Escrow) Policy

1. Purpose of Policy

This policy establishes the mandatory standards for appraisal procurement, valuation independence, and title/escrow requirements for all loans underwritten, originated, or processed through CR Equity Ai. The purpose is to ensure:

• Regulatory compliance
• Independence of valuation
• Protection against fraud, coercion, and valuation manipulation
• Consistency and defensibility of underwriting
• Audit‑ready documentation for lenders, investors, and regulators

2. Scope

This policy applies to:

• All borrowers
• All brokers, affiliates, and intermediaries
• All CR Equity Ai underwriting personnel
• All valuation vendors, AMCs, and MAI‑certified appraisers
• All title and escrow partners

This policy governs every loan product, including commercial real estate, private credit, business capital, and in‑ground asset finance.

3. Mandatory Appraisal Requirements

3.1 MAI‑Certified Appraisal Required

All valuations must be performed by an MAI‑certified appraiser retained through a CR Equity Ai–approved Appraisal Management Company (AMC).

CR Equity Ai does not accept:

• Borrower‑ordered appraisals
• Broker‑ordered appraisals
• Appraisals procured by any party with a financial interest in the transaction
• Appraisals older than 120 days
• Restricted‑use or desktop appraisals unless explicitly authorized

This requirement ensures independence, compliance, and defensibility.

4. Legal Basis for Appraisal Independence

CR Equity Ai’s policy is grounded in the following federal laws and regulatory frameworks:

4.1 FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989)

FIRREA mandates that appraisals for federally related transactions must be:

• Performed by state‑licensed or certified appraisers
• Independent of loan production staff
• Ordered through a compliant process ensuring no undue influence

4.2 USPAP (Uniform Standards of Professional Appraisal Practice)

USPAP requires:

• Independence
• Objectivity
• No conflict of interest
• No predetermined value
• Full disclosure of any prior involvement with the property

Accepting borrower‑procured appraisals violates USPAP’s independence and ethics rules.

4.3 Dodd‑Frank Act – Appraiser Independence Requirements (AIR)

Dodd‑Frank prohibits:

• Borrowers or interested parties from selecting, retaining, or influencing appraisers
• Any person with a financial stake from participating in the valuation process
• Lenders from relying on appraisals obtained by interested parties

CR Equity Ai’s policy directly aligns with AIR to prevent coercion, manipulation, or value inflation.

4.4 Interagency Appraisal & Evaluation Guidelines

These guidelines require:

• Lender‑controlled appraisal ordering
• Separation between valuation and loan production
• Independent review and audit trails

5. Rationale for Rejecting Third‑Party or Borrower‑Ordered Appraisals

5.1 Conflict of Interest

Borrower‑ordered appraisals inherently create:

• Financial bias
• Selection bias
• Pressure or influence
• Lack of independence

These conditions violate FIRREA, USPAP, and Dodd‑Frank.

5.2 Valuation Manipulation Risks

Borrower‑procured appraisals have historically resulted in:

• Inflated values
• Misrepresentation of property condition
• Selective omission of negative comparables
• Non‑compliant scope of work
• Lack of market‑supported adjustments

Such appraisals cannot be used in any institutional underwriting environment.

5.3 Chain‑of‑Custody Issues

CR Equity Ai requires:

• Full audit trail
• AMC‑controlled assignment
• Randomized appraiser selection
• Documentation of independence

Borrower‑ordered appraisals lack these controls.

6. Approved Appraisal Ordering Process

1. Borrower pays appraisal fee as outlined in the CR Equity Ai Pricing Policy.
2. CR Equity Ai orders the appraisal through an approved AMC.
3. AMC assigns an MAI‑certified appraiser via randomized rotation.
4. Appraiser performs site visit, analysis, and valuation.
5. Completed appraisal is delivered directly to CR Equity Ai.
6. CR Equity Ai performs internal valuation review and compliance checks.

Borrowers may receive a copy only after the appraisal is completed and paid for.

7. Title & Escrow Requirements

7.1 Approved Title/Escrow Providers

All title and escrow services must be conducted through:

• CR Equity Ai–approved title companies
• Licensed escrow agents
• Attorneys authorized in the relevant jurisdiction

7.2 Title Policy Requirements

Title commitments must include:

• Lender’s title insurance
• CR Equity Ai listed as First Lien Holder
• Mortgagee/Loss Payee clause
• Full legal description
• Verification of ownership
• Search for liens, encumbrances, judgments, and easements

7.3 Escrow Requirements

Escrow must:

• Be independent of borrower influence
• Maintain full chain‑of‑custody of funds
• Provide itemized settlement statements
• Comply with state and federal escrow regulations

8. Fees and Costs

All appraisal, title, and escrow fees are governed by the CR Equity Ai Pricing Policy, which is incorporated by reference into this document.

9. Enforcement

Any attempt to:

• Submit a borrower‑ordered appraisal
• Influence valuation
• Circumvent AMC ordering
• Provide altered or fraudulent valuation documents

will result in:

• Immediate rejection of the appraisal
• Possible denial of the loan
• Mandatory fraud review
• Reporting to regulators if required

10. Effective Date

This policy is effective 10/31/2025 and remains in force until amended or superseded by CR Equity Ai.