Are You Ready for a USPAP Compliance Audit?

What AMCs, lenders, and compliance teams need to know about review requirements—and what to do if you're not prepared for a USPAP Compliance Audit.

Picture this, you're the Chief Appraiser at an AMC, or maybe you lead the compliance team at a lending institution. You care deeply about quality, integrity, and doing things the right way. You lead a small team of strong appraisers, you have a busy review schedule, and plenty of fires to put out on any given day. You know USPAP reviews are important, but they’ve never been a top priority since no one’s asked to see them, and budgets are tight.

THEN IT HAPPENS.

You get the letter. The state is auditing your appraisal compliance program—and that includes how you manage USPAP compliance. Suddenly, the pressure you already live with every day doubles overnight.

Your team scrambles. Questions arise: Do we have documentation? Have we been consistent? What does our policy say? Has anyone ever looked into it?

There’s confusion. Panic. Because there are too many moving parts, and too few hands to track every one of them.

We’ve seen this happen. Many times. And the truth is: it doesn’t have to go this way.

In this blog we’ll walk through what a USPAP compliance audit looks like, what states expect, and what to do if you haven’t been performing regular reviews. If you’re under pressure, behind on documentation, or not sure what your state requires, you’re in the right place.

What Is a USPAP Compliance Review and Who Actually Needs It?

A USPAP compliance review is a detailed evaluation of an appraisal report to determine whether it meets the Uniform Standards of Professional Appraisal Practice. These reviews are typically conducted by a certified appraiser and are often required by state regulators for AMCs. However, AMCs, banks, credit unions, and attorneys also use these reviews proactively—not just for USPAP compliance but as part of their quality control process to identify risk and strengthen report credibility.

Who Requires USPAP Reviews?

While all appraisal reports are expected to meet USPAP, only some states legally require AMCs to perform regular reviews. Banks and credit unions may be required to conduct them depending on their size, audit history, and whether they plan to sell loans into the secondary market.

Still, even when not mandatory, they’re a best practice and a major risk reducer. Especially if an audit letter arrives.

What Happens When You Get Audited?

During the COVID freeze, many assumed audits were on pause indefinitely. Then New Mexico launched a surprise wave of AMC audits, triggering widespread panic among companies that had let their USPAP reviews lapse. Now that a lot of this has calmed down, many who were not affected are still wondering: what DOES happen if you get audited?

When you're selected for a state audit, you’ll receive an official letter usually with about four weeks to respond. Knowing your odds on passing often starts with the following questions:

• Do we have completed reviews on file?

• Have we met the state’s expectations?

• Can we show proof of policies and procedures?

• What if we haven’t done any?

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Trying to "catch up" under audit pressure rarely ends well. States can immediately tell when reviews were done last-minute, but it would be far worse to not have them at all. And yes, it can lead to fines or even license suspension.

What the State Will Ask For and What You Should Already Have

To pass a USPAP audit in most states, you’ll need to show:

• Documentation of completed reviews (organized, dated, and clearly tied to USPAP)

• A documented policy and procedure for how you handle USPAP reviews

• Evidence that you follow those procedures consistently

• Logs or tracking tools showing which appraisers are reviewed and when

TIP: Need a head start?

Download our USPAP Compliance Checklist to see what you should have on file.

What If You Haven’t Been Doing USPAP Reviews?

If you’re in this boat, you’re not alone. Here’s what you can do:

1. Don’t fake it. Auditors can spot reviews created under pressure. It’s better to be honest and start fixing the issue.

2. Work with a partner (like Appraisal Aid) who can:

   • Identify state-specific review requirements

   • Pull appraisal reports by date or appraiser

   • Review reports for compliance and credibility

   • Deliver summary spreadsheets for audit submission

We look for adherence to USPAP standards, adequate commentary, and red flags that could potentially affect value and/or credibility. Our dashboards make it easy to track what’s been reviewed and what hasn’t, which can be a life saver during audits.

3. Draft a plan to prevent future problems. States will often look more favorably on companies who show clear, corrective action steps.

Appraisal Aid is your Trusted Review Support

If this process feels confusing or overwhelming, you’re not alone. That’s why many of our clients come to us not just for reviews, but for help setting up:

• A systemized plan to perform reviews following state requirements.

• Tools to document how you report and manage results.

• Flexible, volume-based pricing with two USPAP review options:

• Core Review – Focused on basic USPAP compliance when price is the priority.

• Comprehensive Review – Includes compliance, quality insights, and risk mitigation to support stronger QC and audit readiness.

  
  

This is your chance to create a scalable, audit-ready review process and not just a quick fix.

Don't Wait. Be Audit-Ready and Build a Strong USPAP Review Process Now

USPAP compliance audits aren’t going away and they often arrive when you least expect them. But the stress, panic, and last-minute scrambling that so many teams experience? That can be avoided.

Success in today’s regulatory environment means being proactive, not reactive. It means having a documented, repeatable review process. It means knowing your reviewers are qualified, your files are audit-ready, and your procedures are defensible under scrutiny. It means moving forward with confidence, knowing you are following state requirements.

Failure, on the other hand, can look like this:

• Scrambling to create documentation after receiving an audit letter

• Assigning reviews to the wrong appraiser or not meeting state expectations

• Getting flagged for inconsistency, poor tracking, or lack of policy

• Facing fines, reputational damage, or even temporary license loss

If you’ve made it this far in the blog, chances are you care deeply about getting this right. And you don’t have to do it alone. Whether you need to catch up on overdue reviews, set up a consistent process, or simply get clarity on your state’s specific requirements, Appraisal Aid is here to help. We work with AMCs, lenders, and compliance teams across the country to create structured, audit-ready solutions that are scalable, documented, and easy to manage.

• Understand your state’s USPAP requirements

• Catch up on missing or inconsistent reviews

• Document your internal processes with clarity

• Build a system your team can trust—and regulators can respect

The next step is yours.

If you’re ready to leave the stress behind and take control of your review process, we’re here to support you. If you’re still unsure, start small. Use our free checklist to assess where you stand and where you might need help.

Download the Pre-Audit Checklist

Schedule a quick call and get audit-ready without the panic

You don’t have to wait for the audit letter to act. Appraisal Aid is your trusted partner for compliance clarity, review accuracy, and peace of mind.