The Reconsideration of Value policy requires lenders to provide a formal pathway for borrowers to request a reassessment of the appraised value of their property.
With the goal of protecting consumers from appraisal inaccuracies and biases, the U.S. Department of Housing and Urban Development (HUD) and the government-sponsored enterprises (GSEs) have issued new guidance related to reconsideration of value (ROV) requests. Introduced in May, the Reconsideration of Value policy represents a monthslong collaboration of the FHA and the Federal Housing Finance Agency (FHFA) focused on developing an aligned approach for both FHA-insured mortgages and those purchased or guaranteed by Fannie Mae and Freddie Mac.
“Although ROV requests have been commonplace for years, the industry has lacked standardized processes for borrowers, lenders and appraisers to follow — until now,” says Natalie Bowman, vice president, valuation, ServiceLink. “With the effective date of Oct. 31, lenders need to be putting the right structure, processes and controls into place to ensure they will comply with the new ROV policies and are prepared to provide their customers with the best possible experience.”
Bowman provides more insight into lender preparation for ROV, appraiser readiness for ROV and ROV implementation below.
Q: What is the Reconsideration of Value policy?
Bowman: This new joint policy of the GSEs and HUD sets forth guidelines to help lenders address borrower-initiated ROV requests. Its objectives include ensuring borrowers are informed of both their right to appeal an appraisal and the steps they must follow to make an ROV request; creating a uniform, industry-wide expectation for how to manage ROV requests; establishing standardized elements that must be part of a lender’s ROV procedures; and maintaining appraiser independence.
Q: When does the new policy go into effect?
Bowman: Lenders are expected to apply Reconsideration of Value policy guidelines for loan applications dated on or after Oct. 31, 2024; however, lenders are encouraged to implement these policies ahead of the Oct. 31 go-live date.
Q: How does the new ROV policy affect lenders, borrowers and vendors?
Bowman: The new policy establishes defined rights and responsibilities for lenders, borrowers and appraisers, as outlined below.
Lenders are responsible for:
- Ensuring their ROV policies and procedures include steps for borrowers to appeal an appraisal when they believe the opinion of value is unsupported, is deficient due to unacceptable appraisal practices, or reflects prohibited discriminatory practices.
- Providing a disclosure to the borrower at the time of loan application and at the time of appraisal delivery (if an appraisal is required for the loan). This disclosure must outline the borrower’s right to request an ROV, the process involved, the information required, and the estimated timeline. The disclosure must specify that the borrower may submit one ROV request, containing no more than five comparable sales, per appraisal.
- Validating the ROV request and the appraiser’s response.
- Retaining all documentation and communication in the loan file.
- Training underwriters to identify and remedy appraisal deficiencies, including racial and ethnic bias.
Borrowers have the right to receive the disclosure of the ROV process at the time of loan application and upon receipt of the appraisal. When they submit an ROV, they are required to:
- Provide identification and a description of unsupported, inaccurate or deficient items.
- Provide an explanation of how the data support the ROV.
- Submit their ROV before loan closing.
Appraisers have the right to receive requests that comply with Appraiser Independence Requirements (AIR) and meet the information requirements set forth in the Reconsideration of Value policy. Once provided that information, they must:
- Provide a revised appraisal within the defined timeline.
- Submit a revised appraisal that includes a description of the points in dispute and the outcome.
Q: How will ServiceLink support lenders as they implement this policy?
Bowman: ServiceLink maintains a dedicated ROV team, which includes senior analysts and staff appraisers, to ensure centralized attention, adherence to appraiser independence, and direct client and appraiser panel engagement. This team manages ROV requests from start to finish, and collaborates closely with our chief appraiser to make sure these requests receive the highest level of attention within our quality control group.
ServiceLink can facilitate a significant portion of the ROV process for the lender through our proprietary ROV request form and enhanced quality control processes. All our ROV documents include the data points and supporting details required by the GSEs and HUD, so lenders can be confident our process fully aligns with the joint policy.
In short, when an ROV request is submitted, ServiceLink’s process ensures that the required information is obtained from the borrower, validated for accuracy and completeness, and subsequently communicated to the appraiser.
Q: How has ServiceLink prepared its team – including its appraiser panel – to support lenders with ROV implementation?
Bowman: Immediately following the May announcement of the Reconsideration of Value policy by the GSEs and HUD, a collaborative group of ServiceLink’s Quality Control Management team, chief appraiser, and Valuation Risk department developed and implemented an ROV roadmap in preparation for the new joint policy. This roadmap includes a new interactive ROV training course with a required assessment, enhancing the ROV request form for lenders to use for ROV submissions, and proactive outreach to our lender clients to educate and prepare them for the upcoming changes.
While the topic of ROV requests has garnered more industry attention recently, ServiceLink has long maintained a robust ROV process. As the industry changes, our longstanding procedures and controls enable us to continue to provide our clients with exceptional support in the appraisal management space.
