We’re excited to share some important updates regarding the Reconsideration of Value (ROV) process. As you may know, Fannie Mae, Freddie Mac (the GSEs), and HUD have recently announced a standardized approach for handling ROVs initiated by borrowers during the appraisal process. These changes are set to take effect for all loans with applications dated on or after October 31, 2024, and for FHA case numbers assigned on or after the same date.
Federal banking regulators and the GSEs have stressed the importance of financial institutions managing their relationships with service providers, including appraisers, to ensure compliance with consumer protection laws. These laws are designed to protect the interests of consumers and prevent potential harm.
As appraisers, your role is critical in upholding these standards. Ensuring accurate valuations and timely responses to ROVs not only supports compliance but also enhances trust and transparency in the appraisal process.
What is a borrower-initiated ROV?
A Reconsideration of Value (ROV) is a request for an appraiser to review and potentially revise the appraisal based on new or additional information provided by the borrower. It is typically requested when the borrower believes the appraisal is unsupported, deficient, or discriminatory. As appraisers, it is important to familiarize yourself with several critical aspects:
- Disclosure to Borrower: Lenders must provide a disclosure outlining the ROV process to borrowers at two key points:
- At the time of loan application.
- When the appraisal report is provided to the borrower.
- Resolution Timeline: An ROV must be resolved before the loan closes. Once the loan is closed, borrowers can no longer submit ROV requests.
- Addressing Deficiencies: If the appraisal report has material deficiencies that impact value and marketability or indicate a potential violation of anti-discrimination laws, these must be corrected in response to an ROV request. The lender must report the appraisal and findings to the appropriate licensing or regulatory body if not addressed.
- Unacceptable Practices: Unacceptable appraisal practices, as defined by GSE requirements, include reporting a market value that is not supported by data and is misleading. Any suspected violations of anti-discrimination laws must be reported to the proper local, state, and federal agencies.
How will Clear Capital support you?
- Every borrower initiated ROV request will be reviewed by our Quality Assurance team before it is sent to you to help ensure the ROV request meets all applicable requirements, is free from undue influence, and meets Appraiser Independence Requirements (AIR).
- A maximum of 1 borrower-initiated ROV request will be sent, containing no more than 5 additional sales for your review.
- We will distinctly identify any/all ROV requests you may receive by language in the body of the ROV request.
- We’ve proactively notified all of our customers, and provided an optional ROV request form that supports the requirements of the request to assist with a smooth implementation.
New ROV requirements
To help facilitate the new industry requirements, please review the new guidelines below:
- Appraiser Responses: All ROV requests must be thoroughly addressed. This involves reviewing the provided information and, when necessary, issuing a revised appraisal report.
- Turn Time: As these requests are time sensitive, we are asking for your cooperation in providing a response to any ROV within 1 business day of receiving the request. Timely completion is crucial to maintain the efficiency of the loan process and ensure a fair review of the borrower’s concerns.
- Communication: If you are unable to meet these requirements, please notify us immediately. Open communication is essential to ensure that any issues can be managed proactively.
- Compliance and Reporting: As per the new requirements, any unresolved material deficiencies may result in reporting to the appropriate licensing or regulatory body.
We appreciate your dedication to providing high-quality appraisals and your adaptability to these evolving industry standards. By working together, we can ensure a smooth transition to the new ROV process and continue to provide the exceptional service that borrowers and lenders expect.
For more information, please review the following industry updates:
