CFPB Issues Blog Post on ROV Process for Mortgage Appraisals

A recent CFPB blog post provides that mortgage lenders should have a nondiscriminatory reconsideration of value (ROV) process for when borrowers have concerns regarding the accuracy of an appraisal.  While an individual lender’s ROV process may vary, the CFPB explains that responsible lenders provide all borrowers with clear, actionable information about how to raise concerns about the accuracy of an appraisal.

The blog post provides that accurate appraisals are integral to homeownership because overvaluation can decrease the affordability of a home, for example, by making it harder to sell or refinance.  Similarly, undervaluation can prevent a homeowner from accessing accumulated equity, either through a sale or a home equity loan.  The CFPB states that every lender’s ROV process must explain the benefits of a reconsideration to determine if a reconsideration is appropriate and must ensure that all borrowers have the opportunity to explain why they believe that a valuation is inaccurate.  Moreover, lenders help ensure that their ROV process is nondiscriminatory when they provide borrowers with clear, plain-language notices of ROV opportunities.  According to the CFPB, lenders lacking clear and consistent ROV processes risk violating federal law.

Lastly, the blog post states that the CFPB and other federal regulators are taking action to ensure fair and accurate appraisals.  Aside from the CFPB’s actions to limit bias in algorithmic appraisals, it and other regulators are members of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE).  More information on PAVE is available here.  Although this blog post does not have the same legal effect as a rule that went through notice and comment rulemaking, it indicates an area of focus for the CFPB in the future.