FHA and GSEs Issue New Reconsideration of Value Requirements for Appraisals

FHA, Fannie Mae, and Freddie Mac each recently released new requirements related to reconsideration of value requests (ROVs) for appraisals.  The requirements were collaboratively developed as part of a working group within the Interagency Task Force of Property Appraisal and Valuation Equity that was designed to develop consistent ROV standards.

Among the new requirements for lenders are the following:

• Lenders must include in their policies and procedures an ROV process, including steps for borrowers to appeal an appraisal, which must be disclosed to borrowers at the time of application and again when the appraisal report is delivered;

• Underwriters must be trained to identify material deficiencies during the appraisal review process, which must include heightened protocols for remediating any deficiencies identified; and

• Underwriters must adhere to a standardized format when communicating ROV requests to appraisers.

Other notable updates include standards for appraisers when responding to underwriters’ ROV requests and the incorporation of language directly addressing potential discrimination and violations of fair housing laws in the appraisal process.

FHA’s requirements become effective on September 2, 2024, while Fannie Mae’s and Freddie Mac’s become effective on August 29, 2024.