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Question: Are there new requirements mortgage lenders must incorporate into their Reconsideration of Value (ROV) process?

Answer:

Yes. In May 2024, Freddie Mac, Fannie Mae and HUD issued ROV process requirements in an effort to promote consistency and combat appraisal bias.

The updates highlight the importance of a borrower having the knowledge and opportunity to request a ROV and understand the process. Among other requirements, below is a summary of some of the ROV process requirements:

• Disclosure: lenders must provide an easy-to-understand disclosure to mortgage applicants at the time of loan application and upon delivery of the appraisal report with instructions that explain the ROV process, timeframes, etc.;
• Process: lenders must establish a standardized process for communicating with the loan applicant, as well as the appraiser. The ROV process and all communication must confirm with appraiser independent requirements;
• Turn times: lenders must set the turn-time expectations both with the loan applicant and the appraiser and resolution of the ROV must be completed prior to loan closing;
• Training: lenders must ensure valuation and related staff, inclusive of third parties, are trained to identify prohibited discriminatory practices and appraisal deficiencies through the valuation review and ROV processes; and
• Cost: no costs associated with a ROV may be charged to the loan applicant.

Fannie Mae and Freddie Mac updates are effective for loans with applications dated on or after August 29, 2024.

HUD requirements must be implemented for FHA case numbers assigned on or after September 2, 2024.