Borrower-Initiated Reconsiderations of Value (ROV) Policies

Fannie Mae, Freddie Mac, and HUD recently released Borrower-Initiated Reconsiderations of Value policy changes to their Guides and Handbook, which impact lenders, appraisers, AMCs, and… consumers! While the three policies have nuanced differences, they align with each other very well, which is not surprising considering the three parties coordinated the requirements.

Walitt Solutions’ Stacy Caprioli and A&B Real Estate Group’s Ayako Marsh recently sat down with Josh Walitt, Principal Consultant with Walitt Solutions to discuss the upcoming changes to the Fannie Mae, Freddie Mac, and HUD appraisal policies.

View the recorded webinar from July 9, 2024:

Effective Dates of Policies

The Fannie Mae and Freddie Mac policies are effective August 29, 2024, while the HUD policy is effective September 2, 2024.

Updated August 7, 2024:  On August 6, 2024, Fannie Mae issued a Selling Guide Announcement (SEL-2024-03) that extended the implementation deadline to October 31, 2024. Freddie Mac and HUD announced the same implementation date extension through their Guide Bulletin 2024-F and Mortgagee Letter 2024-16, respectively. What does this mean? Loans with application dates on or after October 31, 2024 (or case numbers assigned on or after October 31, 2024 for HUD) are subject to the new borrower-initiated ROV requirements.

Policies’ Key Points

  • Lender must provide ROV instructions to borrower upon loan application and upon delivery of the appraisal report to the borrower from the lender.
  • Lender must review the appraisal prior to sending the ROV.
  • Lender ensure proper and adequate information is collected from the borrower and conveyed to the appraiser after review, such as
    • appraisal identifying information,
    • the borrower’s specific concerns and issues,
    • detailed data (e.g., alternative sales),
    • the data sources (e.g., MLS), and
    • rationale for the request for reconsideration.
  • No more than five alternative sales are allowed, and the sales must have closed before the effective date.
  • Lenders must instruct appraisers to deliver a revised appraisal report.
  • One borrower-initiated ROV is permitted per appraisal. (“Appraisal” refers to the appraiser’s assignment, not each report issued.)
  • ROV processes cannot violate appraisal independence requirements.
  • Policies reference subject matter experts and appraisal management companies related to reviewing (i.e., vetting) the ROV scenario.
  • Policies reiterate mandatory reporting requirements related to material deficiencies, unacceptable appraisal practices, and antidiscrimination regulations.

Reach out for a consultation today, to learn more about ROV requirements, Handbook and Guide policy analysis, forms, procedures, and other support.

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