A group of five government agencies has collaborated to solicit public feedback on proposed guidelines concerning reassessments of property values in the residential real estate sector.
ROVs, short for “reconsiderations of value,” refer to the requests made by financial institutions to appraisers to reevaluate their assessment of residential properties. These requests are typically initiated when a consumer raises concerns about the appraisal or presents new information that could impact the estimated value of the property. Recently, there has been a growing focus on ROVs and their associated processes, with the Biden administration suggesting that government agencies have been actively exploring methods to streamline and enhance their accessibility.
The suggested guidelines outline the ways in which financial institutions can establish or improve their ROV procedures, ensuring the independence of appraisers while remaining attentive to the needs of potential borrowers and homebuyers. Additionally, the guidelines address the risks associated with inadequate residential real estate valuations, including omissions, errors, discriminatory practices, and insufficient information.
It is worth noting that the proposed guidance, presented by the Consumer Financial Protection Bureau (CFPB), the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA), does not include explicit regulatory mandates. Instead, it offers a comprehensive framework of mutually agreed-upon policies that financial institutions can choose to adopt. This framework aims to enhance the efficiency, simplicity, and effectiveness of the ROV process, ensuring its productivity and positive outcomes.
The policies cover different aspects like criteria for secondary appraisal, cost responsibility, and early consumer notification in the underwriting process. The instructions will be released on the CFPB website and the Federal Register, allowing a 60-day period for public input. Feedback can be provided through the Federal eRulemaking Portal using the identification number OCC-2023-0007. To streamline the organization and distribution of responses, individuals providing feedback are kindly asked to use the title “Joint Guidance on Reconsiderations of Value of Residential Real Estate Valuations.”