Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development (HUD) have created new guidelines for Reconsideration of Value (ROV) policies with clearer expectations for lenders, appraisers, and borrowers.

ROVs are used when borrowers wish to appeal an appraisal when they believe the opinion of value is unsupported, deficient because of unacceptable appraisal practices, or reflects discriminatory practices.

Although lenders are required to implement changes for loan applications-either when purchasing a property or refinancing-dated on or after August 29, some have already adopted these updated policies. Here's what borrowers need to know if they want to request an ROV for an appraisal.

Does My Lender Offer ROVs?

Government-Sponsored Entities (GSEs) do not loan money directly to consumers but guarantee certain loan products provided by private lenders. GSE-backed loans and HUD loans are required to follow the new policies. Part of the new policy requires that lenders disclose the ROV process to consumers at the time they apply for a loan and again when they receive the appraisal. If you are unsure whether your loan falls under these categories, be sure to ask your lender.

What Borrowers Need to Know About Requesting an ROV

Borrowers can only ask for a ROV one time per appraisal, and the request must be submitted before the loan closes. When the loan closes, the borrowers forfeit their right to dispute the value with the lender. What to Provide to the Lender Lenders are required to provide a standardized format for borrowers to use to initiate the ROV process. Borrowers will be required to provide the following information:

• Name, property address, effective date of the appraisal, appraiser name, and date of the ROV request.
• Specific examples of unsupported, inaccurate, or deficient items within the appraisal report.
• Additional data, such as alternative comparable properties, and the source of that data, such as the MLS listing number. A consumer may only provide up to five comparable properties for the ROV.
• An explanation of how the new data supports the ROV.

What Should You Expect After an ROV Request?

Consumers will not work with or hear directly from the appraiser and should expect to work with the lender.

After the lender receives the ROV, it will designate an underwriter or other appraisal subject matter expert to review the request and determine whether it contains sufficient details prior to sending to the appraiser. The lender is required to obtain the necessary information from the borrower if the ROV request is unclear or needs more information.

Next, the appraiser will receive the materials of the ROV and must provide a revised appraisal report that specifically responds to the points in dispute. Appraisers will follow the lender-imposed timeline.

While the new policy does not mandate specific turn-around times for processing an ROV, it does require that lenders communicate their timeframe and expectation for when the consumer will receive the results.

Takeaways for Borrowers

Regardless of the outcome of the ROV, the lender is responsible for ensuring the appraisal report and opinion of value are reliable, adequately supported, and that the borrower's concerns with the valuation are addressed in a timely manner. Ask your lender if you have questions about the ROV policy changes and how it handles the process.

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