Five federal regulatory agencies have requested public comment on proposed guidance addressing reconsiderations of value (ROV) for residential real estate transactions.
“The proposed guidance advises on policies that financial institutions may implement to allow consumers to provide financial institutions with information that may not have been considered during an appraisal or if deficiencies are identified in the original appraisal,” said the agencies in a joint statement, adding that the proposed guidance “shows how ROVs intersect with appraisal independence requirements and compliance with applicable laws and regulations. The proposed guidance describes how financial institutions may create or enhance their existing ROV processes while remaining consistent with safety and soundness standards, complying with applicable laws and regulations, preserving appraiser independence, and remaining responsive to consumers.”
The agencies added that the proposed guidance would also “describe the risks of deficient residential real estate valuations and how financial institutions may incorporate ROV processes into established risk management functions. Deficient collateral valuations can contain inaccuracies due to errors, omissions, or discrimination that affect the value conclusion. The proposed guidance would also provide examples of ROV policies and procedures that a financial institution may establish to help identify, address, and mitigate valuation discrimination risk.”
The proposed guidance is now online and public comments are being accepted up to 60 days of its publication in the Federal Register.
The agencies seeking public input are the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Federal Reserve, the National Credit Union Administration and the Office of the Comptroller of the Currency.
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