The Federal Housing Finance Agency (FHFA) and the Department of Housing and Urban Development (HUD) have published their new Reconsideration of Value (ROV) policies to address concerns raised by potential disparities in residential property appraisals.
An ROV is a request to an appraiser to reassess the appraised value of a property due to potential appraisal reporting deficiencies or inappropriate selection of comparable properties, or based upon additional information the appraiser should consider.
The FHFA stated the new policies will provide the government-sponsored enterprises with “clear requirements for lenders to disclose and outline the ROV process for consumers, standardize communication to appraisers, and establish ROV response expectations. Lenders will also be required to refer appraisers to local, state, and federal agencies for violations of anti-discrimination laws.”
“Consistent standards for lenders and appraisers, coupled with a well-understood process for consumers to challenge appraisal findings, will help ensure that consumers are treated fairly,” said FHFA Director Sandra L. Thompson. “These updates represent a powerful tool in combatting racial bias in property appraisals and promoting valuation accuracy.”
HUD announced that lenders participating in the Federal Housing Administration’s (FHA) Single Family program will provide borrowers with the right to request a reassessment of the appraised value of their property if they believe that the appraisal was inaccurate or biased. The updates include requirements for transactions in both single family forward and Home Equity Conversion Mortgage programs.
“We know that biased home appraisals not only disproportionately harm homeowners of color, but stunt economic opportunity for the communities we serve,” said HUD Acting Secretary Adrianne Todman. “Today, we are announcing a new step in our work to root out racial and ethnic bias in home valuations, which will give borrowers greater ability to have their home valuation reconsidered.”
The agencies said the new ROV is the result of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), where officials from 13 federal agencies worked to establish a transformative set of recommendations to eradicate racial and ethnic bias in home valuations.
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