Federal regulatory agencies are seeking public comment on proposed guidance that addresses reconsiderations of value (ROV) for residential real estate transactions.
ROVs are requests from a financial institution to an appraiser to reassess the value of residential real estate. An ROV may be warranted if a consumer provides information to a financial institution about potential deficiencies or information that could impact the estimated value.
Specifically, the proposed guidance advises on policies that financial institutions may implement to allow consumers to provide them with information that may not have been considered during an appraisal – or if deficiencies are identified in the original appraisal.
Further, the proposed guidance shows how ROVs intersect with appraisal independence requirements and compliance with 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 laws and regulations, preserving appraiser independence, and remaining responsive to consumers.
Additionally, the proposed guidance describes the risks of deficient residential real estate valuations and how financial institutions may incorporate ROV processes into risk management functions. Also, the proposed guidance would provide examples of ROV policies and procedures that a financial institution may establish to help identify, address, and mitigate valuation discrimination risk.
The guidance has been jointly proposed by the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency.
They are accepting comments and feedback for 60 days after the proposed guidance is published in the Federal Register.