Appraisal Organizations Tell HUD That Proper ROV Policies can be Beneficial

The Appraisal Institute along with ASA, ASFRMA and MBREA submitted on Feb. 2 a comment letter to the Federal Housing Administration in response to a draft Mortgagee Letter from the Department of Housing and Urban Development that establishes a process for underwriters when a borrower requests a review of an appraisal associated with an FHA-insured mortgage application.

The organizations noted in the letter that a well-developed Reconsideration of Value process “can be beneficial to borrowers, underwriters and appraisers in ensuring fair and accurate appraisals in connection with FHA-guaranteed loans.” It was recommended that HUD consider the Department of Veterans Affairs’ Tidewater Initiative as both a template for new policy and as a means for aligning the agencies as closely as possible so participating mortgage lenders have generally consistent protocols and procedures.

The organizations also emphasized that clear guidance must be given to underwriters regarding the circumstances under which a ROV request should be forwarded to an appraiser. They stated, “Absent meaningful guidance, it is our concern that underwriters will err on the side of always forwarding reconsideration requests to the appraiser, as it will be the easiest, and less risky, option to shift borrower complaint risk to the appraiser.”