A policy designed for lenders to review and respond to borrower-initiated reconsideration of value (ROV) requests for appraisals — originally scheduled to be implemented between Aug. 29 and Sept. 2 — has been pushed back to Oct. 31, 2024. That’s according to announcements from Fannie Mae, Freddie Mac and a new Mortgagee Letter (ML) published by the Federal Housing Administration (FHA).
The policy — announced in May by the U.S. Department of Housing and Urban Development (HUD), the FHA and the government-sponsored enterprises (GSEs) in collaboration with the Federal Housing Finance Agency (FHFA) — was designed to ”develop an aligned approach for both FHA-insured mortgages and those purchased or guaranteed by” the GSEs, HUD explained.
But following industry feedback received after the policy was announced, the agencies have elected to delay the implementation to give industry members additional time to incorporate it into their operations.
“Major stakeholders provided compelling feedback that additional time is necessary to properly meet the new expectations of the [May] ML due to staffing considerations, third-party coordination, and technology constraints,” FHA said in an informational notice. “While the provisions outlined […] may still be implemented immediately, they must be implemented for FHA case numbers assigned on or after October 31, 2024.”
The extension announced by FHA and HUD aligns with extensions also announced on Tuesday by the GSEs.
Applying to all FHA single-family forward and reverse mortgage programs, the previously announced policy enhances the current ROV posture while adding new, clarified statements for appraisal reviews. These include “improvements to the process by which borrowers may request an ROV if they identify a problem with the appraisal,” the original ML said.
The guidance also requires lenders to include “a borrower-initiated ROV process meeting certain minimum requirements, including delivery of disclosures to borrowers at loan application and upon delivery of the appraisal with instructions on how to request an ROV.”
Upon the original announcement, HUD called the guidance a step to fulfill the commitments of its Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), which includes representatives from 13 federal agencies.
