Industry News

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On Oct. 6, 2022, CFPB published an announcement to let borrowers know they can challenge inaccurate appraisals through a reconsideration of value process. That announcement states: “Homebuyers and homeowners can ask for a lender to reconsider a home valuation the consumer believes to be inaccurate. This process is often referred to as a “reconsideration of value” or ROV. Borrowers can point out, for example, factual or other errors or omissions, inadequate comparable properties, or provide evidence that the appraisal was influenced by prohibited bias.” 

Lender Responsibilities

The lender is responsible for ensuring that the subject property provides adequate collateral for the mortgage. For most loans, Fannie Mae requires that the lender obtain a signed and complete appraisal report that accurately reflects the market value, condition, and marketability of the property. Some loans may be eligible for a value acceptance option, and an appraisal is not required if the lender exercises the option and complies with the related requirements.

Changes to the Appraised Value

The lender is responsible for confirming that appraisal reports are complete and that any changes to the reports are made by the appraiser that originally completed the report. If the lender has concerns with any aspect of the appraisal that result in questions about the reliability of the opinion of market value, the lender must attempt to resolve its concerns with the appraiser that originally prepared the report. If the lender is unable to resolve its concerns with the appraiser, the lender must obtain a replacement report prior to making a final underwriting decision on the loan. Any request for a change in the opinion of market value must be based on material and substantive issues and must not be made solely on the basis that the opinion of market value as indicated in the appraisal report does not support the proposed loan amount.

Guidance on Addressing Appraisal Deficiencies

If the lender considers an appraisal deficient, the lender has the following options for addressing the deficiencies:

• contacting the appraiser to address deficiencies contained in the appraisal report,
• obtaining a desk review or a field review of the original appraisal, or
• obtaining a new appraisal of the subject property.