Freddie Mac, Fannie Mae, and HUD issue policy & procedure requirements for appraisal reinstatement of values (ROVs)

Freddie Mac, in collaboration with Fannie Mae and HUD, is implementing requirements related to reconsideration of value (ROV) that promote consistency when a perceived appraisal issue and/or appraisal deficiency exists. These requirements also recognize the importance of the Borrower having the knowledge and opportunity to request an ROV. Requirements were announced on May 1, 2024, Freddie Mac Guide Bulletin 2024-6, and are effective August 29th, 2024.

The Seller must have policies and procedures in place addressing Seller or Borrower requests for ROVs.

Policies and procedures must include, but are not limited to, the following:

  • A review and resolution procedure for an ROV request, including steps for the Borrower(s) to appeal an appraisal report’s findings when the Borrower(s) believes the appraisal report or the appraiser’s opinion of value is unsupported, may be deficient due to an unacceptable appraisal practice or reflects discriminatory practices
  • A process for disclosure of the ROV process to the Borrower(s) and instructions for initiating an ROV request
  • A standardized format for communicating the rationale, requirements and supporting documentation to the appraiser
  • Instructions for the appraiser to deliver a revised appraisal report that includes specific commentary explaining their conclusions to the ROV request
  • Turn-time expectations for communicating results of the ROV to the Borrower
  • A requirement for the retention of all documentation and communications related to the initiation and outcome of the ROV in the Mortgage file

This update also requires the Seller to:

  • Forward the appraisal report, along with a summary of findings, to the appropriate appraisal licensing agency or regulatory board if material deficiencies are identified in the appraisal report that are not corrected or addressed by the appraiser upon request or if there is evidence of unacceptable appraisal practices. In addition, if there are suspected overt violations of antidiscrimination laws, the Seller must report them to the proper local, State or federal agency.
  • Ensure valuation and related staff, inclusive of third parties, are trained to identify prohibited discriminatory practices and appraisal deficiencies through the valuation review and ROV processes. The Seller must have a process for remediating these deficiencies.

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