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5 Federal Agencies Propose Guidance For ROVs

David Krechevsky
Jun 08, 2023
Photo credit: Getty Images/Bet_Noire

Addresses reconsiderations of value (ROV) for residential real estate transactions. 

Five federal regulatory agencies on Thursday jointly requested public comment on proposed guidance addressing reconsiderations of value (ROV) for residential real estate transactions. 

The five federal agencies that jointly issued the request include the:

  • Board of Governors of the Federal Reserve System;
  • Consumer Financial Protection Bureau;
  • Federal Deposit Insurance Corp.;
  • National Credit Union Administration; and
  • Office of the Comptroller of the Currency.

The proposed guidance advises financial institutions on policies they 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, the agencies said.

ROVs are requests from a financial institution to an appraiser or other preparer of a valuation report 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 other information that may affect the estimated value.

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 applicable laws and regulations;
  • Preserving appraiser independence, and 
  • Remaining responsive to consumers.

The proposed guidance also would describe the risks of deficient residential real estate valuations, and how financial institutions may incorporate ROV processes into established risk management functions. Deficient collateral valuations can contain inaccuracies due to errors, omissions, or discrimination that affect the value conclusion. 

The proposed guidance would also provide examples of ROV policies and procedures that a financial institution may establish to help identify, address, and mitigate valuation discrimination risk, the agencies said.

Comments must be received within 60 days of the proposed guidance's publication in the Federal Register.

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