How the new updates to Reconsideration of Value Requirements will affect lenders
By October 31, 2024, lenders will be required to have a borrower-driven process in place to request a Reconsideration of Value (ROV) for home appraisals.
This recent announcement from the U.S. Department of Housing and Urban Development (HUD), in partnership with Fannie Mae and Freddie Mac, has sparked debate within the real estate community due to the potentially significant impact to consumers, appraisers, and lenders.
Recently, critics and regulators have expressed concern that the current appraisal system may not always accurately reflect the true value of a property due to error, omission, or other factors. However, there is currently no standard industry guidance on how a consumer can request a reconsideration of value.
As a result, regulators saw fit to put forward a formal industry standard for consumers to request a reconsideration of the appraiser’s value opinion.
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Impacts on the Housing Market
The new joint guidance from HUD, Fannie Mae, and Freddie Mac aims to address the concerns identified by the presidential PAVE task force regarding existing challenges in the appraisal process. The revised requirements also promote a more transparent, fair, and efficient valuation of properties.
These updated ROV requirements will require lenders to change multiple components of their process, ranging from initial application to appraisal delivery to ROV requests.
If successfully implemented, these changes have the potential to streamline the appraisal process, reduce transaction costs, and expedite the homebuying process. Moreover, by fostering greater transparency and objectivity in property valuations, the revised requirements may help create a more equitable and efficient housing market for all stakeholders.
How CoreLogic Is Planning to Support the ROV Requirements
At CoreLogic, our valuations solutions are designed with a focus on compliance. While we already integrate a robust set of tools needed for compliance, our product management teams are currently developing new functionality to help support lenders’ ROV needs.
In August 2024, the Mercury Network team released the ability to attach the required documentation for an ROV disclosure to accompany the completed appraisal report delivered to borrowers. The Mercury Network team is also developing the ability to support specific disclosure delivery needs for both client groups and integrated AMCs. Additionally, enhancements to Mercury’s appraisal revision request workflow are in progress to support the ability to initiate and manage ROV requests with an appraiser.
Our technology teams are diligently working on updates to our other valuation platforms, including Collateral Management System and Appraisal Scope.
The Reconsideration of Value requirements developed by HUD, Fannie Mae, and Freddie Mac represent a significant step towards modernizing and improving the overall appraisal process. By embracing technology, the industry aims to benefit both buyers and sellers through enhancing the accuracy, consistency, and fairness of property valuations. As the industry navigates these changes, it will be essential to monitor the impact of the revised requirements and ensure a smooth transition towards a more efficient and reliable appraisal system.
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