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Agencies Finalize Guidance on Reconsiderations of Value

Michael Christians • July 21, 2024

On July 18^th, the joint agencies (CFPB, FDIC, FRB, NCUA, and OCC) finalized their guidance on the development of policies, procedures, and control systems applicable to reconsiderations of value (ROVs). An ROV is a request to an appraiser or other preparer of a valuation report to reassess the report based on potential deficiencies or other information that may affect the value conclusion.

Valuation deficiencies may be identified internally through the financial institution’s appraisal review process or through information later submitted by the consumer. This information may include but is not limited to consideration of comparable properties not previously identified or property information/characteristics incorrectly reported or not previously considered.

These deficiencies may be addressed in several ways. First, the institution could request a review of the valuation by an independent, qualified, and competent state-certified or state-licensed appraiser. Second, the institution could communicate relevant information to the original preparer of the valuation and ask them to reassess their report. Finally, the institution could obtain a second appraisal or valuation.

The guidance, available here, provides that institutions should consider the following when building out their ROV policies, procedures, and control systems:

Ensure lending staff are properly trained to identify deficiencies during the internal review process,
Clearly disclose to consumers how and when they must raise concerns about a valuation and detail what supporting information will be required in connection with the reconsideration request, and
Establish policies and procedures that route the request to the appropriate business unit, establish timelines for when milestones must be achieved, and set clear expectations for communicating the status of the ROV request to the consumer.

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