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HUD Rescinds FHA Reconsideration of Value Requirements

Michael Christians • March 22, 2025

On March 19th, the US Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2025-08. The letter rescinds, among other things, ML 2024-07, which imposed several borrower-initiated reconsideration of value (ROV) requirements in connection with FHA-insured residential mortgage loans with a case number assigned on or after October 31, 2024.

The borrower-initiated ROV requirements rescinded by HUD's most recent mortgagee letter include, but are not limited to:

Disclosure at application and again upon delivery of the appraisal copy information about the borrower's ability to initiate an ROV request,
Policies and procedures that outline the steps a borrower must take to initiate an ROV request, along with milestones for communication with the borrower as to the status of his/her request, and
The actions a creditor may take in response to an ROV request.

While underwriter-initiated ROV requirements remain in effect for FHA loans, HUD states that the borrower-initiated requirements are being rescinded in response to President Trump's executive order dated January 20, 2025. That executive order was aimed at reversing policies that the administration feels have adversely affected key sectors, including the housing market. It remains to be seen whether the Federal Housing Finance Agency will follow suit and rescind their borrower-initiated ROV requirements in connection with Fannie Mae and Freddie Mac loans.

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