On May 1, 2024, the Federal Housing Administration (“FHA”) and the Federal Housing Finance Agency (“FHFA”) both published new policies regarding Reconsideration of Value (“ROV”). The new requirements outline how lenders must disclose the ROV process to consumers and sets standards to improve current policies for appraisal reviews, including requests for reconsideration of value and second appraisals.
In Mortgagee Letter 2024-07 (ML 2024-07), the FHA announced that the new ROV guidance can be implemented immediately but must be implemented for loans with FHA Case numbers assigned on or after September 2, 2024. ML 2024-07 provides policy updates for borrower-initiated requests for reconsideration of value, which includes a new disclosure requirement. Mortgagees must “provide an easy-to-understand disclosure at mortgage loan application and upon delivery of the appraisal report to the Borrower with instructions to explain the borrower-initiated ROV process, the expected ROV processing times, and the process for requesting clarifications or corrections unrelated to the value conclusion.”
The FHFA also announced the publication of new ROV policies issued by Fannie Mae and Freddie Mac. Like the FHA, Fannie Mae and Freddie Mac require lenders to provide borrowers a disclosure outlining the ROV process at the time of application and again when the appraisal report is provided to the borrower. The disclosure must include a notification to the borrower that they may only request one ROV per appraisal. FHFA requires the new policies to be implemented for loan applications dated on or after August 29, 2024. On August 6, 2024, FHA, Fannie Mae and Freddie Mac announced a delay in their requirement for the new reconsideration of value process to October 31, 2024, while still encouraging immediate implementation. DocMagic is proceeding with the original planned implementation date of August 15, 2024, for all conventional and FHA loans.
DocMagic will provide a new Reconsideration of Value Disclosure (Form ID: ROVD.MSC) to meet the requirement of providing the borrower an explanation of the ROV process. The form will be added by default to application, appraisal, and initial disclosure packages for FHA-guaranteed and conventional loans. Under the ROV Process Overview section, the form states by default that the “appraiser will generally respond within 5 business days of receiving the ROV request.” Clients have the option to request a change the number of days that print in this section.
Additionally, DocMagic will make a new Reconsideration of Value Request Form (Form ID: ROVRF.MSC) available from the Forms List for clients to select as needed. This form can be provided to borrowers to complete with the information that they want the appraiser to review during a reassessment of the valuation report. The form will print the loan originator email under the method to submit the completed form. This section may be customized by clients to include other methods of submission. The form also prints “2” business days for the time frame in which a lender will confirm the receipt of the ROV request. This number of days may be updated upon request or changed to a range of days.
Both forms are currently available in DocMagic’s testing environment and will be released to production on August 15, 2024. DocMagic recommends that clients review the forms by testing or requesting sample forms from DocMagic’s Customer Service.
