The Board of Governors of the Federal Reserve System, along with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, have jointly released a request for public comment on proposed guidance regarding reconsiderations of value (ROV) for residential real estate transactions. This initiative aims to provide financial institutions with policies that allow consumers to submit additional information that may have been overlooked during the appraisal process or address deficiencies found in the original appraisal.
ROVs occur when financial institutions ask appraisers or valuation report preparers to reassess the value of residential real estate. If a consumer provides information that could potentially affect the estimated value or highlight deficiencies, an ROV may be warranted. The proposed guidance outlines how ROVs align with appraisal independence requirements and compliance with relevant laws and regulations. It emphasizes that financial institutions can establish or improve their ROV processes while adhering to safety and soundness standards, regulatory compliance, appraiser independence, and consumer responsiveness.
In addition, the proposed guidance addresses the risks associated with flawed residential real estate valuations and suggests incorporating ROV processes into existing risk management functions at financial institutions. Inaccurate collateral valuations may arise due to errors, omissions, or discriminatory practices, impacting the final value assessment. The guidance also provides examples of ROV policies and procedures that financial institutions can adopt to identify, address, and mitigate the risk of valuation discrimination.
The public comment period for the proposed guidance is now open, enabling stakeholders and interested parties to contribute their insights and perspectives on these measures. This collaborative approach ensures that the final guidance takes into account a wide range of perspectives and contributes to robust and effective policies governing residential real estate valuations.
Financial institutions, consumer advocacy groups, appraisers, and other relevant stakeholders are encouraged to participate in the comment process to provide valuable input on the proposed guidance. The agencies involved are committed to ensuring transparency and incorporating public feedback to enhance the final guidance, which will play a crucial role in promoting fair and accurate residential real estate valuations across the industry.