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Federal agencies propose reconsideration of value guidance

June 8, 2023

NCUA, the Consumer Financial Protection Bureau (CFPB) and three other federal regulatory agencies Thursday requested public comment on proposed guidance addressing reconsiderations of value (ROV) for residential real estate transactions.

The proposed guidance advises on policies that financial institutions may implement to “allow consumers to provide financial institutions with information that may not have been considered during an appraisal or if deficiencies are identified in the original appraisal.”

ROVs are requests from a financial institution to an appraiser or preparer of a valuation report to reassess the value of residential real estate. An ROV may be warranted if a consumer provides information to a financial institution about potential deficiencies or other information that may affect the estimated value.

The proposed guidance:

  • Shows how ROVs intersect with appraisal independence requirements and compliance with applicable laws and regulations.
  • Describes how financial institutions may create or enhance their existing ROV processes while remaining consistent with safety and soundness standards, complying with applicable laws and regulations, preserving appraiser independence, and remaining responsive to consumers.
  • Describes the risks of deficient residential real estate valuations and how financial institutions may incorporate ROV processes into established risk management functions. Deficient collateral valuations can contain inaccuracies due to errors, omissions, or discrimination that affect the value conclusion.
  • Provides examples of ROV policies and procedures that a financial institution may establish to help identify, address, and mitigate valuation discrimination risk.

Comments must be received within 60 days of the proposed guidance’s publication in the Federal Register.