Understanding the New Reconsideration of Value (ROV) Process: Rights and Responsibilities

As of May 1, 2024, Fannie Mae introduced a new Reconsideration of Value (ROV) policy aimed at standardizing how lenders handle borrower-initiated appraisal disputes. This change establishes a clearer framework for borrowers who want to challenge their appraisal results. By outlining the rights and responsibilities of both lenders and borrowers, the policy ensures appraiser independence while simplifying the process across the lending industry.

What is Reconsideration of Value (ROV)?

An ROV, also referred to as an appraisal rebuttal or appraisal dispute, allows borrowers to formally contest an appraisal if they believe it contains errors or lacks adequate supporting data. Historically, lenders had different procedures for handling ROV requests, which often confused borrowers. Fannie Mae’s new policy brings much-needed standardization, making the process more transparent and easier to follow.

Lender Responsibilities in the New ROV Process

Lenders now have specific obligations when dealing with borrower-initiated ROV requests. These include:

• Providing Clear Disclosure: Lenders must explain the ROV process, including submission requirements, both at the time of loan application and when delivering the appraisal report.
• Appraisal Review and Validation: Before starting the ROV process, lenders need to review the appraisal and designate an underwriter or expert to handle the ROV. The lender must ensure the borrower’s request includes valid supporting evidence, such as additional data or comparable properties.
• Standardized Communication with Appraisers: If the ROV request is deemed valid, the lender must communicate the following to the appraiser:
  • Borrower’s details (name, property address, appraisal date)
  • Specific areas of the appraisal report that are unsupported or inaccurate
  • Up to five new comparable properties or data to support the ROV
  • Clear timelines (turn-times) for responding to the ROV
  • Instructions for delivering the revised appraisal, including commentary, regardless of the outcome
• Reporting Unresolved Issues: If there are unresolved material deficiencies or evidence of poor appraisal practices, the lender must report these to relevant regulatory boards. In cases involving potential discrimination, lenders must notify the appropriate local, state, or federal authorities.

Lenders are encouraged to include ROV timelines in their initial appraisal engagement letters and ensure all procedures comply with Appraiser Independence Requirements (AIR). It’s important to note that only one borrower-initiated ROV is allowed per appraisal, and it must be submitted before the loan closing.

Borrower Responsibilities in the ROV Process

Borrowers also have a clear role in the ROV process. They must provide specific details about why they believe the appraisal is inaccurate, along with supporting information. This may include up to five comparable sales and an explanation of how this new data supports their claim.

A few key points for borrowers to remember:

• Only one ROV request is allowed per appraisal.
• The ROV must be submitted before the loan closes. Once the loan is finalized, no further ROV requests can be made.

Appraiser Responsibilities in ROV

Once the lender validates an ROV request, the appraiser must review the new information and analyze its relevance. Whether or not the appraisal’s value changes, the appraiser must submit a revised report within the agreed-upon timeline. The appraiser must also address the disputed points and provide detailed reasoning for their conclusions.

Protecting Appraiser Rights

The new ROV policy includes protections for appraisers, ensuring their rights are upheld during the review process. Borrower-initiated requests must meet specific criteria, including providing relevant and concise supporting information. Lenders can share no more than five alternative comparables, and only one ROV request is allowed per appraisal. This prevents unnecessary challenges and helps maintain appraiser independence, as outlined by the Appraiser Independence Requirements (AIR).

Conclusion: The Importance of the New ROV Process

Fannie Mae’s updated Reconsideration of Value (ROV) process not only empowers borrowers by giving them a structured way to dispute an appraisal but also creates a uniform system that protects appraisers’ independence. By increasing transparency and setting clear expectations for lenders, appraisers, and borrowers alike, this policy strengthens trust in the appraisal profession and ensures that disputes are handled fairly.

If you want to understand more about the ROV process or how to effectively dispute an appraisal, knowing your rights and responsibilities under this new policy is essential.