this federal housing administration (FHA) this week announced its FHA Connection (FHAC) portal—which provides FHA-approved lenders and business partners with secure online access to computer systems U.S. Department of Housing and Urban Development (HUD) — Updates will be made to accommodate the implementation of the new Reconsideration of Appraisal Value (ROV) policy.
The new policy will allow mortgage borrowers “to request a re-evaluation of the appraised value of their property if they believe the appraisal is inaccurate or biased,” the FHA said in releasing Mortgage Letter (ML) 2024-07.
The new rules, which must be implemented by lenders by September 2, 2024, apply to all FHA single-family forward and reverse mortgage programs. According to the FHA, it enhances current ROV policy while adding clarity to assessment reviews. These include “improving processes so borrowers can request an ROV if they identify issues with an appraisal.”
The FHAC will be modifying its Forward and Home Equity Conversion Mortgage (HECM) loan programs to include a “Borrower Assessment Review Information Request” in the Portal Approved Information section of the insurance application screen.
Lenders will need to answer a series of new questions to move forward, including whether a borrower requires an ROV and several related inquiries about the basis for such a review.
Lenders will also have several options to answer on how to resolve such requests. Options include resolution by underwriter (as long as sufficient information is included in the binder); underwriter submitting ROV request to appraiser; underwriter determines the appraisal to be “significantly deficient”; or an “Other” option where relevant details can be filled in.
“FHAC guidance has been updated and can be found on the portal home page,” the department explained this week. The guide provides detailed instructions on page 20 for single-family forward mortgages and new sections on page 17 for HECM loans.
The lender must also retain all documents related to the ROV for inclusion in the binder.
“This includes all written communications between the mortgagee, borrower, appraiser, and any other parties involved in the ROV process,” the announcement states. “As a reminder, the provisions of ML 2024-07 may be implemented immediately but must be specific to Implementation of FHA case numbers assigned on or after September 2, 2024.”
FHA will also hold a virtual stakeholder briefing on August 8 where industry members can ask questions of FHA’s subject matter experts. Registration for the event is now online.
