In an effort to combat appraisal bias, the U.S. Department of Housing and Urban Development (HUD) along with both Fannie Mae and Freddie Mac (collectively the GSE’s) have issued new guidance to support borrowers who believe their appraisal to be inaccurate or deficient. Lenders are required to develop processes for handling a reconsideration of value (ROV), including a borrower-initiated ROV.

One key aspect of the new guidance is the requirement that lenders notify borrowers of the process for requesting an ROV - including the information borrower will be required to provide and the expected ROV processing times. The disclosure must be provided at application and again upon delivery to the borrower of the appraisal report.

In response to industry concerns about meeting the original compliance date, both HUD and the GSE's have extended the date on which the disclosure must be included from the original dates of September 2, 2024 (HUD) and August 29, 2024 (GSE's) to October 31, 2024. The disclosure may, however, be provided early and is now available in Propel. Lenders will be required to provide information regarding their specific ROV process in order to generate the disclosure.

Links to the original announcements issued by HUD, Fannie Mae and Freddie Mac, are included below.

HUD:
Appraisal Review and Reconsideration of Value Updates
https://www.hud.gov/sites/dfiles/OCHCO/documents/2024-07hsgml.pdf

Freddie Mac:
Guide Bulletin 2024-6
https://guide.freddiemac.com/app/guide/bulletin/2024-6

Fannie Mae:
https://singlefamily.fanniemae.com/media/39081/display