Five federal regulatory agencies including the Consumer Financial Protection Bureau have finalized a rule that allows home buyers to request a reassessment of an appraisal as part of a residential real estate transaction.
The new rule allows 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 and request a reconsideration of value, or ROV.
This can include a variety of circumstances, such as discrimination on the grounds of race, color, religion, sex, disability, familial status or national origin.
The financial institution, in turn, is to ask the appraiser or other preparer of a valuation report to reassess the value of the property.
Deficiencies identified in valuations, either through an institution’s valuation review processes or through consumer-provided information, may be a basis for financial institutions to question the credibility of the appraisal or valuation report.
The guidance offers examples of ROV policies and procedures that a financial institution may implement to help institutions identify, address, and mitigate discrimination risk; describes the risks of deficient residential real estate valuations; and explains how financial institutions may incorporate ROV processes into risk management functions.
The agencies finalized the guidance largely as proposed, with the addition of clarifying edits based on public comments received on the proposed guidance published in July 2023.
Photo: Markus Winkler