five federal agencies including consumer financial protection bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the federal ReserveThe National Credit Union Administration (NCUA) and office of the comptroller of the currency (OCC), are collectively proposing new interagency guidance on Reconsideration of Value (ROV) for residential real estate transactions.
Thank you for reading this post, don't forget to subscribe!The announcement states, “The proposed guidance advises on policies that financial institutions may implement to allow consumers to provide information to financial institutions that may not have been considered during the assessment or original assessment.” deficiencies have been identified.
Situations in which an ROV request may be warranted by a financial institution include when a consumer provides information about “potential deficiencies or other information that may affect the estimated value,” the announcement said. .
The guidance, to be published in the Federal Register with a 60-day public comment period, “demonstrates how ROV evaluations intersect with independence requirements and compliance with applicable laws and regulations,” according to the announcement.
The guidance outlines how financial institutions can either enhance their existing ROV processes or create new ones while maintaining security and soundness requirements and complying with all applicable regulations and laws.
The guidance also prioritizes independence of appraisers and accountability to consumers.
“Additionally, the proposed guidance will describe the risks of undervaluing residential real estate and how financial institutions can incorporate ROV procedures into established risk management operations,” the announcement notes. “Mistakes may be due to errors, omissions, or biases in the imprecise collateral valuation that affect the value conclusion.”
It includes examples of ROV procedures and policies that a financial institution can use to “help identify, address and mitigate rating discrimination risk,” according to the announcement.
The proposed guidance is available on the CFPB website.
The announcement follows a statement made last week by the White House about expanding the ability of homeowners to pursue ROVs, adding that federal banking agencies will “require financial institutions to are in the process of issuing proposed guidance on how ROVs can integrate policies and controls into their current assessment processes.
