May 13, 2024
The FHA and HUD have reformed parts of the FHA single-family home loan appraisal guidelines found in HUD 4000.1. These changes are meant to improve the process for reconsidering an FHA appraisal in cases where there may be defects or violations of FHA policy.
Can I Get A Revised FHA Appraisal?
Was your FHA appraisal is flawed? In such cases the borrower or lender may be allowed to request a Recosideration of Value (ROV).
An ROV is essentially a review of the appraisal to correct report deficiencies or problems with HUD regulatory compliance.
You should not expect to be allowed a second appraisal only because the value comes in lower than anticipated.
What HUD Says About ROVs
The HUD official site says, “A Reconsideration of Value (ROV) refers to a request from the Mortgagee’s underwriter to the Appraiser to re-assess the appraisal report” with that reassessment based on “information that may affect the value conclusion.”
If the ROV happens, HUD regulations require the lender to, as part of that ROV process, “include a description of the area(s) in the appraisal report and all the additional information that require the Appraiser’s response” as well as the following:
- The lender must “provide detailed information, data, or relevant comparable sales as available” and only include relevant comparable sales where appropriate;
- The lender must not include “more than five alternative comparable sales.”
- The FHA appraiser’s response “must be included in a revised version of the Appraisal.”
And in all cases, HUD typically requires an answer before the loan can move forward. “The resolution of the ROV must be completed prior to loan closing,” according to HUD.gov.
In a borrower-initiated reconsideration of value, any information delivered to the borrower as a result of the procedure should be jargon-free, and should be designed to help the borrower understand the reasons the appraisal results.
What To Know About Revised Appraisal Guidelines
The house’s physical condition isn’t the only thing to be mindful of in situations like these. Does the appraisal include relevant data from comparable properties?
What industry pros call a “material deficiency” in an appraisal can include not reporting a “reliance upon outdated or dissimilar comparable sales” in the appaisal process, “when more recent and/or comparable sales were available as of the effective date…”
A related issue? “Fraudulent statements or conclusions when the Appraiser had reason to know or should have known that such statements or conclusions compromise the integrity, accuracy, and/or thoroughness of the appraisal submitted to the client…”
The housing data and how your FHA fee appraiser reports that data face added scrutiny going forward, and not just the appraiser’s ability to accurately judge the condition of the home.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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