The Federal Housing Administration (FHA) this week announced that its FHA Connection (FHAC) portal — which provides FHA-approved lenders and business partners with secure online access to computer systems at theU.S. Department of Housing and Urban Development (HUD) — will be updated to accommodate the implementation of a new Reconsideration of Value (ROV) policy for appraisals.
Alongside the publication of Mortgagee Letter (ML) 2024-07, FHA said the new policy would enable mortgage borrowers to “request a re-assessment of the appraised value of their property if they believe that the appraisal was inaccurate or biased.”
The new rule, which must be implemented by lenders by Sept. 2, 2024, applies to all FHA single-family forward and reverse mortgage programs. It enhances current ROV policy while adding additional clarity for appraisal reviews, according to FHA. These include “improvements to the process by which borrowers may request an ROV if they identify a problem with the appraisal.”
FHAC will be modified for both forward and Home Equity Conversion Mortgage (HECM) loan programs to include a “Borrower Request for Appraisal Review Information” in the portal’s endorsement information section of the insurance application screen.
Lenders will be required to respond to a host of new questions to progress, including whether or not a borrower requested an ROV, as well as several related queries about the basis for such a review.
There will also be several selections for the lender to answer regarding how such a request was resolved. Options include resolution by the underwriter (so long as sufficient information is included in the case binder); the underwriter’s submission of an ROV request to the appraiser; the underwriter’s determination that the appraisal was “materially deficient”; or an “other” option that can be filled in with relevant details.
“The FHAC Guide has been updated and is available on the portal homepage,” the department explained this week. The guide has detailed instructions for the new section on page 20 for single-family forward mortgages and page 17 for HECM loans.
Lenders must also retain any documentation related to an ROV for inclusion in the case binder.
“This includes all written communication among the mortgagee, the borrower, the appraiser, and any other parties involved in the ROV process,” the announcement said. “As a reminder, the provisions of ML 2024-07 may be implemented immediately but must be implemented for FHA case numbers assigned on or after September 2, 2024.”
FHA will also be holding a virtual stakeholder briefing on Aug. 8 where industry members can ask questions of FHA’s subject-matter experts. Event registration is now live.
