Accurate appraisals are essential to the integrity of mortgage lending. Overvaluation can decrease affordability, make it harder to sell a home or refinance, and increase the risk of foreclosure. Undervaluation can prevent a homeowner from accessing accumulated equity, whether through a sale or a home equity loan. Both over- and under-valuation keep individuals, families, and neighborhoods from building wealth through homeownership.
Homebuyers and homeowners can ask a lender to reconsider a home valuation that the consumer believes to be inaccurate. This process is often referred to as a “reconsideration of value,” or ROV. Borrowers can point out, for example, factual or other errors or omissions and inadequate comparable properties or provide evidence that the appraisal was influenced by prohibited bias.
Responsible lenders focused on serving their customers typically will provide borrowers with clear, actionable information about how to raise concerns about the accuracy of an appraisal. A lender’s reconsideration of value process must ensure that all borrowers have an opportunity to explain why they believe a valuation is inaccurate and the benefit of an ROV to determine whether an adjustment is appropriate. While an individual lender’s reconsideration of valuation process may vary, lenders must make sure that their reconsideration of value process is nondiscriminatory and available and accessible to all.
Sign up to the receive the weekly InfoSight eNewsletter email. Existing subscribers can manage their subscription.
Cornerstone members have access to a wide variety of compliance assistance.
Now available on Spotify and Apple Podcasts.