Good morning,

Just wondering how other lenders are handling this guidance. Are you sending a form along with the copy of the appraisal to the borrowers? I am assuming this would apply to commercial borrowers as well as it is ECOA. Last I knew comments were due by September, but I don't recall hearing an mandatory compliance date....

As far as I am aware there has been no further action after the proposal. I am unable to find the proposal in the unified agenda.

Back in 2022 we incorporated some of the language from the CFPB's blog post in our appraisal cover letter, telling the applicant "how" to ask for a reconsideration. (https://www.consumerfinance.gov/abo...gh-the-reconsideration-of-value-process/)

Given the FFIEC's statement on examination principles released last month, we are working on updating our procedures and appraisal review checklist to review appraisals for any potentially discriminatory practices, results, or keywords. We've also provided additional training for those handling/reviewing appraisals on appraisal bias.

Thank you both. I was afraid I missed something. I am thinking once we get final word, there may be some timeline guidance provided.

Remember this advisory from Freddie Mac? While your bank may not be selling loans to Freddie, there are hints in Freddie's message for things to look for in an appraisal that may suggest problems.

In the proposed guidance....it specifies "consumer" over and over. We are planning to roll out ROV procedures limiting it to consumer purpose loans until final guidance is released. Consumer purpose loans secured by 1-4 residential real estate will receive an ROV notice with other early disclosures. I don't see how we can be criticized....first it's guidance; second it's proposed guidance.....

Am I way off here??

Sounds like a plan to me.

Thank you for chiming in, Randy....confirmation from you BOL Gurus always helps to put my mind at ease!!!!!!! THANKS!!!

Revisiting this to ask how the new notices at time of application and at delivery of appraisal are being handled by others. It appears we may have to create a form. Anyone have one already? I know the disclosures will be required for applications beginning August 29, 2024.

I know the disclosures will be required for applications beginning August 29, 2024.


Where have you seen that?

FNMA Selling Guide Announcement (SEL-2024-03) May 1, 2024
Our updated policy includes specific instructions for the borrower disclosure that must be provided at the time of loan
application and again upon delivery of the appraisal report as well as lender requirements for reviewing and responding to both
the borrower(s) and appraiser. We continue to explore options that would allow us to track ROV activity going forward.
Effective: Lenders are encouraged to implement these policies immediately but must do so for loans with applications dated on
or after Aug. 29, 2024.

Oh - you are talking about a secondary market requirement and not an agency requirement. That explains it.

I suppose it should go without saying that lenders will not be charging for ROVs. But there, I said it anyhow.

Thoughts on this disclosure language?

"You have the right to request that we reconsider the value given in your appraisal. A reconsideration of value may include consideration of comparable properties not previously identified, property characteristics, or other information about the property that you believe were incorrectly reported or not reported. If you feel we should reconsider the value given in your appraisal, please contact your loan officer."

FYI- this question has already arrived in our latest pre-exam request.

That might be OK for a general disclosure on portfolio loans to the borrower, but it fails to give them the instructions regarding the specific requirements for submitting a ROV under the FNMA guidance.

Thanks, Randy. Yes, we are just getting ahead of the curve on this for portfolio loans. We don't do any secondary market deals. All internal portfolio loans.

So....any word on when this actually takes effect...the final rule?

Outside of the FNMA requirements, there is no word from the prudential regulators. Last I looked it was not even on their calendars.

Thank you Randy.

So- I had another banker reach out and ask why I was implementing if not a FHMA seller. We are an FDIC shop scheduled for an exam later this year and the question of how we handle ROVs was listed on the questionnaire.

I've been through many exams over the years and this was the first time I've seen the topic on a pre-exam questionnaire. So, trying to get ahead of what I assume is an expectation.

"the question of how we handle ROVs was listed on the questionnaire."

Well, yes. Every bank should have ROV policies and procedures. But there is no current regulatory requirement for any specific disclosure to be made to borrowers at this time.

I've been pretty naive, then. I've worked mostly for smaller community banks ~$1B and honestly never heard the term ROV until the guidance came out.

Completely plausible that I dodged a bullet by never having a policy (formal or otherwise). Also never heard about it from regulators until now.

Well, it has been almost a year since the release of the proposal.

"Highlights how financial institutions may create or enhance existing ROV processes that are consistent with safety and soundness standards, comply with applicable laws and regulation (including nondiscrimination requirements), preserve appraiser independence, and remain responsive to consumers."

https://www.fdic.gov/news/financial-institution-letters/2023/fil23030.html

Is it allowable to combine the initial ROV disclosure notice with the right to receive a copy of an appraisal notice or do they have to be separate notices?

The only current requirement for a notice is under the GSE rules that go into effect the end of August. There is no mention about segregation. But the appraisal notice is required within three business days and this disclosure is required at the time of application.