FHA proposes changes to lender requirements for review of appraisal requests

The Federal Housing Administration today posted a draft mortgagee letter proposing policy changes to its requirements for processing and documenting reconsideration of valuation (ROV) requests, particularly when requests are initiated by a borrower for the review of appraisal results.

In the draft letter, FHA proposed guidance for what the agency says would improve the process when prospective borrowers—applying for either an FHA-insured Title II forward mortgage or a home equity conversion mortgage—request a valuation reconsideration on a property if the initial valuation is lower than expected; there is indication of illegal bias; Fair Housing Act regulations have been violated; or unlawful discrimination has been identified. The draft also proposes updated appraisal review standards intended to provide mortgagees and appraisers with clarifying guidance regarding the quality of an appraisal report and the ROV process and responsibilities.

FHA is seeking public feedback through Feb. 2.