ABA offers recommendations for proposed real estate reevaluation guidance

The American Bankers Association today offered recommendations to improve proposed interagency guidance for how financial institutions may incorporate reconsiderations of value, or ROV, processes for residential real estate valuations into established risk management functions. Five federal agencies issued the guidance in June to give consumers more options to provide information about possible deficiencies in their appraisals that lower their estimated property values.

In its comments, ABA said that it supports the goals of the guidance but had suggestions to clarify and improve the final version of the document. First, the final guidance should apply only to loans secured by a single one-to-four-family residential property and exclude multi-family dwellings, the association said. Second, new appraiser licensure requirements should satisfy the training for appraisers and appraisal management companies. Third, the agencies should work together to help lenders identify potential bias and to ensure that secondary market entities accept a lender’s ROV process if it is consistent with the agencies’ guidance. Finally, the final guidance should provide model disclosure language for lenders to use when notifying consumers of the ROV process.