On January 12, 2023, HUD Secretary Marcia L. Fudge announced that HUD, through the Federal Housing Administration, is creating a process that people seeking FHA financing can use to request a review of their appraisal if they believe the results may have been skewed by racial bias. The proposed change to FHA policy represents the first step to solidify the processes that lenders must follow when a borrower requests a Reconsideration of Value (ROV) review if concerns arise around unlawful discrimination in residential property valuations.
The Reconsideration of Valuation proposal provides lenders with clear guidance when reviewing requests from borrowers for a reconsideration of value for the appraisal conducted in conjunction with their application for FHA-insured mortgage financing. The proposal also contains guidance in obtaining a second appraisal when material deficiencies are documented, and the appraiser is unwilling to resolve them.
The FHA is seeking feedback from its stakeholders to identify barriers and impediments that the draft ROV process may impose on the lending process. Input will be accepted until February 2, 2023.
Read the HUD’s announcement here.
