Two Letters Endorse VA’s Tidewater Process, Address Need for Consistent Process for All Consumers
ASA, joined by several industry partners, filed two sets of comments in response to proposed interagency guidance regarding reconsiderations of value (ROVs). Together, the comments recommend broad adoption of the VA’s Tidewater process for resolving variances between the contract price or loan amount and the likely appraised value and encourage consistency between lending institutions with an eye toward fairness for consumer and appraisers alike.
In the Tidewater letter, ASA – joined by the Appraisal Institute (AI), American Society of Farm Manager and Rural Appraisers (ASFMRA), MBREA, the National Association of Home Builders (NAHB), and the National Association of Realtors (NAR) – point to the VA process as being best for all parties involved at offering a proactive solution. The appraiser, retaining full autonomy in whether and how this information affects their opinion of value, initiates the process by contacting a designated point of contact with the lender, affording the lender and borrower an opportunity to offer additional information. Critically, this occurs before the appraisal is completed and delivered, avoiding challenges that come with post-delivery ROV requests.
In a broader letter, ASA – joined by AI, ASFMRA, and MBREA – delves into specific questions asked by the interagency proposal. The comments call for lending institutions to vet additional information provided by the borrower prior to asking the appraiser for an ROV, and that the information be specific, verifiable, and additional to that already considered by the appraiser. The comments go on to illustrate the regulatory environment appraisers operate under, and how the risks involved create strong incentives for appraisers to deliver credible assignment results at the outset, especially true since many appraisers receive no additional compensation for the time and effort involved in responding to an ROV request.
The second letter also encourages strong appraisal review functions to proactively identify and address issues with appraisal reports, likely reducing the volume of ROV requests as a result. Lastly, ROVs should encompass a one-time event, rather than a string of iterative requests, as a matter of fairness to the appraiser’s time. It concludes by exploring possible adoption of a prior TAF form for ROVS, and stresses how good documentation by lenders in their own internal review processes can reduce the need to seek ROVS when requested by the borrower.
To read the Tidewater letter, click here. For the broader letter, click here.