Mortgage Borrowers Can Challenge Inaccurate Appraisals Through the Reconsideration of Value Process
Accurate appraisals are essential to the integrity of mortgage lending. Overvaluation can decrease affordability, make it harder to sell a home or refinance, and increase the risk of foreclosure. Undervaluation can prevent a homeowner from accessing accumulated equity, whether through sale or a home equity loan. Both over- and under-valuation keep individuals, families, and neighborhoods from building wealth through homeownership.
Homebuyers and homeowners can ask for a lender to reconsider a home valuation the consumer believes to be inaccurate. This process is often referred to as a “reconsideration of value” or “ROV.” Borrowers can point out, for example, factual or other errors or omissions, inadequate comparable properties, or provide evidence that the appraisal was influenced by prohibited bias.
Responsible lenders focused on serving their customers typically will provide borrowers with clear, actionable information about how to raise concerns about the accuracy of an appraisal. A lender’s reconsideration of value process must ensure that all borrowers have an opportunity to explain why they believe that a valuation is inaccurate and the benefit of a reconsideration to determine whether an adjustment is appropriate. While an individual lender’s reconsideration of valuation process may vary, lenders must make sure that their reconsideration of value process is nondiscriminatory and available and accessible to all.
Some lenders include information about how to request a reconsideration of value in the copies of appraisals and other home valuations required under the Equal Credit Opportunity Act Valuations Rule. Other lenders may provide information about the reconsideration of value process and a borrower’s ability to provide relevant information before an appraisal is conducted. When lenders provide borrowers with clear, plain-language notice of reconsideration of value opportunities, lenders help ensure that their reconsideration of value process is nondiscriminatory. Lenders that fail to have a clear and consistent method to ensure that borrowers can seek a reconsideration of value risk violating federal law.
Ensuring that homebuyers and homeowners can challenge inaccurate appraisals is one of many efforts that the CFPB and other federal agencies are working on to ensure fair and accurate appraisals. The CFPB has already taken the first step to implement legal requirements to limit bias in algorithmic appraisals. Regulators are also working to provide more oversight over the activities of the Appraisal Foundation, which wields enormous power over the appraisal industry. Learn more about the work of the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) .