As previously reported, the U.S. Department of Housing and Urban Development (HUD) in connection with single-family residential mortgage loans insured by the Federal Housing Administration (FHA), and Fannie Mae and Freddie Mac in connection with single-family residential mortgage loans, announced Reconsideration of Value (ROV) guidance for appraisals to help address appraisal bias. The HUD guidance applies to FHA insured mortgage loans under the Title II forward mortgage loan and reverse mortgage loan programs.

HUD/FHA

Originally the HUD ROV guidance could be implemented immediately and had to be implemented for FHA case numbers assigned on or after September 2, 2024. In Mortgage Letter 2024-16, HUD provides that the guidance still may be implemented immediately but must be implemented for FHA case numbers assigned on or after October 31, 2024. HUD advises that:

“FHA has carefully considered industry feedback received since [Mortgagee Letter] publication and recognizes the challenges for Mortgagees to operationalize this important policy update properly and effectively within the original 120-Day time frame. Therefore, FHA is providing additional time beyond the previously announced effective date to ensure Mortgagees have sufficient time for implementation.”

Fannie Mae/Freddie Mac

Originally, the Fannie Mae and Freddie Mac guidance could be implemented immediately and had to be implemented for loans with applications dated on or after August 29, 2024. In a Selling Notice and a Bulletin 2024-F, Fannie Mae and Freddie Mac, respectively, provide that lenders now must implement the ROV policy for loans with applications dated on or after Oct. 31, 2024, and Fannie Mae specifically notes that the guidance still may be implemented immediately.

Fannie Mae advises that:

“Feedback gathered after the ROV announcement revealed more time was needed for lenders to meet all the elements outlined in our policy. As the formalization is unique to the industry, in coordination with Freddie Mac and HUD, we have extended the implementation date by 60 days to provide more time for lenders to develop and deploy the requirements of the ROV policy.”

Fannie Mae also advised that frequently asked questions (FAQs) will be published later in August 2024.