Secondary Market Reconsideration of Value Requirements Effective October 31st

Happy Thursday! Fall weather seems to have officially arrived with cooler temperatures in the mornings. With Halloween just around the corner and the election not far behind, time really is flying!

Today we are looking at an upcoming effective date for a new regulation regarding secondary market reconsideration of value, courtesy of our partners at League Infosight. 

Back in July, the joint agencies, including the National Credit Union Administration (NCUA), finalized their reconsideration of value (ROV) guidance. The guidance provides examples of policies and procedures that the credit union may choose to implement to help identify, address, and mitigate the risk of discrimination impacting residential real estate valuations.

Credit unions that sell their loans on the secondary market will soon have mandatory reconsideration of value requirements that they must follow. In May, Fannie Mae issued Selling Guide Announcement SEL-2024-03 and Freddie Mac issued Bulletin 2024-06. These documents require sellers to establish and follow policies and procedures when responding to a reconsideration of value request. 

Sellers must notify borrowers at the time of application and again upon delivery of the appraisal of their right to request an ROV and what information will be required in support of that request. These new policy and procedure requirements are effective in connection with applications dated on or after October 31, 2024. 

FHA is also implementing ROV requirements in connection with HUD guaranteed loans. These requirements are found in Mortgagee Letter 2024-07. Similar to the Fannie and Freddie requirements, applicants must be notified of their right to request an ROV, what information will be required in support of their request and expected processing times.  

FHA’s requirements are effective in connection with transactions that have a case number assigned on or after October 31, 2024. Credit unions can find model content related to Reconsiderations of Value (7302.10) within CU PolicyPro. Please note credit unions will need to customize this resource based on the applicable GSE requirements.