Letter to the Agencies on the Joint Guidance on Reconsiderations of Value of Residential Real Estate Valuations

To Whom It May Concern:

The American Bankers Association (ABA) appreciates the opportunity to comment on the Interagency Guidance on Reconsiderations of Value on Residential Real Estate Valuations. The proposed guidance highlights the risk associated with deficient residential real estate valuations and describes how financial institutions may incorporate reconsiderations of value (ROV) processes and controls into established risk management functions. ABA supports the proposed guidance for ROVs and offers some recommendations to improve clarity.

I. Summary of the Comment

Banks are committed to fairly serving the families and businesses in their communities and oppose discrimination in any aspect of the lending process, including appraisals. Therefore, ABA is in full support of the objectives of the proposed guidance to guard against inaccuracies in real estate valuations, particularly those due to discrimination, that can keep individuals, families, and neighborhoods from building wealth, accessing accumulated equity, and achieving the dream of homeownership.

ABA appreciates the framework of the proposed guidance, which permits financial institutions to retain implementation flexibility through the use of examples that provide relevant considerations for banks' risk-based ROV-related policies, procedures, control systems and complaint processes. This flexibility is important to enable banks to establish the tailored policies and procedures they require in the ROV process.

In the comments below, we offer the following recommendations to clarify and improve the final guidance:

• The final guidance should apply only to loans secured by a single 1-to-4 family residential property and clearly exclude multi-family dwellings.
• New appraiser licensure requirements should satisfy the training for appraisers and Appraisal Management Companies. (AMC).
• The agencies should work together to help lenders identify potential bias and to ensure that secondary market entities accept a lender's ROV process if it is consistent with the agencies' guidance.
• The final guidance should provide model disclosure language for lenders to use when notifying consumers of the ROV process.

Download the comment letter to read the full text.