June 09, 2023

NCUA issues joint proposal on reconsiderations of value

Govt building columnsThe NCUA, CFPB, Federal Reserve, FDIC, and Office of the Comptroller of the Currency Thursday requested comment on joint proposed guidance related to reconsiderations of value (ROV) for residential real estate transactions.

ROVs are requests from a financial institution to an appraiser or other preparer of a valuation report to reassess the value of residential real estate. An ROV may be warranted if a consumer provides information to a financial institution about potential deficiencies or other information that may affect the estimated value.

The proposed guidance advises on policies that financial institutions may implement to allow consumers to provide financial institutions with additional information, while ensuring safety and soundness standards, compliance with applicable laws and regulations, appraiser independence, and responsiveness to consumers.

In addition, the proposed guidance describes the risks of deficient residential real estate valuations and how financial institutions may incorporate ROV processes into established risk management functions. The agencies note that deficient collateral valuations can contain inaccuracies due to errors, omissions, or discrimination that affect the value conclusion. The proposed guidance also provides examples of ROV policies and procedures that a financial institution may establish to help identify, address, and mitigate valuation discrimination risk.

NAFCU will review the proposal and seek member credit union feedback; comments are due to the agencies 60 days after it is published in the Federal Register.