ROV (Reconsideration of Value) Changes – FHA and GSEs

GSE Effective date is August 29, 2024
HUD Effective date is September 2, 2024

Editor’s note: This long section includes, In order:

  • McKissock/Dave Bradley post with a good summary including links to HUD and GSE documents.
  • Appraisersblogs with Dave Towne’s opinions plus many appraiser comments.
  • George Dell – his usual very interesting comments.
  • VA’s Tidewater Initiative written in 2021 by McKissock (Similar idea as current ROV changes), effective in 2003.


Changes to ROVs: GSEs and HUD Announce New Reconsideration of Value Policies

By Dave Bradley, McKissock May 2, 2024

Excerpts: On May 1, 2024, Fannie Mae, Freddie Mac, and HUD announced new policies for appraisal reconsiderations of value (ROV). These policies were the result of a collaborative effort between the GSEs, the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA).

These policies are intended to create a consistent framework for lenders to respond to a borrower-initiated reconsideration of value. Within this framework, the lender must include steps for the borrower to appeal an appraisal when they believe the value opinion:

  • is unsupported;
  • is deficient due to unacceptable appraisal practices; or
  • reflects discriminatory practices.

Freddie Mac’s Bulletin, announcing the new policy, states:

“Freddie Mac, in collaboration with Fannie Mae and HUD, is implementing requirements related to reconsideration of value (ROV) that promote consistency when a perceived appraisal issue and/or appraisal deficiency exists. These requirements also recognize the importance of the Borrower having the knowledge and opportunity to request an ROV.”

Several sections of HUD Handbook 4000.1 have been amended to reflect HUD’s new ROV policy.

For appraisers, Section II.D.2. of the Handbook creates new general requirements for appraisers. This section states, in part:

“In the event that the underwriter requests a Reconsideration of Value (ROV) and provides additional information material to the value of the Property, the Appraiser must: review all information and market data received from the underwriter;

and summarize the analysis of all information provided by the underwriter within a revised version of the appraisal report regardless of whether the Appraiser determines that changes are not needed to address the issues identified in the ROV.”

To read more plus get links to FHA/GSE documents, Click Here

My comments: If you do GSE or FHA appraisals, read this post, plus the links to the documents. Many appraisers will probably not like it, but will like to have a standardized ROV method. I have never done an “official” ROV for a lender, but I did not like any lender clients objecting to my values.


Low Value = Material Deficiencies? New FHA ROV Policy

By Dave Towne, May 3, 2024

Excerpts: Up until recently, there has never been a standardized policy for mortgage loan related Reconsideration of Value (ROV) requests after an appraisal has been submitted. Now there is, per the attached PDF HUD/FHA mortgage letter. The GSE’s have similar policies.

I’m not opposed to having a standardized ROV policy. However, these policies are in keeping with the new initiatives surrounding alleged and often unproved appraisal bias and discrimination claims.

But when one reads deeper into the reason for implementing these procedures, it is quickly evident that actually it’s focused on the perception that the appraised VALUE is wrong.

This is the statement in the HUD/FHA ML-2024-07: “This included guidance to improve the established process by which FHA program participants may request an ROV if the initial valuation is lower than expected.”

OK, so who exactly decided the value should be HIGHER than what the appraiser reported, before an appraisal was ordered? Was it the borrower? The mortgage loan officer handling the loan? A Zillow Zestimate? Maybe the underwriter at the lender?

The document also mentions many times the words “material deficiencies” in the appraisal report, which can trigger an ROV request.

My comments: I find this post’s appraiser comments most interesting, especially those from VA appraisers who have been required to use the VA’s Tidewater Initiative, which started in 2003. It was and is controversial. See the last article in this list for more info on Tidewater.

To read more, Click Here

Row, Row, Row, Part 1

By George Dell May 8, 2024

Excerpts: A better ROV! Please reconsider the direction of your boat. Try this this bigger oar. And use it only on the right side of the boat.

Appraisers have long been asked to “reconsider” their opinion. Now we have a more official “standardized process” which affects appraisers, lenders, AMCs, GSEs, and of course, the borrower.

On quick review, I see some unintended consequences, as well as some which have been anticipated. The anticipation includes the additional burden on lenders as well as appraisers. There is administrative time involved, as well as legal factors. Also, the burden on borrowers appears greater than before, including detail and reason.

First, the burden on borrowers. They start the row. Borrowers must believe the opinion of value is:

And regardless of the impact on borrowers and appraisers, the Fannie Mae Selling Guide is almost entirely focused on the responsibilities of the lender.

To read more, Click Here

My comments: Short and worth reading.


The first “official” ROVs – VA’s Tidewater Initiative in 2003: What VA Appraisers Need to Know

By McKissock, January 8, 2021

Excerpts: The VA has a unique set of protocols, known as the Tidewater Initiative, that a VA appraiser must follow when he or she expects the appraised value of a property is going to be lower than its contract price.

This program, often known simply as “Tidewater,” initiated in—you guessed it—the Tidewater area of Virginia (i.e., the Norfolk, Chesapeake, Portsmouth, and Virginia Beach areas). It initially began as a test program in the early 2000s and was expanded to all areas of the country in 2003, as a result of VA Circular 26-03-11. This initiative was subsequently reaffirmed in the issuance of VA Circular 26-17-18 in July 2017.

If it appears to a VA appraiser that the appraised value of a property is going to come in below the pending sales price, the appraiser must contact the designated point of contact (POC) party that is specified in the appraisal order.

The appraiser is not supposed to discuss the contents of the appraisal with the POC at this point, except to explain they are asking for whatever additional information the POC may be able to provide…

To read more, Click Here

My comments: Read this Tidewater post to see why the current changes are not new. There was a precedent. I never did VA appraisals, so can’t speak from Tidewater experience. But, I remember it was very controversial when it started. Many appraisers complained about it. I was contacted many years ago by the VA to get on their panel, but I declined as the property values were way above VA limits where I lived.



Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on staying positive with slow business,  economic analysis for appraisers, current real estate market, unusual homes, mortgage origination stats, etc.



$14M Castle on 40 Acres in Wyoming

Excerpts: 5 bedrooms, 5.5+ baths, 9,470 sq.ft., 40 acre lot, built in 1992.

Known as Bedford Castle, the property is nestled in an agricultural area with excellent mountain views.

Highlights include stone floors; a custom, stainless steel staircase; dual towers; and an underground tunnel system accessible via “secret hidden holes.” There’s even an underground shop and a vault room for added security. Above the shop, there is a helipad for easy access in and out of the property.

A spiral, stainless steel staircase accesses all five levels of the residence and leads to the tallest tower. Other details include radiant-heat floors, six fireplaces, stone balconies, custom beams, crown molding, and a copper roof. “When you climb to the top of the tower, the owner has a telescope where you can see forever valley views,” Speakman (agent) adds.

“Inside, there are pillars and towers.” A greenhouse, game room, fitness center, numerous walking and biking trails, and a bridge-accessed moat are included.

To read more, Click Here

To read the listing with a virtual tour and 111 photos, Click Here


Some red flags for the housing market

By Ryan Lundquist, May 2, 2024

Excerpts: Consumers are feeling economic pain, and we need to talk about some of the things that are brewing. Today, I want to look at growing debt, distressed sales, and unemployment. I have both national and local stats. Sounds like a happy post, right? Look, some people really hype this topic and use it to magnify doom, but let’s talk about the market that actually exists.

First off, we don’t have a big problem with mortgage delinquencies, but there is a little bit of an uptick. Basically, depending on the data source, delinquencies have inched up very slightly. This is something to watch, but it’s important to not amplify the small change to promote a narrative.

There are few bank-owned (REO) sales right now, but when they happen, they’ve been a combination of older loans and some newer ones (but not really people who bought in 2022 at peak prices). Remember, people can go into foreclosure for so many reasons, and it’s not just about prices in the market. In many cases, it’s about a personal financial situation. On a side note, I’m definitely noticing some familiar agents listing bank-owned homes right now (mostly people who were big REO agents back in the day).

It’s important to watch any red flags in the housing market, but it’s also key to stay objective. I find the tendency online is to highlight a trickle of doom and make it sound like an avalanche. There is no integrity in that. Likewise, some real estate professionals only want to talk about the glowing stuff rather than some of the issues we’re seeing right now.

Overall, we don’t have a distressed market, but let’s keep our antennas up about all of this while actively cultivating objectivity. And if you work in real estate, be prepared to serve clients in all stations of life. The good times and the hard times.

To read more, plus 20+ appraiser comments, Click Here

My comments: I really like to read the appraiser’s comments on their opinions and local markets in Ryan’s post. What is your market like? How does it compare with Ryan’s?

Ryan’s blog focuses on local real estate agents and market conditions, a most excellent method of becoming the “go-to” appraiser and getting lots of referrals from agents. His speaking engagements also help.

I first started writing a real estate column in the local newspaper back in the late 1980s but did not like it. Now, I would do a blog with local data and graphs, like Ryan does. It’s lots more fun! Even better, it’s a most excellent way to get referrals from real estate agents, one of my primary referral sources for non-lender appraisals.


Are you getting too many ad-only emails?

4 ways to get only the FREE email newsletters and NOT the ad-only emails.

1. Twitter: posted by noon Friday

2. Read on blog Posted by noon Friday. You can subscribe to the blog in the upper right of each blog page. NOTE: the popular ads with liability tips are below the first topic on my blog posts.

3. Email Archives:

(posted by noon Friday) The link is above and to the left of the big yellow email signup form. Newsletters start with “Newz.” Contains all recent emails sent.

4. Link to the 10 most recent newsletters (no ads) at Scroll down past the big yellow signup block. The newsletters have abbreviated titles, taken from their blog posts.

To read more about the 4 ways, plus information on why I take ads, etc. Click here


How to stay positive with slow business

In the April 2024 issue of Appraisal Today.

Excerpts: if you can stay positive you will survive the current downturn. Humans, including appraisers, don’t like change. Overcoming negative attitudes can be done.

In more recent downturns, such as during the 2008 recession, many foreclosures were due to bad lending. These appraisals kept appraisers busy. There have been few foreclosures in the current downturn. Appraisers who make it through the current slowdown will be very busy with good fees when interest rates finally decline, as many appraisers have retired or quit.

Another significant factor has been the rapid ups and downs in the real estate market caused by Covid. It could have never been predicted. Since Covid started 4 years ago, there have been significant increases and declines in the appraisal business. Covid had never occurred before.

Staying positive is very difficult if all you read are negative comments.

I have been online since the first web browser. Negative comments have always been common for most groups, not just appraisers. I am still trying to understand why. Nothing can be done about it except having good moderators who don’t allow it. Increasing appraiser use of social media communication is another significant factor in the difficulty of being positive.

Motivational books and recordings help you stay up when business is stressful. The classics are Dale Carnegie and Napoleon Hill. I like Dale Carnegie and others like Napoleon Hill. Try different speakers and authors to see what you like. Local real estate associations often sponsor sales trainers and motivational speakers.

To read more in the full 7-page article with many more ideas, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

Not sure if you want to subscribe?

Sign up for monthly auto renewal for $8.25!

Cancel at any time for any reason! You will receive a prorated refund.

$8.25 per month, $24.75 per quarter, and $89 per year (Best Buy)

or $99 per year or $169 for two years

To subscribe, go to

Subscribers get FREE: past 18+ months of past newsletters

What’s the difference between the Appraisal Today free Weekly email newsletter and the paid Monthly newsletter? Click here for more info.

If you are a paid subscriber and did not get the May 2024 issue emailed on Wednesday, May 1, 2024, please email, and we will send it to you. Or hit the reply button. Be sure to put in a comment requesting it.


If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new



April 2024 Housing Market Overview: Insights and Trends For Appraisers

By Kevin Hecht, April 30, 2024

Excerpts: In this installment of The Full Measure with Kevin Hecht, uncover April 2024 housing market insights, plus implications for real estate appraisers.

Topics include:

  • Overall economic analyses
  • Existing and pending home sales
  • New home sales
  • Inflation and mortgage rate trends

What this means for appraisers

These trends underscore the necessity for real estate appraisers to be astute in their market awareness and adaptability. The current economic environment, characterized by fluctuating interest rates and a volatile inflationary landscape, demands a nuanced understanding of market dynamics to accurately assess property values and anticipate future shifts.

Appraisers must consider broader economic indicators, such as inflation rates and GDP growth, in tandem with localized market conditions, including inventory levels and median price changes, to provide accurate and timely valuations.

To read more, Click Here

My comments:  This is the only economics article I regularly read. Written by Kevin Hecht, MNAA, CDEI, ChE Chartered Economist®, AQB Certified USPAP Instructor. Kevin has been a real estate appraiser since 1987 and holds a Certified Residential appraiser license in Missouri.

As a McKissock instructor, Kevin specializes in market analysis, USPAP, and real estate economics. In addition to being an appraiser, Kevin is an Adjunct Professor of Economics at Maryville University.

I had never taken an economics class until I took one as a prerequisite for my MBA classes in 1980. It was not my favorite topic, but I learned to understand the concepts. This is very important for all appraisers.


Fannie Mae Selling and Servicing Notice May 8, 2024
Regarding Recent Clarifications of Lender and Servicer Responsibilities Related to Property Insurance

Excerpts: In February 2024, we issued Selling Guide Announcement SEL-2024-01 and Servicing Guide Announcement SVC-2024-01 to clarify various existing lender and servicer responsibilities related to monitoring and verifying property insurance coverage.

The clarifications were made to long-standing policies in our Guides intended to ensure the borrower has sufficient property insurance coverage in the event of a loss, and the February announcements did not change these policies. Among other things, we removed coinsurance requirements and reinforced the requirement to obtain the replacement cost value and confirm the policy provides for replacement cost coverage. The June 1, 2024 effective date was intended to provide advance notice to accommodate lenders’ and servicers’ internal governance processes.

Following these announcements, we have heard concerns from industry partners about lenders’ and servicers’ ability to comply with our long-standing policy to obtain the replacement cost value, which is necessary to confirm the minimum required coverage amount in our Guides is met.

In light of the unique nature of these concerns, in coordination with Freddie Mac and FHFA and until further notice, we have decided not to cite findings for noncompliance related to obtaining property insurance replacement cost values for the purposes of determining coverage amount sufficiency, including any failure to obtain lender- placed insurance for a coverage shortage due to failure to utilize replacement cost value.

During this period, we will conduct additional research and industry engagement to evaluate the reported obstacles to lenders’ and servicers’ compliance with our requirements related to replacement cost value.

To read the Fannie document, Click Here

My comments: What will happen to owners and buyers who cannot get insurance or whose costs will go way up? Problems are happening all over the country, and Florida and California are regularly in the news.

What is happening in your market? If buyers cannot get insurance or it is very expensive, it will affect value.

Hopefully, the GSEs will have some helpful advice before there are many more uninsured homes.

One of my brothers lived in Lake County, about 2 hours north of San Francisco. The area is semi-rural, mainly with a few tiny towns and a very high fire risk. From 2015 to 2018, there were 5 significant fires. In September 2015, a fire destroyed nearly 2,000 buildings and killed at least four people. My brother spent 1-2 weeks in his truck in a Walmart parking lot. He could not get back to his home. Most homeowners want to go there and see if it survived for any reason. Fortunately, his home survived.

The county is not on the maps of places where fire insurance by standard insurance companies is canceled on renewal. Many cannot get standard insurance. They can get one from the state of California, which is expensive and has limited coverage.


Historic Seattle Triangular Eagle House listed for $995K

May 8, 2024

Excerpts: 2 bedroom, 2 bath, 1,190 sq.ft., 1-acre lot, Built-in 1958

Architect Robert Reichert designed the home, known as the Egan House, back in 1958. The place is named for its first owner. “He was kind of fun and eccentric,” says listing agent Barbara Brandt, with Windermere Seattle-Wedgewood, of the architect.

“It feels like in each house, he does something pretty dramatic; and this one is just super cutting edge for the time it was built.” “It’s really interesting from the exterior because it’s almost a little stark,” she says. “But when you go inside, it’s just a fun surprise. The inside and the outside are quite different.”

While the home sits on an acre, the buyer will not own the land. Instead, they can have rights to it via an easement agreement until 2153—an arrangement that protects the house from developers.

Brandt says there has been a lot of interest and many showings, but making the right deal could take some time. “I really think that the perfect buyer for this property is someone who really appreciates the uniqueness of this and is willing to be a steward moving forward,” she says. “Maybe it’s an architect. Maybe it’s just a lover of historic architecture, but I think it’s someone who really cares about history and saving history.”

To read more, Click Here

To see the listing with 32 photos, Click Here

My comments: Who will finally buy it? Of course, with a very high appraisal fee, I might consider appraising it.> I have appraised unusual homes in the past. They always took more time than I planned, but they were very challenging and interesting.


HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.

Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. Many appraisers are not busy. Some are busy, usually with non-lender appraisals.

Mortgage applications increased 2.6 percent from one week earlier

WASHINGTON, D.C. (May 8, 2024) — Mortgage applications increased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 3, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 6 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 17 percent lower than the same week one year ago.

“Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely. The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92 percent, back below 7% for the first time in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Mortgage applications increased for the first time in three weeks, with refinances up 5 percent. Even with the increase, which included a 29 percent jump in VA refinances, refinance volume remains about 6 percent below last year’s already low levels.”

Added Fratantoni, “Driven by a 5 percent gain in FHA applications, purchase activity was up 2 percent. First-time homebuyers account for roughly half of purchase loans, and the government lending programs are an important source of financing for these homebuyers. The gain in FHA activity is a sign that this segment of the market is active.”

The refinance share of mortgage activity increased to 30.6 percent of total applications from 30.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.7 percent of total applications.

The FHA share of total applications increased to 12.9 percent from 12.7 percent the week prior. The VA share of total applications increased to 11.7 percent from 11.3 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.18 percent from 7.29 percent, with points unchanged at 0.65 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 7.31 percent from 7.39 percent, with points unchanged at 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.92 percent from 7.09 percent, with points decreasing to 0.91 from 0.98 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.60 percent from 6.74 percent, with points decreasing to 0.59 from 0.63 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged at 6.60 percent, with points decreasing to 0.65 from 0.75 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.


Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone: 510-865-8041



We want to know what you think!! Please leave a comment.