HUD Announces Proposed FHA Appraisal Reform
January 20, 2023
HUD wants to give FHA borrowers a way to formally complain about appraisal bias when purchasing a home with an FHA mortgage. It’s called a Reconsideration of Valuation, and it’s part of a larger effort to end racial bias in the housing industry.
A Revamped Appraisal Process?
HUD Secretary Marcia L. Fudge says the department, via the Federal Housing Administration, is working to formulate a process for those trying to buy homes with FHA mortgages who want a review of their appraisal for racial bias.
At press time, this project is not finalized, but instead proposes such changes. According to a press release issued by HUD, it’s the first in a series of steps meant to “solidify the processes that lenders must follow when a borrower requests a Reconsideration of Value (ROV) review if concerns arise around unlawful discrimination in residential property valuations.”
According to Secretary Fudge, it’s a move that could offer borrowers a form of recourse when the appraisal is in doubt.
“HUD is committed to making the appraisal process fair nationwide. We must eliminate bias in home valuations so that everyone can equally reap the benefit of wealth -- and intergenerational wealth – that come along with homeownership,” said HUD Secretary Marcia Fudge, who was quoted in HUD’s press release.
Fudge adds, “This announcement is an important step forward in rooting out appraisal bias in this country.”
Lender Guidelines
Under the Reconsideration of Valuation proposal, assuming it becomes HUD policy, FHA lenders would be given specific instructions on reviewing borrower requests for a reconsideration of value.
The proposed plan would also offer guidance on when it’s appropriate to ask for a second appraisal when what HUD calls “material deficiencies” are present and the FHA fee appraiser is not willing to provide a resolution.
According to HUD.gov, “Material deficiencies include when a Fair Housing violation has occurred, or bias has been identified on a property valuation report.”
This proposal is not yet the law of the land, but similar rules have been presented, reviewed, and have become HUD policy--at least where moves to end bias in the housing process are concerned. If the proposal does wind up becoming HUD policy, we will report on the new guidelines when they become available.
Report Housing Discrimination
In the meantime, FHA borrowers who have experienced housing discrimination in the appraisal process or any other part of the home loan journey should contact the HUD Office of Fair Housing and Equal Opportunity by calling 1-800-669-9777 or TTY: 1-800-877-8339.
------------------------------
RELATED VIDEOS:
Get to Know HUD
Using an FHA Loan Calculator
Living in a Single Family Home
A Revamped Appraisal Process?
HUD Secretary Marcia L. Fudge says the department, via the Federal Housing Administration, is working to formulate a process for those trying to buy homes with FHA mortgages who want a review of their appraisal for racial bias.
At press time, this project is not finalized, but instead proposes such changes. According to a press release issued by HUD, it’s the first in a series of steps meant to “solidify the processes that lenders must follow when a borrower requests a Reconsideration of Value (ROV) review if concerns arise around unlawful discrimination in residential property valuations.”
According to Secretary Fudge, it’s a move that could offer borrowers a form of recourse when the appraisal is in doubt.
“HUD is committed to making the appraisal process fair nationwide. We must eliminate bias in home valuations so that everyone can equally reap the benefit of wealth -- and intergenerational wealth – that come along with homeownership,” said HUD Secretary Marcia Fudge, who was quoted in HUD’s press release.
Fudge adds, “This announcement is an important step forward in rooting out appraisal bias in this country.”
Lender Guidelines
Under the Reconsideration of Valuation proposal, assuming it becomes HUD policy, FHA lenders would be given specific instructions on reviewing borrower requests for a reconsideration of value.
The proposed plan would also offer guidance on when it’s appropriate to ask for a second appraisal when what HUD calls “material deficiencies” are present and the FHA fee appraiser is not willing to provide a resolution.
According to HUD.gov, “Material deficiencies include when a Fair Housing violation has occurred, or bias has been identified on a property valuation report.”
This proposal is not yet the law of the land, but similar rules have been presented, reviewed, and have become HUD policy--at least where moves to end bias in the housing process are concerned. If the proposal does wind up becoming HUD policy, we will report on the new guidelines when they become available.
Report Housing Discrimination
In the meantime, FHA borrowers who have experienced housing discrimination in the appraisal process or any other part of the home loan journey should contact the HUD Office of Fair Housing and Equal Opportunity by calling 1-800-669-9777 or TTY: 1-800-877-8339.
------------------------------
RELATED VIDEOS:
Get to Know HUD
Using an FHA Loan Calculator
Living in a Single Family Home
Do you know what's on your credit report?
Learn what your score means.
