ROV (Reconsideration of Value) is now in the boat. Is it safe?
We suspect this will be a long row to get to the chosen island. Just row! It is likely this topic will be the focus of more of our “analog blog” series.
To read part one of this series or other blog post on this topic, follow this link.
It may be good to start where any good study starts. “What are the words?” The only two words here are “reconsider” and “value.” Let’s look at these. (Sometimes just looking at the words can sort things out.) Different words mean different things to different people!
Reconsider: “To consider again, especially for a possible change of decision” … “especially with a view to changing or reversing.”
Value: “The worth or usefulness something.”
The new FannieMae Selling Guide section discusses the process to changes to the appraiser opinion of value. One more word might be important here: “Appraisal.” Appraisal is defined as the act or process of developing an opinion of value, or the opinion of value itself. An opinion.
Ah. This simplifies things. An official ROV wants you to change your opinion. Usually, if not always, this means “You came in too low.” But you already knew that …
The official ROV process includes a procedure for when the value:
- is unsupported;
- is deficient (due to unacceptable appraisal practices); or
- reflects prohibited discriminatory practices.
Whew! A lot to think about here. Let’s first see what “support” is! (Yet another “word” thing!) The colloquial meaning includes: “promote the interests or cause of,” “defend as valid or right,” or “advocate or argue for.” [Sounds like good sales, debate, or political skills are paramount!]
The word “support” is used over 100 times in the current USPAP book. But it is not defined! However, it does use the word support to explain how to be “credible” (worthy of belief).
So “support” should be used to help the reader believe your opinion. Your opinion.
If we apply these words we have so diligently “analyzed” – If you got an ROV, it means that someone believes your opinion of value is “un-supported” (not supported, — not even a little). You have failed to:
- “promote the interests or cause of” your opinion;
- “defend [your opinion] as valid or right:” or,
- “advocate or argue for” your opinion.
To sum up: an ROV is a request to an appraiser to “re-assess” their opinion due to “reporting deficiencies,” “inappropriate selection of comparable properties,” or “additional information the appraiser should consider.”
All this starts where someone believes you did work bad: it was unsupported, deficient, or discriminatory (where prohibited).
So, there we have it: be good, be believable, use support, and don’t be deficient!
Don’t row a leaky boat! Get one with no holey leaks! See you in Part 3 … EBV
May 22, 2024 @ 2:40 am
Another huge reason for ROV’s has nothing to do with the items you noted above. It all has to do with the value not landing on the number they need to close a loan for refi or purchase. We never get ROV’s when value is higher than the value needed or expected only when it is lower! So it has nothing to do with worthy of belief or being supported. The only good news is that the ROV’s now must be accompanied by the reason why the comps provided are better than the ones the Appraiser used. They cannot just throw 5 comps at us to review. So in that case ROV’s moving forward should be limited!