Notice of Proposed Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations
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FDIC Financial Institution Letters › Notice of Proposed Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations
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Billing Codes: 4810-33-P; 6210-01-P; 6714-01-P; 7535-01-P; 4810-AM-P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
[Docket ID OCC-2023-0007]
FEDERAL RESERVE SYSTEM
[Docket No. OP-1809]
FEDERAL DEPOSIT INSURANCE CORPORATION
RIN 3064-ZA36
NATIONAL CREDIT UNION ADMINISTRATION
[Docket ID NCUA-2023-0061]
CONSUMER FINANCIAL PROTECTION BUREAU
[Docket No. CFPB-2023-0033]
Interagency Guidance on Reconsiderations of Value of Residential Real Estate
Valuations
AGENCY: Board of Governors of the Federal Reserve System (Board); Consumer
Financial Protection Bureau (CFPB); Federal Deposit Insurance Corporation (FDIC);
National Credit Union Administration (NCUA); and Office of the Comptroller of the
Currency, Treasury (OCC).
ACTION: Proposed interagency guidance with request for comment.
SUMMARY: The Board, CFPB, FDIC, NCUA, and OCC (together, the agencies) are
issuing proposed guidance that would highlight risks associated with deficient residential
real estate valuations and describe how financial institutions may incorporate
reconsiderations of value (ROV) processes and controls into established risk management
functions. The proposed guidance would also highlight examples of policies and
procedures that a financial institution may choose to establish to help identify, address,
and mitigate the risk of discrimination impacting residential real estate valuations.
escribe how financial institutions may incorporate
reconsiderations of value (ROV) processes and controls into established risk management
functions. The proposed guidance would also highlight examples of policies and
procedures that a financial institution may choose to establish to help identify, address,
and mitigate the risk of discrimination impacting residential real estate valuations.
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DATES: Comments must be submitted on or before [INSERT DATE 60 DAYS
AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].
ADDRESSES: Interested parties are encouraged to submit written comments to any and
all agencies listed below. Comments submitted to the Federal eRulemaking Portal will
be shared with all agencies for consideration. Comments should be directed to:
OCC: Commenters are encouraged to submit comments through the Federal
eRulemaking Portal. Please use the title “Joint Guidance on Reconsiderations of Value
of Residential Real Estate Valuations” to facilitate the organization and distribution of the
comments. You may submit comments by any of the following methods:
Federal eRulemaking Portal – Regulations.gov: go to https://regulations.gov/
Enter “Docket ID OCC-2023-0007” in the Search Box and click “Search.” Public
comments can be submitted via the “Comment” box below the displayed document
information or by clicking on the document title and then clicking the “Comment” box on
the top-left side of the screen. For help with submitting effective comments please click
on “Commenter’s Checklist.” For assistance with the Regulations.gov site, please call 1-
866-498-2945 (toll free) Monday-Friday, 9am-5pm ET, or e-mail
regulationshelpdesk@gsa.gov.
Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the
Comptroller of the Currency, 400 7th Street, SW., suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street, SW., suite 3E-218, Washington, DC
20219
assistance with the Regulations.gov site, please call 1-
866-498-2945 (toll free) Monday-Friday, 9am-5pm ET, or e-mail
regulationshelpdesk@gsa.gov.
Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the
Comptroller of the Currency, 400 7th Street, SW., suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street, SW., suite 3E-218, Washington, DC
20219.
Instructions: You must include “OCC” as the agency name and “Docket ID
OCC-2023-2007” in your comment. In general, the OCC will enter all comments
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received into the docket and publish the comments on the Regulations.gov website
without change, including any business or personal information provided such as name
and address information, e-mail addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the public record and
subject to public disclosure. Do not include any information in your comment or
supporting materials that you consider confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to this action
by the following method:
Viewing Comments Electronically – Regulations.gov: Go to
https://regulations.gov/. Enter “Docket ID OCC-2023-0007” in the Search Box and click
“Search.” Click on the “Documents” tab and then the document’s title. After clicking
the document’s title, click the “Browse Comments” tab. Comments can be viewed and
filtered by clicking on the “Sort By” drop-down on the right side of the screen or the
“Refine Results” options on the left side of the screen. Supporting materials can be
viewed by clicking on the “Documents” tab and filtered by clicking on the “Sort By”
drop-down on the right side of the screen or the “Refine Documents Results” options on
the left side of the screen. For assistance with the Regulations.gov site, please call 1-866-
498-2945 (toll free) Monday-Friday, 9am-5pm ET, or e-mail
regulationshelpdesk@gsa.gov
of the screen. Supporting materials can be
viewed by clicking on the “Documents” tab and filtered by clicking on the “Sort By”
drop-down on the right side of the screen or the “Refine Documents Results” options on
the left side of the screen. For assistance with the Regulations.gov site, please call 1-866-
498-2945 (toll free) Monday-Friday, 9am-5pm ET, or e-mail
regulationshelpdesk@gsa.gov.
The docket may be viewed after the close of the comment period in the same
manner as during the comment period.
Board: You may submit comments, identified by Docket No. OP-1809, by any
of the following methods:
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Agency Web Site: http://www.federalreserve.gov. Follow the instructions for
submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
Email: regs.comments@federalreserve.gov. Include the docket number in the
subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Ann Misback, Secretary, Board of Governors of the Federal Reserve
System, 20th Street and Constitution Avenue NW, Washington, DC 20551.
In general, all public comments will be made available on the Board’s web site at
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, and will not
be modified to remove confidential, contact or any identifiable information. Public
comments may also be viewed electronically or in paper in Room M-4365A, 2001 C St.
NW Washington, DC 20551, between 9:00 a.m. and 5:00 p.m. during federal business
weekdays. Please call (202) 452-3684 to make an appointment to visit the Board and
inspect comments.
FDIC: The FDIC encourages interested parties to submit written
comments. Please include your name, affiliation, address, email address, and telephone
number(s) in your comment. You may submit comments to FDIC, identified by RIN
3064-ZA36, by any of the following methods:
FDIC Website: https://www.fdic.gov/resources/regulations/federal-register-
publications/
Board and
inspect comments.
FDIC: The FDIC encourages interested parties to submit written
comments. Please include your name, affiliation, address, email address, and telephone
number(s) in your comment. You may submit comments to FDIC, identified by RIN
3064-ZA36, by any of the following methods:
FDIC Website: https://www.fdic.gov/resources/regulations/federal-register-
publications/. Follow the instructions for submitting comments on the FDIC’s website.
Mail: James P. Sheesley, Assistant Executive Secretary, Attention:
Comments/Legal OES (RIN 3064-ZA36), Federal Deposit Insurance Corporation, 550
17th Street NW, Washington, DC 20429.
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Hand Delivery/Courier: Comments may be hand delivered to the guard station
at the rear of the 550 17th Street NW building (located on F Street NW) on business days
between 7:00 a.m. and 5:00 p.m.
Email: comments@fdic.gov. Comments submitted must include “RIN 3064-
ZA36” in the subject line of the message.
Public Inspection: Comments received, including any personal information
provided, may be posted without change to
https://www.fdic.gov/resources/regulations/federal-register-publications/. Commenters
should submit only information that the commenter wishes to make available publicly.
The FDIC may review, redact, or refrain from posting all or any portion of any comment
that it may deem to be inappropriate for publication, such as irrelevant or obscene
material. The FDIC may post only a single representative example of identical or
substantially identical comments, and in such cases will generally identify the number of
identical or substantially identical comments represented by the posted example. All
comments that have been redacted, as well as those that have not been posted, that
contain comments on the merits of this notice will be retained in the public comment file
and will be considered as required under all applicable laws. All comments may be
accessible under the Freedom of Information Act
er of
identical or substantially identical comments represented by the posted example. All
comments that have been redacted, as well as those that have not been posted, that
contain comments on the merits of this notice will be retained in the public comment file
and will be considered as required under all applicable laws. All comments may be
accessible under the Freedom of Information Act.
NCUA: You may submit written comments, identified by “Docket No. NCUA-
2023-0061” by any of the following methods (please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments for “Docket No. NCUA-2023-0061.”
Email: PRAcomments@ncua.gov.
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Mail: Address to Melane Conyers-Ausbrooks, Secretary of the Board, National
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428.
You may view all public comments on the Federal eRulemaking Portal at
http://www.regulations.gov as submitted, except for those we cannot post for technical
reasons. The NCUA will not edit or remove any identifying or contact information from
the public comments submitted. If you are unable to access public comments on the
Internet, you may contact NCUA for alternative access by calling (703) 518-6540 or e-
mailing OGCMail@ncua.gov.
CFPB: You may submit comments, identified by Docket No. CFPB-2023-0033,
by any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov. Follow the
instructions for submitting comments.
Email: 2023-IAA-ResidentialROV@cfpb.gov.
Mail/Hand Delivery/Courier: Comment Intake – Interagency ROV, Consumer
Financial Protection Bureau, c/o Legal Division Docket Manager, 1700 G Street NW,
Washington, DC 20552.
Instructions: The CFPB encourages the early submission of comments. All
submissions should include the agency name and docket number for this document
ubmitting comments.
Email: 2023-IAA-ResidentialROV@cfpb.gov.
Mail/Hand Delivery/Courier: Comment Intake – Interagency ROV, Consumer
Financial Protection Bureau, c/o Legal Division Docket Manager, 1700 G Street NW,
Washington, DC 20552.
Instructions: The CFPB encourages the early submission of comments. All
submissions should include the agency name and docket number for this document.
Because paper mail in the Washington, DC, area and at the CFPB is subject to delay,
commenters are encouraged to submit comments electronically. In general, the CFPB
will post all comments received without change to https://www.regulations.gov.
The CFPB will make all comments, including attachments and other supporting
materials, part of the public record and subject to public disclosure. You should not
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include proprietary information or sensitive personal information, such as account
numbers or Social Security numbers, or names of other individuals. The CFPB will not
edit comments to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT:
OCC: Siddarth Rao, Fair Lending Compliance Policy Specialist, (732) 635-
2070; Joanne Phillips, Counsel, or Marta Stewart-Bates, Counsel, Chief Counsel’s
Office, (202) 649-5490; Office of the Comptroller of the Currency, 400 7th Street, SW,
Washington, DC 20219. If you are deaf, hard of hearing, or have a speech disability,
please dial 7–1–1 to access telecommunications relay services.
Board: Carmen Holly, Lead Financial Institutions Policy Analyst, Division of
Supervision and Regulation, (202) 973-6122; Keshia King, Lead Supervisory Policy
Analyst, Division of Consumer and Community Affairs, (202) 452-2496; Trevor Feigleson,
Senior Counsel, (202) 452-3274, or Derald Seid, Senior Counsel, (202) 452-2246, Legal
Division
ial 7–1–1 to access telecommunications relay services.
Board: Carmen Holly, Lead Financial Institutions Policy Analyst, Division of
Supervision and Regulation, (202) 973-6122; Keshia King, Lead Supervisory Policy
Analyst, Division of Consumer and Community Affairs, (202) 452-2496; Trevor Feigleson,
Senior Counsel, (202) 452-3274, or Derald Seid, Senior Counsel, (202) 452-2246, Legal
Division. For users of telephone systems via text telephone (TTY) or any TTY-based
Telecommunications Relay Services, please call 711 from any telephone, anywhere in the
United States; Board of Governors of the Federal Reserve System, 20th and C Streets, NW,
Washington, DC 20551.
FDIC: Patrick J. Mancoske, Senior Examination Specialist, Division of Risk
Management Supervision, (202) 898-7032; Stuart Hoff, Senior Policy Analyst, Division of
Depositor and Consumer Protection, (202)898-3852; Legal Division: Navid Choudhury,
Counsel, (202) 898-6526, nchoudhury@fdic.gov, or Mark Mellon, Counsel, (202) 898-
3884, mmellon@fdic.gov. Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
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NCUA: Naghi Khaled, Director of Credit Markets, or Walonda Hollins, Senior
Credit Specialist, Office of Examination and Insurance, (703) 216-5136; Ernestine Ward,
Director, Division of Consumer Compliance Policy & Outreach, Office of Consumer
Financial Protection (703) 518-6524; National Credit Union Administration, 1775 Duke
Street, Alexandria, VA 22314.
CFPB: Makalia Griffith, Counsel; Woody Anglade, Senior Counsel; Tim
Lambert, Fair Lending Programs Lead and Senior Counsel, Office of Fair Lending and
Equal Opportunity, at 202-435-7000. If you require this document in an alternative
electronic format, please contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I.
Introduction
The Board, the CFPB, the FDIC, the NCUA, and the OCC are proposing
interagency guidance (proposed guidance) on ROVs of residential real estate valuations
ad and Senior Counsel, Office of Fair Lending and
Equal Opportunity, at 202-435-7000. If you require this document in an alternative
electronic format, please contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I.
Introduction
The Board, the CFPB, the FDIC, the NCUA, and the OCC are proposing
interagency guidance (proposed guidance) on ROVs of residential real estate valuations.
Collateral valuations, including appraisals,1 are important to the integrity of the
residential real estate lending process. Deficient collateral valuations can contain
inaccuracies due to errors, omissions, or discrimination that affect the value conclusion
and can result in either overvaluing or undervaluing real estate collateral. The Board,
FDIC, NCUA, and the OCC have previously issued guidance that describes actions a
financial institution may take to correct deficiencies identified in collateral valuations.2
These actions include ordering a second appraisal or evaluation or resolving the
1 Appraisal means “a written statement independently and impartially prepared by a qualified appraiser
setting forth an opinion as to the market value of an adequately described property as of a specific date(s),
supported by the presentation and analysis of relevant market information.” 12 CFR 34.42(a) (OCC); 12
CFR 323.2(a) (FDIC); 12 CFR 225.62(a) (Board); 12 CFR 722.2 (NCUA).
2 See Interagency Appraisal and Evaluation Guidelines, 75 FR 77450 (Dec. 10, 2010).
pared by a qualified appraiser
setting forth an opinion as to the market value of an adequately described property as of a specific date(s),
supported by the presentation and analysis of relevant market information.” 12 CFR 34.42(a) (OCC); 12
CFR 323.2(a) (FDIC); 12 CFR 225.62(a) (Board); 12 CFR 722.2 (NCUA).
2 See Interagency Appraisal and Evaluation Guidelines, 75 FR 77450 (Dec. 10, 2010).
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deficiency through the original appraiser or preparer of the evaluation.3
The agencies, collectively, do not have existing guidance specific to ROV
processes. For purposes of the proposed guidance, an ROV is a request from the
financial institution to the appraiser or other preparer of the valuation report to re-assess
the report based upon potential deficiencies or other information that may affect the value
conclusion.4 The agencies have received questions and comments from financial
institutions and other industry stakeholders on ROVs, highlighting the uncertainty in the
industry on how ROVs intersect with appraisal independence requirements and
compliance with Federal consumer protection laws, including those related to
nondiscrimination.
II.
Description of Proposed Joint ROV Guidance
The proposed guidance describes how financial institutions may create or enhance
ROV processes that are consistent with safety and soundness standards, comply with
applicable laws and regulations, preserve appraiser independence, and remain responsive
to consumers. The proposed guidance (1) describes the risks of deficient collateral
valuations, (2) outlines applicable statutes, regulations, and existing guidance that govern
ROVs and collateral valuations, (3) explains how ROV processes and controls can be
incorporated into existing risk management functions such as appraisal review and
complaint management, and (4) provides examples of ROV policies, procedures, and
controls that financial institutions may choose to adopt.
III
tions, (2) outlines applicable statutes, regulations, and existing guidance that govern
ROVs and collateral valuations, (3) explains how ROV processes and controls can be
incorporated into existing risk management functions such as appraisal review and
complaint management, and (4) provides examples of ROV policies, procedures, and
controls that financial institutions may choose to adopt.
III.
Request for Comment
3 The NCUA uses the term “written estimate of market value” in place of the term “evaluation.” See 12
CFR 722.3.
4 ROVs may arise from a consumer requesting a financial institution to reexamine a valuation.
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The agencies seek comment, from all interested parties, on all aspects of the proposed
guidance, and in particular request comment on the following:
1) To what extent does the proposed guidance describe suitable considerations for a
financial institution to take into account in assessing and potentially modifying its
current policies and procedures for addressing ROVs?
a) What, if any, additional examples of policies and procedures related to ROVs
should be included in the guidance?
b) Which, if any, of the policies and procedures described in the proposed
guidance could present challenges?
2) What model forms, or model policies and procedures, if any, related to ROVs would
be helpful for the agencies to recommend?
3) What other guidance may be helpful to financial institutions regarding the
development of ROV processes?
4) To what extent, if any, does the proposed ROV guidance conflict, duplicate, or
complement the existing Interagency Appraisal and Evaluation Guidelines or a
financial institution’s policies and procedures to implement those Guidelines?
IV.
Paperwork Reduction Act Analysis
In accordance with the Paperwork Reduction Act (PRA) of 19955, the OCC,
Board, FDIC, and NCUA reviewed the proposed guidance
what extent, if any, does the proposed ROV guidance conflict, duplicate, or
complement the existing Interagency Appraisal and Evaluation Guidelines or a
financial institution’s policies and procedures to implement those Guidelines?
IV.
Paperwork Reduction Act Analysis
In accordance with the Paperwork Reduction Act (PRA) of 19955, the OCC,
Board, FDIC, and NCUA reviewed the proposed guidance. The agencies may not
conduct or sponsor, and an organization is not required to respond to, an information
collection unless the information collection displays a currently valid OMB control
number. The agencies have determined that certain aspects of the proposed guidance
5 44 U.S.C. 3506.
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constitute a collection of information and are revising their information collections
related to real estate appraisals and evaluations. The OMB control number for each
agency is: OCC, 1557-0190; Board, 7100-0250; FDIC, 3064-0103; and NCUA, 3133-
0125. These information collections will be extended for three years, with revision. In
addition to accounting for the PRA burden incurred as a result of this proposed guidance,
the OCC, Board, FDIC, and NCUA are also updating and aligning their information
collections with respect to the hourly burden associated with the Interagency Appraisal
and Evaluation Guidelines.
Abstract: The proposed guidance encourages financial institutions to implement ROV
policies, procedures, and control systems to allow consumers to provide the financial
institution with relevant information that may not have been considered during an appraisal
or evaluation. Such policies and procedures create a recordkeeping requirement.
Frequency of Response: Annual
Evaluation Guidelines.
Abstract: The proposed guidance encourages financial institutions to implement ROV
policies, procedures, and control systems to allow consumers to provide the financial
institution with relevant information that may not have been considered during an appraisal
or evaluation. Such policies and procedures create a recordkeeping requirement.
Frequency of Response: Annual.
Affected Public: Businesses, other for-profit institutions, and other not-for-profit
institutions
Respondents:
OCC: National banks, Federal savings associations
Board: State member banks (SMBs), bank holding companies (BHCs) and
nonbank subsidiaries of BHCs
FDIC: Insured state nonmember banks and state savings associations, insured
state branches of foreign banks
NCUA: Private Sector: Not-for-profit institutions
Burden:
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OCC:
Table 1. Summary of Estimated Annual Burden (OMB No. 1557-0190)
Requirement
Citations
Number of
Respondents
Burden
Hours
Per
Respondent
Total
Number
Of Hours
Annually
Recordkeeping:
Resolution stating plans for
use of property
§ 7.1024(d)
6
5
30
Recordkeeping:
ARM loan documentation
must specify indices to which
changes in the interest rate
will be linked
§ 34.22(a)
§ 160.35(b)
164
6
984
Recordkeeping:
Appraisals must be written
and contain sufficient
information and analysis to
support engaging in the
transaction
§ 34.44
976
1,465 responses
per
respondent @ 5
minutes per
response
119,072
Recordkeeping:
Written policies (reviewed
annually) for extensions of
credit secured by or used to
improve real estate
§ 34.62;
appendix A
to subpart D
to part 34; §
160.101;
appendix A
to
§ 160.101
1,413
30
42,390
Recordkeeping:
Real estate evaluation policy
to monitor OREO
§ 34.85
9
5
45
Recordkeeping:
New IC 1 – ROV Guidance –
Policies and Procedures
(Implementation: Applies to
first year only)
N/A
930
40
37,200
Recordkeeping:
New IC 2 – ROV Guidance –
Policies and Procedures
(Ongoing)
N/A
930
A
to subpart D
to part 34; §
160.101;
appendix A
to
§ 160.101
1,413
30
42,390
Recordkeeping:
Real estate evaluation policy
to monitor OREO
§ 34.85
9
5
45
Recordkeeping:
New IC 1 – ROV Guidance –
Policies and Procedures
(Implementation: Applies to
first year only)
N/A
930
40
37,200
Recordkeeping:
New IC 2 – ROV Guidance –
Policies and Procedures
(Ongoing)
N/A
930
2
1,860
Recordkeeping:
New IC 3 – Interagency
Appraisal and Evaluation
Guidelines – Policies and
Procedures
N/A
976
10
9,760
Reporting:
Procedure to be followed
when seeking to use an
alternative index
§ 34.22(b);
§ 160.35(d)
(3)
249
6
1,494
Reporting:
Prior notification of making
advances under development
or improvement plan for
§ 34.86
6
5
30
13
OREO
Disclosure:
Default notice to debtor at
least 30 days before
repossession, foreclosure, or
acceleration of payments
§ 190.4(h)
42
2
84
Disclosure:
New IC 4 – Interagency
Appraisal and Evaluation
Guidelines
N/A
976
5
4,880
Total Annual Burden Hours
217,829
Board:
Table 2. Summary of Estimated Annual Burden (OMB No. 7100-0250)
FR Y-30
Estimated
number of
respondents
Estimated
annual
frequency
Estimated
average hours
per response
Estimated
annual burden
hours
Recordkeeping
Sections 225.61 - 225.67
for SMBs
701
519
5 minutes
30,318
Sections 225.61 - 225.67
for BHCs and nonbank
subsidiaries of BHCs
4,714
25
5 minutes
9,821
Guidelines
5,415
1
10
54,150
Policies and Procedures
ROV guidance (Initial
setup)
5,799
1
13.3
77,127
Policies and Procedures
ROV guidance (Ongoing)
5,799
1
2
11,598
Disclosure
Guidelines
5,415
1
5
27,075
Total
210,089
FDIC:
Table 3. Summary of Estimated Annual Burden (OMB No
.67
for BHCs and nonbank
subsidiaries of BHCs
4,714
25
5 minutes
9,821
Guidelines
5,415
1
10
54,150
Policies and Procedures
ROV guidance (Initial
setup)
5,799
1
13.3
77,127
Policies and Procedures
ROV guidance (Ongoing)
5,799
1
2
11,598
Disclosure
Guidelines
5,415
1
5
27,075
Total
210,089
FDIC:
Table 3. Summary of Estimated Annual Burden (OMB No. 3064-0103)
Information
Collection
(Obligation to
Respond)
Type of
Burden
(Frequency of
Response)
Average
Annual
Number of
Respondents
Number of
Responses
per
Respondent
Time per
Response
(Hours/Minutes)
Annual
Burden
(Hours)
Recordkeeping
Requirements
Associated with
Real Estate
Appraisals and
Evaluations
(Mandatory)
Recordkeeping
(On Occasion)
3,038
250
5 minutes (0.083)
63,039
14
New IC 1 –
ROV Guidance
– Policies and
Procedures -
Implementation
(Voluntary)
Recordkeeping
(Annual)
2,976
1
5 hours (15 hours
divided by 3
years)
14,880
New IC 2 –
ROV Guidance
– Policies and
Procedures –
Ongoing
(Voluntary)
Recordkeeping
(Annual)
2,976
1
1 hours
2,976
New IC 3 –
2010 Guidelines
– Policies and
Procedures –
Ongoing
(Voluntary)
Recordkeeping
(Annual)
3,038
1
10 hours
30,380
New IC 4 –
2010 Guidelines
- Disclosure –
Ongoing
(Voluntary)
Disclosure
(Annual)
3,038
1
5 hours
15,190
Total Annual Burden (Hours):
126,465
NCUA:
Table 4. Summary of Estimated Annual Burden (OMB No. 3133-0125)
Information
Collection
Type of
Burden
Average
Annual
Number of
Responden
ts
Number of
Responses
per
Responden
t
Time per
Response
(Hours)
Annual Burden
(Hours)
Recordkeeping
Requirements
Associated with
Real Estate
Appraisals and
Evaluations
Recordkeeping
(On Occasion)
3,648
618
0.0825
185,993
New IC 1 – ROV
Guidance –
Policies and
Procedures –
Implementation
Recordkeeping
(Annual)
3,237
1
5
16,185
erage
Annual
Number of
Responden
ts
Number of
Responses
per
Responden
t
Time per
Response
(Hours)
Annual Burden
(Hours)
Recordkeeping
Requirements
Associated with
Real Estate
Appraisals and
Evaluations
Recordkeeping
(On Occasion)
3,648
618
0.0825
185,993
New IC 1 – ROV
Guidance –
Policies and
Procedures –
Implementation
Recordkeeping
(Annual)
3,237
1
5
16,185
15
New IC 2 – ROV
Guidance –
Policies and
Procedures –
Ongoing
Recordkeeping
(Annual)
3,237
1
1
3,237
New IC 3 – 2010
Guidelines –
Policies and
Procedures –
Ongoing
Recordkeeping
(Annual)
3,648
1
10
36,480
New IC 4 – 2010
Guidelines -
Disclosure –
Ongoing
Disclosure
(Annual)
3,648
1
5
18,240
Total Annual Burden Hours
260,135
Comments are invited on:
(a) Whether the collections of information are necessary for the proper
performance of the agencies’ functions, including whether the information has practical
utility;
(b) The accuracy of the estimate of the burden of the information collections,
including the validity of the methodology and assumptions used;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the information collections on respondents,
including through the use of automated collection techniques or other forms of
information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and
purchase of services to provide information.
All comments will become a matter of public record. Comments on the
collections of information should be sent to the address listed for each agency in the
ADDRESSES section of this document. A copy of the comments may also be submitted
formation technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and
purchase of services to provide information.
All comments will become a matter of public record. Comments on the
collections of information should be sent to the address listed for each agency in the
ADDRESSES section of this document. A copy of the comments may also be submitted
16
to OMB: by mail, to U.S. Office of Management and Budget, 725 17th Street NW,
#10235, Washington, DC 20503; by facsimile, to 202-395-6974; or by email, to
oira_submission@omb.eop.gov, Attention: Federal Banking Agency Desk Officer.
V.
Text of Proposed Interagency ROV Guidance
Background
Credible collateral valuations, including appraisals, are essential to the integrity of
the residential real estate lending process. Deficiencies identified in valuations, either
through an institution’s valuation review processes or through consumer provided
information may be a basis for financial institutions to question the credibility of the
appraisal or valuation report. Collateral valuations may be deficient due to prohibited
discrimination;6 errors or omissions; or valuation methods, assumptions, data sources, or
conclusions that are otherwise unreasonable, unsupported, unrealistic, or inappropriate.
Deficient collateral valuations can keep individuals, families, and neighborhoods from
building wealth through homeownership by potentially preventing homeowners from
accessing accumulated equity, preventing prospective buyers from purchasing homes,
making it harder for homeowners to sell or refinance their homes, and increasing the risk
of default. Valuations that are not credible may pose risks to the financial condition and
operations of a financial institution. Such risks may include loan losses, violations of
law, fines, civil money penalties, payment of damages, and civil litigation
enting prospective buyers from purchasing homes,
making it harder for homeowners to sell or refinance their homes, and increasing the risk
of default. Valuations that are not credible may pose risks to the financial condition and
operations of a financial institution. Such risks may include loan losses, violations of
law, fines, civil money penalties, payment of damages, and civil litigation.
Applicable Statutes, Regulations, and Guidance
6 For the purposes of this guidance, “discrimination” is prohibited discrimination based on protected
characteristics in the residential property valuation process. For these purposes, “valuation” includes
appraisals, evaluations, and other means to determine the value of residential property.
17
The Equal Credit Opportunity Act (ECOA), and its implementing regulation,
Regulation B, prohibit discrimination in any aspect of a credit transaction.7 The Fair
Housing Act (FH Act) and its implementing regulation prohibit discrimination in all
aspects of residential real estate-related transactions.8 ECOA and the FH Act prohibit
discrimination on the basis of race and certain other characteristics in all aspects of
residential real estate-related transactions, including in residential real estate valuations.
In addition, section 5 of the Federal Trade Commission Act prohibits unfair or deceptive
acts or practices9 and the Consumer Financial Protection Act prohibits any covered
person or service provider of a covered person from engaging in any unfair, deceptive, or
abusive act or practice.10
The Truth in Lending Act (TILA) and its implementing regulation, Regulation Z,
establish certain federal appraisal independence requirements.11 Specifically, TILA and
Regulation Z prohibit compensation, coercion, extortion, bribery, or other efforts that
may impede upon the appraiser’s independent valuation in connection with any covered
transaction.12 However, Regulation Z also explicitly clarifies th
n Lending Act (TILA) and its implementing regulation, Regulation Z,
establish certain federal appraisal independence requirements.11 Specifically, TILA and
Regulation Z prohibit compensation, coercion, extortion, bribery, or other efforts that
may impede upon the appraiser’s independent valuation in connection with any covered
transaction.12 However, Regulation Z also explicitly clarifies that it is permissible for
covered persons13 to, among other things, request the preparer of the valuation to
7 See 15 U.S.C. 1691 et seq. and 12 CFR part 1002. Regulation B requires creditors to (1) provide an
applicant a copy of all appraisals and other written evaluations developed in connection with an application
for credit that is to be secured by a first lien on a dwelling; and (2) provide a copy of each such appraisal or
other written valuation promptly upon completion, or three business days prior to consummation of the
transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier. See 12
CFR 1002.14(a)(1).
8 See 42 U.S.C. 3601 et seq. and 24 CFR part 100.
9 See 15 U.S.C. 45(a)(1).
10 See 12 U.S.C. 5531, 5536.
11 See 15 U.S.C. 1601 et seq. and 12 CFR part 1026.
12 See 12 CFR 1026.42(c)(1).
13 “Covered persons” include creditors, mortgage brokers, appraisers, appraisal management companies,
real estate agents, and other persons that provide “settlement services” as defined in section 3(3) of the Real
Estate Settlement Procedures Act (12 USC 2602(3)) and the implementing regulation. See 12 CFR
1026.42(b)(1).
U.S.C. 1601 et seq. and 12 CFR part 1026.
12 See 12 CFR 1026.42(c)(1).
13 “Covered persons” include creditors, mortgage brokers, appraisers, appraisal management companies,
real estate agents, and other persons that provide “settlement services” as defined in section 3(3) of the Real
Estate Settlement Procedures Act (12 USC 2602(3)) and the implementing regulation. See 12 CFR
1026.42(b)(1).
18
consider additional, appropriate property information, including information about
comparable properties, or to correct errors in the valuation.14
The Board’s, FDIC’s, NCUA’s, and OCC’s appraisal regulations15 implementing
Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 198916
require all appraisals conducted in connection with federally related transactions to
conform with the Uniform Standards of Professional Appraisal Practice (USPAP), which
requires compliance with all applicable laws and regulations including nondiscrimination
requirements.
The Board’s, FDIC’s, NCUA’s, and OCC’s appraisal regulations also require
appraisals to be subject to appropriate review for compliance with USPAP.17 Financial
institutions generally conduct an independent review prior to providing the consumer a
copy of the appraisal or evaluation; however, additional review may be warranted if the
consumer provides information that could affect the value conclusion or if deficiencies
are identified in the original appraisal. An appraisal does not comply with USPAP if it
relies on a prohibited basis set forth in either the ECOA or the FH Act or contains
material errors including errors18 of omission or commission. If a financial institution
determines through the appraisal review process, or after consideration of information
later provided by the consumer, that the appraisal does not meet the minimum standards
14 See 12 CFR 1026.42(c)(3)(iii)
ither the ECOA or the FH Act or contains
material errors including errors18 of omission or commission. If a financial institution
determines through the appraisal review process, or after consideration of information
later provided by the consumer, that the appraisal does not meet the minimum standards
14 See 12 CFR 1026.42(c)(3)(iii).
15 See 12 CFR part 34, subpart C (OCC); 12 CFR part 208, subpart E and 12 CFR part 225, subpart G
(FRB); 12 CFR part 323 (FDIC); 12 CFR part 722 and 12 CFR part 701.31 (NCUA).
16 P. L. 101–73, title XI, 103 Stat. 511 (1989), codified at 12 U.S.C. 3331 et seq.
17 See 12 CFR 34.44(a) (OCC); 12 CFR 225.64(c) (Board); 12 CFR 722.4(c) (NCUA); and 12 CFR
323.4(c) (FDIC).
18 An error of omission is neglecting to do something that is necessary, e.g., failing to identify the subject
property’s relevant characteristics. An error of commission is doing something incorrectly, e.g., incorrectly
identifying the subject property’s relevant characteristics.
19
outlined in the agencies’ appraisal regulations and if the deficiencies remain uncorrected,
the appraisal cannot be used as part of the credit decision.19
The Board, FDIC, NCUA, and OCC have issued interagency guidance describing
actions that financial institutions may take to resolve valuation deficiencies.20 These
actions include resolving the deficiencies with the appraiser or preparer of the valuation
report; requesting a review of the valuation by an independent, qualified, and competent
state certified or licensed appraiser; or obtaining a second appraisal or evaluation.
Deficiencies may be identified through the financial institution’s valuation review or
through consumer provided information
ese
actions include resolving the deficiencies with the appraiser or preparer of the valuation
report; requesting a review of the valuation by an independent, qualified, and competent
state certified or licensed appraiser; or obtaining a second appraisal or evaluation.
Deficiencies may be identified through the financial institution’s valuation review or
through consumer provided information. The regulatory framework permits financial
institutions to implement ROV policies, procedures, and control systems that allow
consumers to provide, and the financial institution to review, relevant information that
may not have been considered during the appraisal or evaluation process.
Use of Third Parties
A financial institution’s use of third parties in the valuation review process does
not diminish its responsibility to comply with applicable laws and regulations.21
Moreover, whether valuation review activities and resolving deficiencies are performed
19 See 12 CFR 34.44 (OCC); 12 CFR 225.64 (Board); 12 CFR 323.4 (FDIC); and 12 CFR 722.4 (NCUA).
In addition, under TILA, if at any point during the lending process the financial institution reasonably
believes, through appraisal review or consumer-provided information, that an appraiser has not complied
with USPAP or ethical or professional requirements for appraisers under applicable State or Federal
statutes or regulations, the financial institution is required to refer the matter to the appropriate State
appraisal regulatory agency if the failure to comply is material. See 12 CFR 1026.42(g).
20 See Interagency Appraisal and Evaluation Guidelines, 75 FR 77450 (Dec. 10, 2010).
21 See OCC Bulletin 2013-29, “Third-Party Relationships: Risk Management Guidance;” CFPB
Compliance Bulletin and Policy Guidance; 2016-02, Service Providers (Oct
on is required to refer the matter to the appropriate State
appraisal regulatory agency if the failure to comply is material. See 12 CFR 1026.42(g).
20 See Interagency Appraisal and Evaluation Guidelines, 75 FR 77450 (Dec. 10, 2010).
21 See OCC Bulletin 2013-29, “Third-Party Relationships: Risk Management Guidance;” CFPB
Compliance Bulletin and Policy Guidance; 2016-02, Service Providers (Oct. 2016); FDIC FIL-44-2008,
“Guidance for Managing Third-Party Risk” (June 6, 2008); SR Letter 13-19 / CA Letter 13-21, “Guidance
on Managing Outsourcing Risk” (December 5, 2013, updated February 26, 2021). The NCUA does not
currently have supervisory or enforcement authority over third-party credit union vendors and service
providers. The NCUA issued LTR 07-CU-13 “Evaluating Third Party Relationships.” to communicate
guidance to examiners on a standard framework for reviewing third party relationships.
20
internally or via a third party, financial institutions supervised by the Board, FDIC,
NCUA, and the OCC are required to operate in a safe and sound manner and in
compliance with applicable laws and regulations, including those designed to protect
consumers.22 In addition, the CFPB expects financial institutions to oversee their
business relationships with service providers in a manner that ensures compliance with
Federal consumer protection laws, which are designed to protect the interests of
consumers and avoid consumer harm.23 A financial institution’s risk management
practices include managing the risks arising from its third-party valuations and valuation
review functions.
Reconsiderations of Value
An ROV request made by the financial institution to the appraiser or other
preparer of the valuation report encompasses a request to reassess the report based upon
deficiencies or information that may affect the value conclusion
institution’s risk management
practices include managing the risks arising from its third-party valuations and valuation
review functions.
Reconsiderations of Value
An ROV request made by the financial institution to the appraiser or other
preparer of the valuation report encompasses a request to reassess the report based upon
deficiencies or information that may affect the value conclusion. A financial institution
may initiate a request for an ROV because of the financial institution’s valuation review
activities or after consideration of information received from a consumer through a
complaint, or request to the loan officer or other lender representative.24
22 See Section 39 of the Federal Deposit Insurance Act (12 U.S.C. 1831p-1) (which requires each
appropriate Federal banking agency to prescribe safety and soundness standards for insured depository
institutions). The Federal banking agencies implemented section 1831p-1 by rule through the “Interagency
Guidelines Establishing Standards for Safety and Soundness.” See 12 CFR part 30, appendix A (OCC); 12
CFR part 208, appendix D-1 (Board); and 12 CFR part 364, appendix A (FDIC). See also 12 U.S.C. 1786
(b); 12 U.S.C. 1789; and 12 CFR 741.3 (NCUA).
23 CFPB Compliance Bulletin and Policy Guidance; 2016-02, Service Providers (Oct. 2016).
24 See Interagency Appraisal and Evaluation Guidelines, 75 FR 77450, 77463 (Dec. 10, 2010). “An
institution should establish policies and procedures for resolving any inaccuracies or weaknesses in an
appraisal or evaluation identified through the review process, including procedures for: Communicating
the noted deficiencies to and requesting correction of such deficiencies by the appraiser or person who
prepared the evaluation. An institution should implement adequate internal controls to ensure that such
communications do not result in any coercion or undue influence on the appraiser or person who performed
the evaluation
hrough the review process, including procedures for: Communicating
the noted deficiencies to and requesting correction of such deficiencies by the appraiser or person who
prepared the evaluation. An institution should implement adequate internal controls to ensure that such
communications do not result in any coercion or undue influence on the appraiser or person who performed
the evaluation. Addressing significant deficiencies in the appraisal that could not be resolved with the
original appraiser by obtaining a second appraisal or relying on a review that complies with Standards Rule
21
A consumer inquiry or complaint regarding a valuation would generally occur
after the financial institution has conducted its initial appraisal or evaluation review and
resolved any issues identified. Given this timing, a consumer may provide specific and
verifiable information that may not have been available or considered when the initial
valuation and review were performed. Regardless of how the request for an ROV is
initiated, a request could be resolved through a financial institution’s independent
valuation review or other processes to ensure credible appraisals and evaluations.
An ROV request may include consideration of comparable properties not
previously identified, property characteristics, or other information about the property
that may have been incorrectly reported or not previously considered, which may affect
the value conclusion. To resolve deficiencies, including those related to potential
discrimination, financial institutions can communicate relevant information to the
original preparer of the valuation and, when appropriate, request an ROV.
Complaint Resolution Process
Financial institutions can capture consumer feedback regarding potential
valuation deficiencies through existing complaint resolution processes
n. To resolve deficiencies, including those related to potential
discrimination, financial institutions can communicate relevant information to the
original preparer of the valuation and, when appropriate, request an ROV.
Complaint Resolution Process
Financial institutions can capture consumer feedback regarding potential
valuation deficiencies through existing complaint resolution processes. The complaint
resolution process may capture complaints and inquiries about the financial institution’s
products and services offered across all lines of business, including those offered by third
parties, as well as complaints from various channels (such as letters, phone calls, in
person, transmittal from regulators, third-party valuation service providers, emails, and
social media). Depending on the nature and volume, appraisal and other valuation-based
3 of USPAP and is performed by an appropriately qualified and competent State certified or licensed
appraiser prior to the final credit decision. Replacing evaluations prior to the credit decision that do not
provide credible results or lack sufficient information to support the final credit decision.”
22
complaints and inquiries can be an important indicator of potential risks and risk
management weaknesses. Appropriate policies, procedures, and control systems can
adequately address the monitoring, escalating, and resolving of complaints including a
determination of the merits of the complaint and whether a financial institution should
initiate an ROV
the final credit decision.”
22
complaints and inquiries can be an important indicator of potential risks and risk
management weaknesses. Appropriate policies, procedures, and control systems can
adequately address the monitoring, escalating, and resolving of complaints including a
determination of the merits of the complaint and whether a financial institution should
initiate an ROV.
Examples of Policies, Procedures, and Control Systems
Financial institutions may consider developing risk-based ROV-related policies,
procedures, control systems, and complaint processes that identify, address, and mitigate
the risk of deficient valuations, including valuations that involve prohibited
discrimination, and that:
Consider ROVs as a possible resolution for consumer complaints related to
residential property valuations.
Consider whether any information or other process requirements related to a
consumer’s request for a financial institution to initiate an ROV create
unreasonable barriers or discourage consumers from requesting an ROV.
Establish a process that provides for the identification, management, analysis,
escalation, and resolution of valuation related complaints across all relevant lines
of business, from various channels and sources (such as letters, phone calls, in
person, regulators, third-party service providers, emails, and social media).
Establish a process to inform consumers how to raise concerns about the valuation
sufficiently early enough in the underwriting process for any errors or issues to be
resolved before a final credit decision is made. This may include suggesting to
consumers the type of information they may provide when communicating with
regulators, third-party service providers, emails, and social media).
Establish a process to inform consumers how to raise concerns about the valuation
sufficiently early enough in the underwriting process for any errors or issues to be
resolved before a final credit decision is made. This may include suggesting to
consumers the type of information they may provide when communicating with
23
the financial institution about potential valuation deficiencies.
Identify stakeholders and clearly outline each business unit’s roles and
responsibilities for processing an ROV request (e.g., loan origination, processing,
underwriting, collateral valuation, compliance, customer experience or complaints).
Establish risk-based ROV systems that route the request to the appropriate
business unit (e.g., ROV requests that allege discrimination could be routed to the
appropriate compliance, legal, and appraisal review staff that have the requisite
skills and authority to research and resolve the request).
Establish standardized processes to increase the consistency of consideration of
requests for ROVs:
o Use clear, plain language in notices to consumers of how they may request
the ROV;
o Use clear, plain language in ROV policies that provide a consistent
process for the consumer, appraiser, and internal stakeholders;
o Establish guidelines for the information the financial institution may need
to initiate the ROV process;
o Establish timelines in the complaint or ROV process for when milestones
need to be achieved;
o Establish guidelines for when a second appraisal could be ordered and
who assumes the cost; and
o Establish protocols for communicating the status of the complaint or ROV
and results to consumers.
Ensure relevant lending and valuation related staff, inclusive of third parties (e.g.,
process;
o Establish timelines in the complaint or ROV process for when milestones
need to be achieved;
o Establish guidelines for when a second appraisal could be ordered and
who assumes the cost; and
o Establish protocols for communicating the status of the complaint or ROV
and results to consumers.
Ensure relevant lending and valuation related staff, inclusive of third parties (e.g.,
24
appraisal management companies, fee-appraisers, mortgage brokers, and
mortgage servicers) are trained to identify deficiencies (inclusive of prohibited
discriminatory practices) through the valuation review process.
VI.
CFPB Signing Authority
The Director of the Consumer Financial Protection Bureau, Rohit Chopra, having
reviewed and approved this document, is delegating the authority to electronically sign
this document to Laura Galban, CFPB Federal Register Liaison, for purposes of
publication in the Federal Register.
Michael J. Hsu,
Acting Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve System.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
Dated at Washington, DC, on June 1, 2023.
James P. Sheesley,
Assistant Executive Secretary.
Melane Conyers-Ausbrooks,
Secretary of the Board, National Credit Union Administration.
Laura Galban,
Federal Register Liaison, Consumer Financial Protection Bureau.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.