Episode Details

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Hello, this is Samantha Shares. This episode is a high level summary of the final interagency guidance on reconsiderations of value (R O V) for residential real estate valuations

 This podcast is educational and is not legal advice.  We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union  Administration experience.  We assist our clients with N C U A so they save time and money.  If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM.  Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.

And now the summary.

1. Purpose and Scope:

   - The guidance is issued by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency.

   - It aims to highlight risks associated with deficient residential real estate valuations and describe how credit unions can incorporate R O V processes into their risk management functions.

   - The scope is limited to real estate-related financial transactions secured by single 1-4 family residential properties.

2. Background and Importance:

   - Credible collateral valuations, including appraisals, are essential to the integrity of residential real estate lending.

   - Deficient valuations can result from prohibited discrimination, errors, omissions, or inappropriate valuation methods.

   - Such deficiencies can prevent individuals and families from building wealth through homeownership and pose risks to credit unions.

3. Regulatory Context:

   - The guidance references several relevant laws and regulations, including:

     - Equal Credit Opportunity Act (ECOA) and Regulation B

     - Fair Housing Act (FH Act)

     - Truth in Lending Act (TILA) and Regulation Z

     - Uniform Standards of Professional Appraisal Practice (USPAP)

   - It emphasizes that credit unions must comply with these laws and operate in a safe and sound manner.

4. Reconsideration of Value (R O V) Process:

   - An R O V is a request from the financial institution to the appraiser or valuation preparer to reassess the report based on potential deficiencies or new information.

   - R O Vs can be initiated by the institution's review process or after consideration of consumer-provided information.

   - The guidance allows credit unions to implement R O V policies and procedures to review relevant information not considered in the original valuation.

5. Use of Third Parties:

   - The use of third parties in the valuation review process does not diminish an institution's responsibility to comply with applicable laws and regulations.

   - Credit unions are expected to manage risks arising from third-party valuations and valuation review functions.

6. Complaint Resolution Process:

   - Credit unions can capture consumer feedback on potential valuation deficiencies through existing complaint resolution processes.

   - The process should cover complaints from various channels and sources.

   - Complaints can be an important indicator of potential risks and risk management weaknesses.

7. Recommendations for Policies, Procedures, and Control Systems:

   - Consider R O Vs as a possible resolution for valuation complaints

   - Establish processes for identifying, managing, analyzing, escalating, and resolving valuation-related complaints

   - Inform and educate consumers on how to