As of October 31, 2024, Fannie Mae has introduced new requirements that will significantly impact how property values are assessed in conventional loans. Whether you’re looking to buy a home or refinance your current mortgage, these changes make it more critical than ever to work with an experienced lender. Here’s what you need to know.

Stricter Appraisal Reconsideration of Value (ROV) Requests

In the past, if you didn’t agree with an appraisal value on a Fannie Mae conventional loan, you had some flexibility in disputing it. But under the new rules, it’s not going to be so easy. The revised guidelines mean that any request to reconsider a value (ROV) must be supported by concrete, relevant evidence. Here’s a breakdown of what needs to be provided:

• Comparable Sales Data: If there are new or previously overlooked comparable properties with similar characteristics that weren’t considered in the initial appraisal, these must now be included in the ROV request.
• Property Characteristics: Any significant discrepancies in the size, condition, or features between your property and the appraisal must be clearly demonstrated.
• Market Conditions: Any misrepresentation or omission of relevant market conditions must be corrected and supported with evidence.
• Renovations/Upgrades: If your property has undergone significant recent improvements that weren’t fully considered in the appraisal, detailed documentation must be provided.
• Clerical/Data Input Errors: Identification of significant clerical errors that could affect the appraised value must be meticulously presented.

Why This Matters in a Purchase Scenario

Let’s say you’re buying your dream home. The seller has accepted your offer, but when the appraisal comes back, the value is lower than expected. Under the new rules, challenging this value isn’t just a matter of pointing out the nice renovations the seller did. You’ll need solid evidence, such as detailed reports on similar homes that sold for higher prices or proof of market trends that weren’t considered.

Without this evidence, you may find yourself stuck with an appraisal that could potentially derail your loan approval. In competitive markets, this could mean losing out on the home entirely or having to come up with more cash to make up the difference.

The Importance of Working with an Experienced Lender

Given these new regulations, partnering with a lender who understands the intricacies of Fannie Mae’s updated guidelines is essential. An experienced lender will help ensure that the appraisal process is as smooth as possible, helping you gather the necessary documentation and guiding you through any challenges that may arise.

At the end of the day, buying or refinancing a home is one of the most significant financial decisions you’ll make. With the new mortgage value rules in effect, having a knowledgeable professional by your side can make all the difference in successfully navigating this process.

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