The guidelines outline a variety of circumstances that might trigger a so-called reconsideration of value, or ROV, process, including discrimination on the grounds of race, color, religion, sex, disability, familial status or national origin. 

Valuations are a key risk management tool for lenders, as they determine the collateral value for mortgages and other loans. Consumers have long been able to challenge valuations, but the guidance adopted by the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and National Credit Union Administration specifies when and why an ROV is appropriate. 

Regulators received 45 comment letters about their proposal last summer, with feedback coming in from banking organizations, real estate companies, trade associations, nonprofits, loan officers and appraisers, among others. The Appraisal Foundation — the Washington, D.C.-based entity that writes the standards and qualification requirements for appraisers throughout the country — also weighed in.

The final framework is largely the same as what the agencies' proposed last year, though with some notable clarifications. One of the biggest addendums notes that the scope of the framework is "limited to real estate-related financial transactions that are secured by a single one-to-four family residential property."

Some commenters asked for more specific guidance around certain issues that the agencies opted not to weigh in on. These include questions about who should bear the cost of a second appraisal, whether or not remarks from an appraiser should be included in an ROV and timelines for reconsideration requests. 

The agencies noted that there was no "one-size-fits-all" solution to these issues, so it left them up to individual institutions to decide for themselves.

Regulators also addressed concerns raised about the impact of more abundant ROV requests on the independence of appraisers. The assumption by some in and around the profession is that being able to have their reports challenged more easily will make appraisers more likely to give higher valuations. But the agencies did not amend the guidelines to address these concerns.

"The agencies considered the comments received on appraiser independence and reiterate that institutions are responsible for maintaining standards of independence for all real estate lending activity, including ROVs, as required by the agencies' appraisal regulations and, as applicable, [the Appraisal Foundation's rule book]," the guidance notes.

Similarly, the agencies declined to clarify what constitutes a "comparable sale" when compiling or reconsidering an appraisal. The final guidance also points to existing standards from the foundation. 

The issue was raised by commenters because the guidance allows for prospective borrowers to ask that other comparable sales be considered during an ROV process. Appraisers have noted that identifying comparables is the backbone of property valuation and expressed concerns that a broader interpretation of the term could undermine their credibility. 

The finalization is the last in a string of appraisal-related regulatory actions. On Wednesday, the same agencies finalized a rule on the use of appraisal-generating software known as automated valuation models, or AVMs. And last week, the Department of Housing and Urban Development reached an agreement with the Appraisal Foundation to end a long-running probe into alleged discriminatory practices in exchange for the organization expanding its diversity efforts.

All these actions stem from the White House's government-wide initiative known as the Property Appraisal and Valuation Equity, or PAVE, task force, which was convened in 2021.