Why Appraisal Review Matters to Your Loan
When you apply for a mortgage, the appraisal often determines whether your loan gets approved and at what loan-to-value ratio. Fannie Mae requires lenders to thoroughly review every appraisal report before using it to underwrite your loan. This isn't just a quick glance at the final value — it's a comprehensive evaluation of the appraiser's methodology, comparable sales, and conclusions.
Your lender must verify that the appraisal meets all technical requirements and that the opinion of value makes sense given the local market conditions. They're looking for red flags like inappropriate comparable sales, calculation errors, or signs of discriminatory practices. If the appraiser used a house that sold six months ago when there are recent sales available, or compared your suburban home to properties in a different neighborhood, the lender should catch these issues.
The lender's staff must be trained to identify both technical deficiencies and potential bias in appraisals. This training requirement exists because appraisal bias has been a persistent problem in the mortgage industry, particularly affecting minority borrowers and certain neighborhoods.
Your Right to Challenge an Appraisal
If you receive an appraisal that seems too low or contains obvious errors, you can request a reconsideration of value. This is your formal right under Fannie Mae guidelines, not a favor from your lender. The ROV process gives you a structured way to present evidence that the appraisal may be flawed.
Your lender must provide you with a disclosure explaining the ROV process when they deliver your appraisal. This disclosure should tell you exactly how to submit your request and what documentation you need to provide. The lender cannot start the ROV process until they've completed their own review of the appraisal.
Say the appraiser valued your home at $350,000, but you believe it should be worth $380,000 based on recent sales in your neighborhood. You can submit an ROV request with up to five alternative comparable sales that you think better represent your property's value. You'll need to provide the source of this data — typically MLS listings or public records — and explain why these comparables are more appropriate than the ones the appraiser used.
What Documentation You Need for an ROV Request
When submitting an ROV request, you must follow a standardized format that includes specific information. Your request needs your name, the property address, the appraisal's effective date, the appraiser's name, and the date you're submitting the ROV.
You must identify specific issues with the appraisal. Vague complaints like "the value seems low" won't work. Instead, you need to point out concrete problems: "The appraiser used a comparable sale from eight months ago when there are three sales from the past two months that are more similar to my property."
If you're providing alternative comparable sales, include detailed information about each property. This means square footage, lot size, age, condition, and sale price. You need to explain why each comparable is more appropriate than what the appraiser used. The source of your data matters too — MLS listings, public records, or other publicly available information are acceptable.
Your lender should help you understand what constitutes sufficient detail for an ROV request. If your initial submission is unclear or missing information, they should work with you to fix these issues rather than simply rejecting your request.
When Lenders Can Order Additional Appraisals
Lenders cannot simply order a second appraisal because they don't like the value of the first one. Fannie Mae's appraiser independence requirements strictly limit when subsequent appraisals are allowed. The lender needs a legitimate business reason that's documented in your loan file.
Valid reasons include clear indicators that the initial appraisal was inaccurate, not credible, or violated professional standards. This might happen if the appraiser made significant factual errors about your property, used inappropriate comparable sales, or showed signs of discriminatory practices.
The lender can also order a second appraisal as part of their established quality control process, but they must have written policies governing this practice. These policies must require the lender to use the most reliable appraisal, not simply the one with the highest value.
If your lender orders a second appraisal due to suspected discrimination or other serious violations, they must report the problematic appraiser to the appropriate licensing agency. This reporting requirement helps protect future borrowers from similar issues.
How Lenders Handle Multiple Appraisals
When your lender has multiple opinions of value — whether from additional appraisals, desk reviews, or field reviews — they must choose the most credible one. This decision should be based on the quality of the analysis, not the value that helps your loan qualify.
The lender must document their reasoning for which appraisal they used in your loan file. If they chose the lower of two appraisals, they need to explain why that appraisal was more reliable. Maybe the second appraiser had better knowledge of your specific neighborhood, or the first appraisal contained calculation errors that weren't corrected.
This chosen value becomes the basis for your loan-to-value ratio and determines your loan terms. It's also the value the lender warrants to Fannie Mae when they sell your loan. If the appraisal can be submitted to Fannie Mae's Uniform Collateral Data Portal, it must receive a "Successful" status before your loan can be delivered.
Common Problems That Complicate the Process
ROV requests often fail because borrowers don't provide enough specific detail about the appraisal's deficiencies. General statements about market conditions or personal opinions about value aren't sufficient. You need to identify concrete errors or inappropriate methodology.
Timing can also create problems. You cannot request an ROV after your loan closes, so you need to review your appraisal carefully and submit any concerns quickly. Some borrowers wait until they're at the closing table to raise appraisal concerns, but by then it's too late for the ROV process.
The appraiser must respond to ROV requests with specific commentary explaining their conclusions, even if they determine no changes are needed. If the appraiser simply ignores the ROV request or provides an inadequate response, your lender should follow up or consider rejecting the appraisal entirely.
Lenders sometimes struggle with the requirement to complete their own appraisal review before starting the ROV process. If they rush to initiate an ROV without properly reviewing the appraisal first, they might miss obvious deficiencies that should have been caught during their initial review.
References
For the official guidelines, see 5604.4: Reviewing appraisal reports, reconsideration of value requested by the Borrower, obtaining subsequent appraisal reports and reconciling multiple opinions of market value in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
Fannie Mae and Freddie Mac update their rules several times a year. Get notified when changes affect your mortgage eligibility, required documents, or loan terms.
No spam · Unsubscribe anytime
Original Freddie Mac Guideline Text
This section contains:
Appraisal report review requirements
Reconsideration of value (ROV) requirements
Requirements for obtaining subsequent appraisal reports, appraisal desk review reports and appraisal field review reports
Reconciling multiple opinions of market value
Mortgage file documentation and delivery data
(a)
(i)
Seller responsibility
The Seller must evaluate the appraisal report to determine whether it meets the requirements of this topic and the Seller’s other Purchase Documents and whether the opinion of market value is credible and adequately supported.
The Seller must ensure valuation and related staff, inclusive of third parties (e.g., appraisal management companies, fee-appraisers, review appraisers, underwriters) are trained to identify prohibited discriminatory practices and appraisal deficiencies (including the unacceptable appraisal practices in
Section 5603.4
) through the valuation review and ROV processes. The Seller must have a process for remediating any deficiencies.
(ii)
Deficiency remediation and appraisal report rejection
Before rejecting an appraisal report, the Seller must request the appraiser to provide additional information and/or address any deficiencies with the appraisal report. If the appraiser does not address the Seller’s concerns and the Seller is unable to conclude the appraisal report meets Freddie Mac requirements, the appraisal report must be rejected, and a new appraisal report must be obtained.
(b)
ROV requirements
For Mortgages requiring delivery with an appraisal report, the Seller must have in place policies and procedures that address requests for an ROV that meet, at a minimum, the following requirements and any requirements required under applicable local, State or federal law. Freddie Mac’s ROV requirements are minimum standards. If State law or regulation requires more than Freddie Mac’s guidelines, the State law or regulation controls.
The ROV process must include a review and resolution procedure, including steps for the Borrower(s) to appeal an appraisal report’s findings when the Borrower(s) believes the appraisal report or the appraiser’s opinion of value is unsupported, may be deficient due to an unacceptable appraisal practice, or reflects discriminatory practices. The Seller remains responsible for ensuring that the opinion of market value is credible, and the appraisal report meets the requirements of the Seller’s Purchase Documents.
In addition, the Seller’s ROV policies and procedures must:
Provide for a disclosure to the Borrower(s) outlining the ROV process upon delivery of the appraisal report to the Borrower(s).
The disclosure must include instructions for requesting the ROV
The requirements for Borrower submissions of information are the same as those included in the standardized format for submission to the appraiser as described below.
Ensure the Seller completes its appraisal review before initiating the ROV process
Provide a standardized format for providing the rationale, requirements and supporting documentation for the ROV outcome to be communicated to the appraiser. This must include:
Reporting the Borrower(s) name, property address and the effective date of the appraisal, appraiser’s name and date of the ROV submission
Identifying specific issues and deficiencies in the appraisal report
Providing detailed information, data or alternative comparable properties (maximum of five alternative comparables are permitted), including the source of the data (e.g., multiple listing service listing or publicly available information) and the rationale for the inclusion of the alternative comparables, information or data, as applicable
Ensure the ROV request is accurately completed and includes sufficient detail to warrant reengagement of the appraiser. If the ROV request is unclear, deficient or requires additional information, the Seller should remediate with the Borrower(s), as applicable.
Instruct the appraiser to deliver a revised appraisal report that includes specific commentary explaining their conclusions to the ROV request, regardless of whether the appraiser determines that changes are not needed to address the issues identified in the ROV
Define turn-time expectations for communicating results of the ROV to the Borrower
Specify that one Borrower-initiated ROV is permitted per appraisal
Ensure documentation related to the outcome of the ROV is retained in the Mortgage file
Note that once a loan is closed, an ROV request is no longer permitted
Not conflict with
Exhibit 35, Appraiser Independence Requirements
If material deficiencies are identified in the appraisal report that are not corrected or addressed by the appraiser upon request, or if there is evidence of unacceptable appraisal practices as outlined in
Section 5603.4
, the Seller must forward the appraisal report, along with a summary of findings, to the appropriate appraisal licensing agency or regulatory board. Additionally, if there are suspected overt violations of antidiscrimination laws, the lender must report it to the proper local, State or federal agency. In the event of these occurrences, the lender may obtain a second or subsequent appraisal report in adherence to Freddie Mac requirements and local, State and federal laws.
(c)
Requirements for obtaining subsequent appraisal reports, appraisal desk review reports and appraisal field review reports
Exhibit 35
provides that the Seller must not order, obtain, use or pay for a subsequent appraisal report, in connection with a Mortgage financing transaction unless:
There are indicators the initial appraisal report was inaccurate, not credible or in violation of legal and/or professional standards related to nondiscrimination and such indicators are clearly and appropriately noted in the Mortgage file
The subsequent appraisal is done pursuant to written, pre-established bona fide pre- or post-funding appraisal review or quality control processes or underwriting guidelines, and so long as the Seller adheres to a policy of selecting the most reliable appraisal, rather than the appraisal that states a particular value; or
A subsequent appraisal is required by law
(d)
Reconciling multiple opinions of market value
If the initial appraisal report was not rejected and a subsequent appraisal report, appraisal desk review report or appraisal field review report is obtained in compliance with the requirements of this chapter and the Seller’s other Purchase Documents, the Seller must use the most credible opinion of market value.
(e)
Mortgage file documentation and delivery data
The Seller must retain in the Mortgage file copies of all documents used in the valuation analysis, as well as written documentation justifying the Seller’s decision as to which appraisal report (or appraisal desk review report or appraisal field review report) was used to underwrite the Mortgage.
The value used to underwrite the Mortgage is the basis for the Seller’s value warranty and is the value that must be provided to Freddie Mac as part of the delivery data. If the appraisal report used to underwrite the Mortgage can be submitted to the Uniform Collateral Data Portal
®
(UCDP
®
), the appraisal report must be submitted to the UCDP and receive a “Successful” status prior to delivery of the Mortgage. See
Section 5606.2
for more information on UCDP.
