The Federal Housing Administration (FHA) has withdrawn appraisal review guidelines that were in use by the U.S. Department of Housing and Urban Development (HUD). The changes are meant to streamline the appraisal process by removing a layer of oversight.

The announcement marks a significant change regarding appraisal reviews. They rescind the reconsideration of value (ROV) process implemented by the FHA during the administration of President Joe Biden in response to findings of possible appraisal bias.

The Trump administration withdrew a 2021 mortgagee letter clarifying the requirements for appraisers and mortgagees to align with fair housing laws in the appraisal process, according to the American Bankers Association. The new policy also rescinds two 2024 letters on the use of ROV in appraisals.

An ROV is a request to an appraiser to reconsider their valuation of a residential property. Financial institutions may request an ROV if a consumer reports a potential deficiency in the appraisal or provides additional information that may alter the property’s estimated value.

The Biden administration attempted to expand HUD’s existing ROV processes to include borrower-initiated ROV requests. Last October, the FHA began collecting data to track borrower-initiated ROVs and their results. But those mortgagee letters have now been rescinded before sufficient data was collected to examine the policy’s impact.

The American Bankers Association noted that in the recent letter rescinding the earlier policies, the FHA identified an executive order from President Donald Trump which called for reversing policies that have adversely affected key industries, including the housing market.