How To Formally Appeal Your VA Home Loan Appraisal Using “Reconsideration Of Value”
Among the benefits of buying a home with a VA mortgage is that there's a formal appraisal review process built right into underwriting. It's called a Reconsideration of Value and it may be invoked by either the buyer or seller in a VA purchase transaction.
The Reconsideration of Value is used when the appraised value of a home is less than its contracted purchase price.
With an FHA or conforming mortgage, scenarios in which a home fails to appraise for its purchase price often result in canceled contracts. This happened with 1 in 3 sales contracts in early-2012, according to the National Association of REALTORS®.
With a VA loan, the contract is much less likely to break.
Building a VA Appraisal Appeal
When a VA appraisal fails to meet the home's purchase price, the buyer or seller party may request a formal Reconsideration of Value.
The Reconsideration of Value process is not like asking for a second opinion; there is no new appraisal performed, nor is there an opportunity to use a "different appraiser". Rather a Reconsideration of Value is about presenting facts that may have been overlooked or omitted by the original home appraisal.
With a request made in writing to the lender, parties to the purchase may challenge the appraisal and its findings.
Common challenges to an appraisal include :
- Additional comparable homes which were not used in the initial appraisal
- Data on why specific comparable homes should not have been in the appraisal
- Errors in square footage, room count or school district
- Errors in upgrades, age, or condition which may have an effect on value adjustments
Buyers or sellers may also submit a Comparative Market Analysis (CMA), if desired. In general, the more relevant, supporting documentation the parties can provide to the original appraiser, the more likely that the Reconsideration of Value will have a positive outcome.
To start with the Reconsideration of Value process, speak with your lender.
Reconsideration Of Value : How Claims Are Handled
When a Reconsideration of Value is received by the lender, there are two potential courses of action, depending on the severity of the request.
For appraisal appeals in which the requesting party seeks less than 10% in valuation change, the mortgage lender will review the request, then forward it to the original VA appraiser, along with all submitted, supporting documentation. The original appraiser will then consider the request and either increase the appraised value, or leave it as-is.
Note that the appraiser is under no obligation to raise the appraised value, and may respond to your request with a letter explaining why the original value is valid and correct. If this happens, a second Reconsideration of Value may not be submitted.
However, if the requesting party seeks a valuation change of 10% or more, the mortgage lender will skip the original appraiser as part of the review process and will forward the Reconsideration of Value request direct to the Department of Veterans Affairs.
There, an agency staff member will review the original appraisal and the submitted, supporting documentation, and will issue a revised value. Note that there is no guarantee that the revised value will be different from the appraiser's original appraised value.
In this instance, again, a second Reconsideration of Value may not be submitted.
Note that a Reconsideration of Value may not be used to override an appraiser's opinion of minimum property requirements -- health and safety standards meant to ensure that veterans purchase "move-in ready" homes.
VA Loans : 100% Financing, No Mortgage Insurance
VA mortgages offer more benefits to military borrowers than just the Reconsideration of Value appraisal review process.
Home buyers using a VA mortgage can also :
- Buy homes with zero downpayment and pay no annual mortgage insurance
- Refinance via the VA IRRRL program -- the easiest refinance program available
- Get access to mortgage rates which are often lower than comparable conforming rates
It's no wonder that military loans reached an 18-year high in 2012 -- the program is easy, accessible, and home buyer-friendly. Get started with a VA rate quote today. See what a VA loan can do for your purchase.
Contact The Mortgage Mark with any questions!! www.themortgagemark.com mark@themortgagemark.com
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