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FHA · Mortgagee Letter ML 2025-08 · Published

Rescinding Multiple Appraisal Policy Related Mortgagee Letters

FHA rescinds Mortgagee Letters 2024-07, 2024-16, and 2021-27 to restore previous appraisal policies for Title II forward and HECM mortgages effective immediately. Mortgagees must follow restored requirements for appraisal review, quality evaluations, second appraisals, and underwriter-initiated reconsiderations of value, while borrower-initiated ROV rules are removed.

Action requiredIn effect nowChecks passed· adjusted automaticallyRead the letter ↗ (opens in a new tab)

Loan impact

From the letter text · verified

Applies to: FHA Single Family Title II forward and Home Equity Conversion Mortgage (HECM) programs.

Addressed to
All FHA-Approved Mortgagees
Investor
FHAFrom the publisher, not quoted from the text
Programs
FHAFrom the publisher, not quoted from the text
Affected areas
Report format; Valuation; RecordsGuide Section I.B.1.e.i
Affected documents
Appraisal report; form HUD-92800.5B
Applicability confidence
Verified: every row taken from the source text is supported by it; rows marked "from the publisher" are not quoted
Supporting quotes from the letter
  • affected areas“The Mortgagee must review the appraisal and ensure that it is complete, accurate, and provides a credible analysis of the marketability and value of the Property.”
  • affected areas“The underwriter may request a reconsideration of value when the Appraiser did not consider information that was relevant on the effective date of the appraisal.”
  • guide sections“All updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1, FHA Single Family Housing Policy Handbook (Handbook 4000.1).”
  • affected documents“When there are multiple appraisals, the underwriter must confirm the appraisal selected by the HECM collateral risk assessment is used to complete form HUD-92800.5B.”
  • affected documents“The Appraiser must report the results of their analysis in the appraisal report.”

What changed

From the letter text · Sections II.A.3.a.ix, II.A.1.a.iii(B)(9)(a), II.A.3.a.vi, II.A.3.a.v, I.B.1.e.i
RequirementPreviouslyNow
Reconsideration of Value requestsChangedRequiredSection II.A.3.a.ixPreviously: Borrower-initiated reconsideration of value process and minimum processing requirements under ML 2024-07.Restores previous policy allowing underwriters to request an ROV when relevant information was not considered, requiring underwriters to provide all relevant data, and prohibiting charging borrowers if data unavailability was not their fault.
Second Appraisal by Original Mortgagee documentation and fee paymentChangedRequiredSection II.A.1.a.iii(B)(9)(a)Not statedThe mortgagee must fully document the deficiency and status of the appraisal in the mortgage file and must pay for the second appraisal.
Appraisal Review standardChangedRequiredSection II.A.3.a.viNot statedThe mortgagee must review the appraisal and ensure that it is complete, accurate, and provides a credible analysis of the marketability and value of the property.
Quality of Appraisal evaluationChangedRequiredSection II.A.3.a.vNot statedThe mortgagee must evaluate the appraisal and ensure it complies with the requirements in Valuation and Reporting Protocols and any subject property-specific appraisal requirements.
Appraiser general compliance with lawChangedRequiredSection I.B.1.e.iPreviously: Clarified FHA requirements for Appraisers and Mortgagees regarding compliance with fair housing laws related to appraisal under ML 2021-27.Restores previous general compliance language requiring appraiser performance to comply with all applicable federal, state, and local laws and licensing/certification requirements.
Borrower-initiated Reconsideration of Value policy rescissionRemovedPreviously: Expanded HUD’s existing Reconsideration of Value (ROV) process to include a Borrower-initiated ROV process and established minimum requirements and protocols for the Mortgagee to follow when processing a Borrower-initiated ROV request.Rescinds Single Family Housing policy changes issued in ML 2024-07, ML 2024-16, and ML 2021-27 to restore previous policy.

Also affected: Sections II.A.3.a.x, II.B.2.a.iii(B)(10)(b)(i), II.B.4.a.ii(E), II.B.4.a.ii(F), II.B.4.a.ii(H), II.B.4.a.ii(I), II.D.2, II.D.2.e.

What to do

AWACS interpretation · not source language

What to review: Review the immediately effective restored appraisal review requirements, underwriter reconsideration of value procedures, and second appraisal documentation and fee payment rules.

Underwriting

Effective immediately, evaluate appraisals for completeness and accuracy, supply all relevant data when requesting a reconsideration of value, and document appraisal deficiencies in the mortgage file while paying for any required second appraisal.

Appraisal

Effective immediately, perform appraisal services in strict compliance with all applicable federal, state, and local laws, including all state and local licensing and certification requirements.

Compliance

Effective immediately, update appraisal policies and procedures to restore underwriter-initiated reconsideration of value rules, remove borrower-initiated reconsideration of value workflows, and prohibit charging borrowers for second appraisals or unprovided data fees.

QC implications

  • Sample mortgage files with second appraisals to confirm that the appraisal deficiency is fully documented and that the mortgagee paid for the second appraisal.
  • Review underwriter-initiated reconsideration of value requests to ensure all necessary data was provided to the appraiser and no related fees were improperly charged to the borrower.
  • Test appraisal reviews to verify compliance with Valuation and Reporting Protocols and property-specific requirements.

Source and record

Version 1 · archived

Checks

  • Source verified: Passed

    The document ID, link and publication date match the official source.

  • Quotes match the source: Passed

    Every quoted passage appears word for word in the official document.

  • Requirements backed by the source: Passed

    Anything marked required is backed by the requirement language and dates in the source.

  • In scope: Passed

    The document is about residential mortgage lending.

  • Format and labels: Passed, adjusted automatically

    The record follows the AWACS format and uses its standard labels.

    • A detail the source does not support was removed or adjusted