As a veteran or a military service member, one of the benefits you may be entitled to is a VA home loan. VA loans offer several advantages, such as no down payment requirements, lower interest rates, and easier credit qualifications. However, the property you want to purchase must pass a VA appraisal before obtaining a VA loan.
Let’s look at VA appraisals, the Tidewater Act, and the Reconsideration of Value (ROV) process.
A VA appraisal is a valuation of a property conducted by a VA-approved appraiser. The appraisal aims to ensure that the property meets the VA’s minimum property requirements and is worth the loan amount. The VA appraisal process is more stringent than conventional appraisals and includes a thorough examination of the property’s condition and value.
Suppose the VA appraiser determines that the estimated value of the property is less than the agreed-upon purchase price. In that case, the Tidewater Act comes into play. The Tidewater Act is a provision that allows the appraiser to notify the lender and the borrower that the appraised value is likely to be lower than the purchase price. The notification is intended to give the borrower and lender the opportunity to provide additional information that may affect the property’s value.
The Tidewater Act requires the appraiser to notify the lender and the borrower within two business days of the determination that the appraised value is likely to be lower than the purchase price. The notification must include a statement that the borrower has the right to provide additional information to the appraiser that may affect the appraised value. The borrower must provide any additional information within five business days of receiving the notification.
Reconsideration of Value (ROV)
If the borrower provides additional information, the appraiser will review the information and determine whether it affects the appraised value. If the appraiser determines that the additional information changes the appraised value, the appraiser will issue a new appraisal. Suppose the appraiser determines that the additional information does not affect the appraised value. In that case, the appraiser will issue a statement of no change.
If the appraiser issues a statement of no change, the borrower may request a Reconsideration of Value (ROV). An ROV is a formal request for the appraiser to reconsider the appraised value based on additional information or documentation that was not considered in the original appraisal. The ROV must be submitted within 30 days of the original appraisal report.
The appraiser will review the additional information provided in the ROV and issue a final determination. If the appraiser determines that the additional information affects the appraised value, the appraiser will issue a new appraisal. If the appraiser determines that the additional information does not affect the appraised value, the appraiser will issue a statement of no change.
VA appraisals are an essential part of the VA home loan process. The Tidewater Act and Reconsideration of Value processes provide opportunities for borrowers and lenders to address potential discrepancies in appraised value. As a borrower, it is essential to understand your rights and options regarding VA appraisals and work closely with your lender and appraiser to ensure a successful home loan process.
- United States Department of Veterans Affairs. (2021). Tidewater Initiative. Retrieved from https://www.benefits.va.gov/homeloans/apptidewater.asp
- United States Department of Veterans Affairs. (2021). Reconsideration of Value. Retrieved from https://www.benef