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Samantha: Hello, this is Samantha Shares.

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This episode is a high level summary
of the final interagency guidance on

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reconsiderations of value (R O V) for
residential real estate valuations

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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team has over two hundred and
Forty years of National Credit

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Union  Administration experience.

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We assist our clients with N C
U A so they save time and money.

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If you are worried about a recent,
upcoming or in process N C U A

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examination, reach out to learn how they
can assist at Mark Treichel DOT COM.

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Also check out our other podcast called
With Flying Colors where we provide tips

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on how to achieve success with N C U A.

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And now the summary.

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1.

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Purpose and Scope:

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- The guidance is issued by the Board of
Governors of the Federal Reserve System,

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Consumer Financial Protection Bureau,
Federal Deposit Insurance Corporation,

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National Credit Union Administration, and
Office of the Comptroller of the Currency.

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- It aims to highlight risks associated
with deficient residential real estate

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valuations and describe how credit
unions can incorporate R O V processes

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into their risk management functions.

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- The scope is limited to real
estate-related financial

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transactions secured by single
1-4 family residential properties.

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2.

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Background and Importance:

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- Credible collateral valuations, including
appraisals, are essential to the integrity

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of residential real estate lending.

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- Deficient valuations can result
from prohibited discrimination,

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errors, omissions, or
inappropriate valuation methods.

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- Such deficiencies can prevent
individuals and families from

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building wealth through homeownership
and pose risks to credit unions.

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3.

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Regulatory Context:

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- The guidance references several relevant
laws and regulations, including:

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- Equal Credit Opportunity
Act (ECOA) and Regulation B

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- Fair Housing Act (FH Act)

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- Truth in Lending Act
(TILA) and Regulation Z

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- Uniform Standards of Professional
Appraisal Practice (USPAP)

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- It emphasizes that credit unions
must comply with these laws and

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operate in a safe and sound manner.

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4.

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Reconsideration of Value (R O V) Process:

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- An R O V is a request from the financial
institution to the appraiser or valuation

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preparer to reassess the report based on
potential deficiencies or new information.

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- R O Vs can be initiated by the
institution's review process

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or after consideration of
consumer-provided information.

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- The guidance allows credit unions to
implement R O V policies and procedures

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to review relevant information not
considered in the original valuation.

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5.

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Use of Third Parties:

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- The use of third parties in the valuation
review process does not diminish an

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institution's responsibility to comply
with applicable laws and regulations.

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- Credit unions are expected to manage
risks arising from third-party valuations

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and valuation review functions.

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6.

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Complaint Resolution Process:

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- Credit unions can capture consumer
feedback on potential valuation

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deficiencies through existing
complaint resolution processes.

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- The process should cover complaints
from various channels and sources.

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- Complaints can be an important
indicator of potential risks

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and risk management weaknesses.

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7.

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Recommendations for Policies,
Procedures, and Control Systems:

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- Consider R O Vs as a possible
resolution for valuation complaints

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- Establish processes for identifying,
managing, analyzing, escalating, and

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resolving valuation-related complaints

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- Inform and educate consumers on
how to raise valuation concerns

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early in the underwriting process

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- Identify stakeholders and outline
roles and responsibilities

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for processing R O V requests

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- Establish risk-based R O V
systems to route requests to

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appropriate business units

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- Use standardized processes to increase
consistency in handling R O V requests

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- Ensure relevant staff, including third
parties, are trained to identify valuation

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deficiencies, including practices
that may result in discrimination

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8.

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Flexibility in Implementation:

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- The guidance is principles-based and
does not mandate specific requirements.

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- It allows credit unions flexibility
in implementation based on their

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size, complexity, and risk profile.

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- Smaller credit unions may have
policies and procedures that

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differ from larger credit unions.

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9.

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Regulatory Expectations:

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- While the guidance does not have
the force of law or regulation, it

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outlines supervisory expectations for
how credit unions should handle R O

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Vs and valuation-related complaints.

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- Credit unions are expected to
incorporate these considerations

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into their risk management practices.

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10.

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Potential Impact:

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- The guidance aims to improve the
integrity of the residential real

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estate lending process by addressing
potential deficiencies in valuations.

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- It may help mitigate risks associated
with discrimination in property

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valuations and improve consumer
protection in the lending process.

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This guidance provides a framework
for credit unions to develop and

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implement R O V processes that align
with regulatory expectations and help

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ensure the credibility and fairness
of residential real estate valuations.

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This concludes the final interagency
guidance on reconsiderations of

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value (R O Vs) for residential
real estate valuations.

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If your Credit union could use assistance
with your exam, reach out to Mark Treichel

00:05:50.512 --> 00:05:53.292
on LinkedIn, or at mark Treichel dot com.

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This is Samantha Shares and
we Thank you for listening.