VA Loan Rule Changes on Value Adjustments
VA Circular 26-11-21, recently posted at the Department of Veterans Affairs official site VA.gov, announces VA policy changes that directly affect appraisals and the VA loan process. The circular announces a major change–”Rescission of prior SAR authority to issue NOV at other than appraiser’s value estimate”.
Before the policy change, a VA fee appraiser could examine a property, file his or her report with a declared value of the home, but have that value adjusted up or down to a maximum of a five percent difference.
But the Department of Veterans Affairs has ended that practice, stating in VA Circular 26-11-21, “In light of the challenging and volatile market conditions existing today, as well as rapidly changing state regulatory requirements, it is important that professional, VA fee panel appraisers be relied upon to provide market value estimates, as they are the individuals best qualified to submit an objective, independent opinion of market value.”
The new VA guidelines, which are effective immediately from the issuance of the instruction in late December 2011, state that the appraiser’s valuation of the home as listed in the official appraisal report, must be used as-is with no adjustment. “Questions regarding appraisal errors, omissions, or discrepancies, that arise during the initial review, should be handled by following normal procedures involved in contacting the appraiser.”
The value of the home for VA loan purposes can only be changed if the appraiser files an amended appraisal, and VA staff may “continue to make adjustments to the NOV as necessary.”
For borrowers, this is all mostly transparent, but it does affect the VA loan transaction from both the appraiser’s end and the lender’s–appraiser and lender may have more contact than in the past when it comes to questions or requests for reconsideration of the original appraisal amount.
About Joe Wallace
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.