Deciphering the VA Lender’s Handbook Chapter 13 Part 7
There are occasions that, after the Notice of Value (NOV) has been issued by either the VA or the Lender’s SAR (Staff Appraisal Reviewer), the NOV might need to be changed. The VA permits a change being made to the NOV under one of two conditions. Either the change must be clearly warranted and fully supported by real estate market data or other valid information which would be considered adequate and reasonable by professional appraisal standards, or the NOV was issued in a fraudulent manner, misrepresented the value of the home, or was made through substantial VA or SAR administrative error and action is necessary to make the valuation consistent with the real estate market.
Any “party of interest” is allowed to request a change to an NOV. The request must be made in writing and be submitted to the lender. If the lender is requesting the change they’ll take care of it and you will be kept in the loop on what’s happening. The important thing to remember when submitting a change request is to include whatever data or information that is leading you to believe that a change should be made. This is one of the big reasons why it can be so valuable for you to be able to read and understand appraisal reports and know what goes into a valuation. If you don’t understand what the appraiser should have used to reach a value determination, it’s pretty much impossible to compare with what the appraiser actually used. While you don’t technically have to submit any supporting information, it will greatly assist the VA in reviewing the request, since they don’t have to hunt down the possibly-obscure reason why the valuation needs to be changed.
Important note here – the VA does not allow a second official VA appraisal to be requested on a property that has already been issued a valid NOV. However, a non-VA appraisal can be requested to provide support (or evidence against) the VA appraisal. However, the veteran purchaser is not allowed to pay for any portion of the cost of the additional appraisal.
When you submit a change request to the lender, they will process it based on what the request is. If the request is for a change of more than 5%, it’s going to take longer because the lender will need to either work with the appraiser (if the change is less than 10%) or with the local VA office that has jurisdiction (if the change is more than 10% or the appraiser’s performance is in question). If the change request is for less than 5% of the current NOV, then the lender can usually process the request internally and come to a decision without the input of the appraiser or the VA. Remember, though, that requesting a change does not mean that a change will be approved. In the great majority of cases, the original valuation provided by the appraiser is a fair and accurate market value and does not need to be changed. Make sure you have supporting market data that shows why the home is actually more or less valuable before you submit a change request.
Sometimes, a borrower’s ire will be erroneously directed at the lender, when in fact the issue with the NOV is actually the fault of the appraiser or the VA. The appraiser plays an important role in processing change requests to NOVs, as does the VA. The lender does as well, but for any change request above 5%, the lender essentially sends it off to either the appraise or the VA for processing. Because knowing who does what can be very important for you if you submit a change request, we’re going to start the next article by discussing the appraiser’s role, the VA’s role, and the lender’s role. We’ll also discuss something that’s not clearly outlined in the Handbook – your role as the borrower – since this series of articles is intended to help borrowers understand everything they need to know about the VA loan program. If you have specific questions, give us a call or contact us via our website.