What can you actually do when an automated valuation comes back wrong?

Every mortgage file today touches an algorithm somewhere — an automated valuation model checking the appraiser's number, a lender's internal model flagging a file for review, sometimes an AVM standing in for a full appraisal on a refinance or home equity line. Regulators have spent the past few years trying to make sure those models don't quietly reproduce the same bias that showed up in decades of human-appraised lending. The rules that resulted are real, but narrower than a lot of the coverage around them suggests.

For a West Michigan seller or buyer, the practical question isn't abstract. A lakefront property with no close comparable a mile inland, an inland-lake cottage a model treats like a landlocked ranch, a recent renovation the county hasn't recorded yet — these are exactly the situations where an automated number and the actual market diverge, and where it helps to know what levers actually exist to fix it.

The rule that took effect in 2025

In August 2024, six federal regulators — the OCC, the Federal Reserve, the FDIC, the NCUA, the CFPB, and FHFA — finalized quality control standards for automated valuation models under a mandate from the Dodd-Frank Act. The rule became effective October 1, 2025, and it applies to mortgage originators and secondary-market issuers that use an AVM to value the collateral behind a loan secured by someone's primary residence.

• Policies and controls built to produce a high level of confidence in the value an AVM generates
• Safeguards against manipulating the data an AVM relies on
• Protections against conflicts of interest among the people or systems feeding it
• Random sample testing and periodic review of a model's output
• Compliance with existing nondiscrimination and fair lending law

What the rule doesn't do is create a new consumer disclosure requirement or a standalone right to sue over a bad AVM number. It's a supervisory standard aimed at the institutions using these models, enforced by their own regulators — not a form a borrower gets to file.

What happened to your right to dispute a low appraisal

Reconsideration of value, usually shortened to ROV, is the formal process for asking a lender to have an appraiser revisit a valuation you believe is wrong. In 2024, HUD and FHA built out borrower-facing ROV guidance as part of a broader push on appraisal bias. In March 2025, FHA rescinded those 2024 policies through Mortgagee Letter 2025-08, along with an earlier 2021 clarification, citing regulatory burden. Lenders can still request a revaluation on an FHA loan when an appraiser missed something material, and Fair Housing Act obligations still apply regardless of the guidance change — a lender or appraiser cannot discriminate on a protected basis, rescinded mortgagee letter or not. What's gone is the uniform, borrower-initiated federal process; what a specific lender offers now depends on that lender's own policy, so it's worth asking your loan officer directly what their ROV procedure looks like before you need it.

What to actually do if the number looks wrong

An ROV is not an argument that you deserve more money — it's a factual dispute, and it only works when you can point to something concrete.

• Pull recent closed sales the appraiser didn't use, especially anything within the last few months on your own street or lake
• Flag any factual error — wrong square footage, a finished lower level counted as unfinished, a missing bedroom or bath
• Document upgrades the appraiser couldn't have seen from public record — a new roof, a renovated kitchen, permitted work
• Submit it promptly, in writing, through your loan officer — most lenders allow one ROV per appraisal, so make the first submission count
• If the appraiser declines to revise, ask the lender about a desk or field review by a second appraiser before treating the number as final

None of this requires a lawyer or a regulator. It requires the same thing a good local appraisal argument has always required — actual comparable sales, actual permits, actual facts about the house, put in front of the person who can change the number before the loan closes rather than after. On a waterfront or inland-lake property, where the nearest true comparable might be three miles up the shoreline instead of three streets over, that homework tends to matter more than it does on a standard subdivision file — and it's worth doing before you're staring down a closing deadline, not during one.