According to a Reuters report (click here)
"U.S. mortgage firms Fannie Mae and Freddie Mac would require their mortgage lending partners to have independent appraisals of home values under a deal being thrashed out with New York's attorney general, sources familiar with a draft deal said on late Monday."
"Home appraisals would have to come from assessors that do not have formal ties with a lender or mortgage broker, according to sources familiar with negotiations over a deal that could be finalized as soon as Tuesday."
Details of the plan were first reported by the American Banker in its Tuesday edition.
Fannie Mae and Freddie Mac would create a clearinghouse of appraiser information conduct and activity, according to the plan, sources familiar with a draft said on Monday.
"All lenders will be required to provide post-purchase copies of appraisal documents to the Clearinghouse," according to a Fannie outline of the plan. "It will be an independent entity with an executive and board of directors (and) It will staff a hotline for industry and consumer complaints."
From the Implode/Explode forum (click here):
The best part is the complaint line for consumers . . .Oh yeah that should work! What kind of a complaint do you think they are going to get? "Yeah my neighbor sold his house for $10,000 more than they say mine is worth. The appraiser didn't even take into account the wirlpool tub we installed, or the fact that our grass is always greener than the neighbors". What on earth does this help? The total lack of understanding of the industry inside and out just makes me cringe.
According to the Washington Post article : Cuomo Near Deal On Home Appraisals:
"At its core, the deal would bar lending companies that sell loans to Fannie and Freddie from using preferred or internal appraisers who may be subject to pressure to overvalue properties. The deal would establish a "home valuation protection code" to set standards on compensation and independence issues, and it would create an institute with a separate board of directors to monitor complaints from consumers and appraisers, according to documents described to The Washington Post by a source not authorized to speak publicly about the issues."
If the agreement takes hold, Fannie and Freddie would no longer purchase mortgages from lenders who fail to abide by the standards, a powerful economic force that could influence the entire housing landscape.
According to the Wall Street Journal article: Deal Nears to Curb Home-Appraisal Abuse
The proposal, in which the two government-sponsored companies would require lenders they work with nationwide to change their appraisal practices, would cap a year-long probe by Mr. Cuomo's office that has already resulted in a lawsuit against an appraisal-management company, for allegedly submitting to pressure by a big lender to inflate appraisals.
The agreement may create an independent "clearinghouse" for appraiser information. Lenders would be required to provide copies of appraisal documents to the clearinghouse, which would provide reports to the public and staff a hotline for consumer complaints, a person familiar with the matter said.
We have had ongoing discussions [with Fannie and Freddie] for several months. At the end of the process, we will either have agreements or we will take other appropriate action. Jeffrey Lerner, a spokesman for Mr. Cuomo, said in a statement
According to Inman News: New York pushing Fannie, Freddie to make new rules for lenders
Beginning as early as September, lenders doing business with the government-sponsored enterprises would be barred from using in-house appraisers, with all appraisals coming from companies that have no formal ties to a lender or mortgage broker, Reuters said, citing an outline of a draft agreement.
According to the outline, Fannie and Freddie would also create an independent clearinghouse that would collect copies of appraisal documents and operate a hotline for industry and consumer complaints, Reuters said.
Plans to finalize the deal Monday were postponed at the last minute, Reuters reported, citing unnamed sources.
Recent Comments