Fannie/Freddie Regulator creates illusion of HVCC success

May 25, 2010

PRESS RELEASE

WASHINGTON, D.C. – The National Association of Independent Housing Professionals (NAIHP), was disappointed to learn the Federal Housing Finance Agency (FHFA), was promoting the success of the Home Valuation Code of Conduct.
In a May 19, 2010 letter to New York Attorney General Andrew Cuomo, Acting FHFA Director Edward Demarco, informed the Attorney General, the code, “As intended,” has improved the independence of appraisers and reduced opportunities for fraud. The letter went on to say, “Freddie Mac and Fannie Mae each have found that appraisal quality has improved since the code’s implementation.”
Recently released, independent reports on both appraisal fraud and the quality of appraisals, directly contradict the findings of the FHFA and the GSE’s. Last month, the widely respected Mortgage Asset Research Institute (MARI), released its Twelfth Periodic Mortgage Fraud Case Report. The report noted, “Among the report’s revelations are findings that appraisal fraud is on the rise. Fraudulent comparables, material omissions and inflated values are cited as the most typical factors in appraisal fraud.” In fact, the report cites appraisal fraud increased 33% last year, while the quality of appraisals dropped significantly. Additional reports by other respected organizations, such as “Interthinx,” have found similar results.
NAIHP is concerned the FHFA is creating an illusion of success for the code, thereby deceiving investors, consumers and Members of Congress, as to the true results of HVCC.
Acting Director DeMarco’s letter also states, “The Home Valuation Code of Conduct deployed by Fannie Mae and Freddie Mac was implemented after taking extensive market place comments.” NAIHP appreciates the Directors’ admission of the significant role the tens of thousands of comment letters played in the final draft of HVCC and calls on the Director to explain why his agency refuses to release those comments.
At every one of my five meetings with the N.Y. Attorney General’s Office and the seven meetings with the FHFA, I asked for copies of the comment letters. Each time the request was denied, said Marc Savitt, NAIHP President. NAIHP believes the comment letters should be made public in the interest of complete transparency and because of their influence on the final version of HVCC.