Appraisal Institute calls for revisions to Fannie/Freddie Home Valuation Code of ConductMortgagePress.comAppraisal Institute, Home Valuation Code of Conduct , OFHEO, Fannie Mae, Freddie Mac
The Appraisal Institute has submitted a joint industry response
to the creation of the Home Valuation Code of Conduct--a guideline
established in an agreement reached by the New York Attorney
General's Office, Fannie Mae, Freddie Mac and the Office of Federal
Housing Enterprise Oversight (OFHEO). In its letter, the Appraisal
Institute applauded Attorney General Andrew Cuomo's work with
Fannie Mae Freddie Mac and OFHEO to reinforce the independence of
real estate appraisers and the integrity of appraisals, but also
expressed serious concerns about certain aspects of the agreement
that could be harmful to the delivery of residential appraisal
services and, possibly, to the mortgage underwriting process
itself.
Specifically, the Appraisal Institute and its sister
organizations expressed concern about destroying well-established
relationships between honest appraisers and reputable mortgage
professionals. They also voiced concern about banning important
appraisal functions within financial institutions, and encouraging
factors such as appraisal price and turnaround time to take
precedence over appraiser competency and appraisal quality, among
other things.
"The basic framework of the agreement and the new Home Valuation
Code of Conduct is very good, but we think many sections of the new
appraisal guidelines should be revised because of potentially
severe unintended consequences," said Bill Garber, the Appraisal
Institute's Director of Government and External Relations. "Our
comments are meant to be solution-based and we hope that the
parties will implement them to the best of their ability."
For example, the new guidelines ban appraisers working for
financial institutions that sell loans to Fannie Mae or Freddie Mac
from performing appraisals. Upon review, and given that there is
virtually no public record of abuse in this area, the appraisal
organization proposes eliminating this ban. Further, given that
federally regulated institutions are subject to bank examinations
and adherence to federal appraisal independence requirements, as
well as a pending amendment to the Truth-in-Lending Act that grants
greater federal enforcement authority over non-bank mortgage
lenders in this area, this proposed ban should be dropped.
To formulate its comment letter, the Appraisal Institute relied
on feedback from its members, who represent virtually all aspects
of the residential real estate appraisal profession, as well as the
input of industry leaders.
"This letter is only a first step in a long journey to advance
appraisal independence issues," said R. Wayne Pugh, MAI, Appraisal
Institute President. "We have committed the resources of our
organizations to the Agreements parties, as they seek to implement
the Agreement and the HVCC."
For more information, visit www.appraisalinstitute.org.
