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OCC challenges proposed FNMA, FHLMC and OFHEO appraisal agreement with NY Attorney GeneralMortgagePress.comOCC, Fannie MAe, Freddie Mac, appraisal agreement, Andrew Cuomo, OFHEO
On May 27, the Office of the Comptroller of Currency (OCC)
submitted a formal letter addressing the proposed agreement among
Fannie Mae, Freddie Mac and Office of Federal Housing Enterprise
Oversight (OFHEO) and New York Attorney General Andrew Cuomo to
establish the Home Valuation Code of Conduct (Code), a code for
real estate appraisal practices.
On March 3, 2008, the NY AG announced settlement agreements with
Fannie Mae, Freddie Mac, and OFHEO, the office within the
Department of Housing and Urban Development that oversees Fannie
Mae and Freddie Mac. Pursuant to the agreements, beginning on
January 1, 2009, Fannie Mae and Freddie Mac would no longer
purchase single-family mortgage loans, other than
government-insured loans, from mortgage originators that do not
agree to adopt the Code with respect to such loans. The Code
provides for various restrictions, prohibitions, and requirements
regarding appraisal reports used to secure mortgage loans. The OCC
joins the Federal Trade Commission (FTC), Office of Thrift
Supervision (OTS) and various trade groups in (i) raising concerns
over the potential effect of the proposed Code on the mortgage
industry and consumers, and (ii) urging the withdrawal of the Code.
(the FTC and OTS letters were reported in InfoBytes, May 9,
2008).
The OCC's letter highlights likely adverse consequences that may
result from the Code, which include, among others, unnecessarily
raising mortgage origination costs, disrupting the mortgage
appraisal process and undermining rather than enhancing the quality
of appraisals. In addition, the OCC contends that the Code and
underlying Home Valuation Protection Program and Cooperation
Agreements:
(i) constitute a de facto rule adopted in violation of the
Administrative Procedures Act (APA);
(ii) exceed the scope of OFHEO's authority;
(iii) violate federal law by setting requirements or restrictions
on the real estate lending operations of national banks; and
(iv) ignore that federal standards for real estate appraisals
should be set by Congress, not through private litigation.
For a copy of the OCC letter, click here.