On May 1st, Fannie Mae and Freddie Mac imposed a new appraisal rule, referred to as the Home Valuation Code of Conduct. It is now coming under attack from the National Association of Realtors.
The article read:
“The intent of the rule is to improve the accuracy of appraisals by eliminating pressure on appraisers from loan officers. The code pushes most large lenders to use third-party “appraisal management companies” that contract with networks of independent appraisers around the country who have no direct contact with retail loan officers or mortgage brokers.”
On June 23rd, Lawrence Yun, chief economist for the association, commented by saying, “I attribute a lower than expected increase in existing home resales in May to appraisal problems caused by the new code. Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional houses with distressed and discounted sales,”
Charles McMillan, president of the National Association of Realtors, sent a letter to Director of the Federal Housing Finance Agency James Lockhart and New York Attorney General Andrew Cuomo.
McMillan wrote, “The heavy involvement of lender-owned appraisal management companies leads to conflicts of interest. The association wants regulators – or Congress – to prohibit lenders from using any appraisal report from an appraisal management company where the lender, or the lender’s affiliate, has an ownership stake in the management firm.”
Posted by Karen Gagliardi, Berlin Law Firm, Business Development Coordinator.