Wednesday, April 22, 2009

New Appraisal Rules Lack Enforcement

The Center for Public Integrity Reports:

Nine days before new rules radically changing the appraisal industry are set to take effect, appraisers, lenders and real estate agents are asking the same question — who will enforce them?

The rules, intended to prevent lenders from pressuring appraisers to falsely inflate housing values to justify higher mortgages, would ban loan originators from communicating directly with appraisers. The new rules would thus carve out a bigger role for appraisal management firms, which serve as middlemen between lenders and appraisers.

The post mentions the letters sent by NAR President Charles McMillan to the heads of Fannie and Freddie (posted previously), and goes on to say:

Perhaps most significant, the letter notes the lack of a clear enforcement policy. “The HVCC does not clearly delineate which agency or organization will be responsible for enforcement of all or part of the agreement,” wrote Charles McMillan, president of the National Association of Realtors. “There are multiple stakeholders affected by the agreement and none have clear responsibility to see that it is enforced. There is no accountability if there is no organization for enforcement.”

As part of the original agreement, Fannie Mae and Freddie Mac agreed to pay $24 million to set up an “Independent Valuation Protection Institute” to field appraiser complaints about pressure to inflate values and police the rules. But the institute is not yet functioning, and its fate is unclear.

.......and then, the clincher

A Freddie Mac spokesman declined to comment on how his organization would enforce the rules. A Fannie Mae representative did not immediately return calls for comment. Andrew Cuomo’s office has failed to respond to repeated requests by the Center for comment on the HVCC.

Read the Article

They meant for the acronym HVCC to be pronounced "havoc" right?