Fannie Mae and Freddie Mac May No Longer Have Appraisal Rule
In March, the two government chartered lenders, Fannie Mae and Freddie Mac, struck a deal with Andrew Cuomo, the New York state attorney general. In the agreement, Fannie Mae and Freddie Mac agreed only to buy home mortgage loans from lenders that met certain standards of appraiser independence.
Now, though, that deal is under fire and has been called into question. The Daily Briefing, from Fortune, reports on the complaints against the agreement:
But John Dugan, the comptroller of the currency, wrote Tuesday in a letter to the companies’ regulator that the new guidelines “violate or conflict with federal law in fundamental respects.” Dugan said the parties involved in the Fannie-Freddie deal - their regulator, the Office of Federal Housing Enterprise Oversight, and the office of New York’s attorney general - have no authority to dictate the internal structures of federally regulated banks. Moreover, Dugan says, the new rules would impose new costs on borrowers while providing no benefits.
At issue is the fact that many mortgage lenders have in-house appraisers, or partner appraisers. There have been lawsuits in the past, and worries continue, that appraisers offer home values that result in more money for the banks that they are affilitated with. The agreement with Fannie Mae and Freddie Mac back in March was designed to put pressure on mortgage lenders to reform their appraisal practices. Since Fannie Mae and Freddie Mac are the largest buyers of home mortgage loans, without their being able to buy certain types of loans, mortgage lenders would be forced to re-evaluate their practices.
Now, though, things may change. There is legislation to amend the housing relief bill in Congress to nullify the agreement made by Fannie Mae and Freddie Mac. This would allow the two government chartered lenders to continue buying home mortgage loans (and refinancing them), regardless of the practices of the banks.
Do you think that Fannie Mae and Freddie Mac should only buy home mortgage loans that meet certain standards?
Tags: mortgage loan blog, mortgage lenders, home mortgage loans, Fannie Mae,Freddie Mac, appraisals, Andrew Cuomo
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