CUOMO ANNOUNCES AGREEMENT WITH FANNIE MAE, FREDDIE MAC, AND OFHEO

Benjamin Smith - Atlanta Area Appraiser (Apex Appraisals & Consulting) — Mon, 03 Mar 2008 13:53:40 -0600

Click here to read the full agreement: http://www.oag.state.ny.us/press/2008/mar/mar3a_08.html

High points:

Mortgage Brokers will no longer have authority to select appraisers;

Lenders will be prohibited from using "in-house" staff appraisers and

Lenders will be prohibited from using appraisal management companies that they own or control.

Personally, I have mixed feeling on this issue. Yes, I agree that the lack of appraiser independence has been a major problem affecting our industry and I also agree that some of the points in this agreement have merit.

But I also have concerns. The common prediction is that it will spawn a new array of independent appraisal management companies competing against each other for the largest shares of lending business. Especially since most lenders prefer using AMCs vs. maintaing their own approved appraiser panels and ordering systems. AMCs have long since tried to reduce fees paid to appraisers as a way of maximizing their own profits. This will be a huge adjustment for the better appraisers throughout the industry that refused working with AMCs for this reason.

Also, this will eliminate appraiser's marketing to most local mortgage participants. Long term relationships that I have made with local clients may be lost, at least on a professional level.

Overall, I think we are on the right path but I don't think this will be final. I will be looking for new amendments over the coming months.

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CUOMO ANNOUNCES AGREEMENT WITH FANNIE MAE, FREDDIE MAC, AND OFHEO