Federal and state regulators announced an agreement to regulate home appraisal practices as part of an agreement with mortgage finance companies Fannie Mae and Freddie Mac, the Everett, Washington Herald reported January 4, 2009.

Many complaints of problems with inflated appraisals and their impact on the nation's housing market led New York Attorney General Andrew Cuomo to reach an initial pact in March 2008 with Fannie Mae and Freddie Mac on a plan to try to reform the industry.

The original changes, however, brought complaints from bank regulators and mortgage industry officials, who said Cuomo was overstepping his authority and said the law would harm the mortgage industry.

Fannie Mae and Freddie Mac, federal government-controlled companies, own or guarantee the majority new U.S. home loans and have become more dominant in the mortgage industry since the collapse of dozens of lenders that catered to borrowers with poor credit. Any changes made by the two companies affect the entire lending industry.

The new agreement is effective May 1 and requires appraisers to abide by a six-page code of conduct that includes new rules for appraisers who work for the same companies as lenders. A prior version of the agreement banned "in-house" appraisals, but that apparently was excluded from the final pact. 

Read The Everett, Washington Herald Article