I know many people are confused about the new Fannie Mae and Freddie Mac Home Valuation Code of Conduct. This is the worst measure that I have seen since I have been in the industry. This is not a regulator measure it is only the Fannie and Freddie's response to a legal threat from Mario Cuomo in response to unethical business dealings on the part of big banks (WAMU). The effect of this measure will be the rising cost of lending for borrowers and longer turn times.
The code only applies to Fannie and Freddie loans. FHA loans do not apply to the code, though some of the lenders I have talked with are going to apply the code to all loans. Only a few lenders have their policies in place. Some lenders are requiring that all appraisals are ordered thru their website. While others don't know what to do about this.
The code basically says that anyone involved in the transaction can not directly order or have contact with the appraiser. This will cause many unforeseen problems in all of our future deals.
I believe we will see many changes in the code once Fannie and Freddie realize what a mess they have created. There will be lot of problems after implementation (May 1st, 2009) and it will undoubtedly increases overall costs of borrowing.
Stay tuned I am sure there will be more changes in the future.
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