Fannie Mae and Feddie Mac - New Home Valuation Code of Conduct

By
Real Estate Agent with RE/MAX Hometown

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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Comments (5)

Matt Grohe
RE/MAX Concepts - Des Moines, IA
Serving the metro since 2003

Fannie Mae and Freddie Mac code of conduct readers digest version; "Do what you will till the country lies in ruin, then run!"

Apr 08, 2009 06:12 PM
Cameron Novak
The Homefinding Center - Corona, CA
Featured Corona Real Estate Agent Team

With this in mind, WHO GETS TO SEE THAT THE APPRAISERS ARE CORRECTLY APPRAISING HOMES?

I recently had several appraisals which have been obscenely high, or low, where the appraiser didn't have appropriately supporting comps.  When I confronted the lenders, I always get... "We can't have contact with the appraiser during the process".

Shouldn't appraisers have to do accurate work, or suffer consequences/reprimands/license revocation?

Cameron Novak, Corona Real Estate Agent
Cameron Novak

Corona & Riverside Short Sale Agents
The Homefinding Center
TM
Corona, California
951-212-7479

Apr 08, 2009 06:31 PM
Cameron Novak
The Homefinding Center - Corona, CA
Featured Corona Real Estate Agent Team

Matt- Did you steal that quote from the Obama Administration?

Apr 08, 2009 06:32 PM
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC

Whats going to make the appraisers work for there money? Now all they have to do is generatea report to get paid. Accurately...Maybe? But more than likely not. No more county searches!

Apr 08, 2009 10:49 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I ran into this with a Wells Fargo loan about 2 months ago.  The loan officers said that they had already implemented the restrictions on communicating with the appraiser. 

This process is known as "stove piping".

Remember when that process was implemented by Jamie Gorelick when she was the Deputy Secretary of State to prevent the CIA from communicating with the FBI?? 

This is the antithesis of transparency. 

Apr 08, 2009 11:25 PM

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