Fannie and Freddie adopt new appraisal requirements
March 4, 2008
Monday an agreement was announced between Fannie Mae and Freddie Mac, the buyers of over 60% of the nations mortgage loans. After a one year probe from New York’s attorney general and the two parties have decided to revamp their appraisal requirements. Cuomo said banks can “Immediately adopt the new code and clean up appraisal fraud in the mortgage industry or stop doing business with Fannie Mae and Freddie Mac.”
Some of the restrictions will be restricting mortgage brokers from choosing their own appraiser, removing all in-house appraisers, and regulations on other conflicts of interest. Fannie Mae and Freddie Mac will set aside $24,000,000 for enforcement of this new code.
I have not seen anything from Fannie and Freddie regarding this yet, but it will not be easy on the industry in the short run. The tightening doesn’t seem to have an end in site. This is going to be a bigger deal than most people expect.