“Accurate, independent appraisals are very important to ensuring the safety and soundness of Fannie Mae, Freddie Mac and the mortgage market,” said OFHEO Director James Lockhart. “These agreements build upon existing federal and state laws and regulations to further strengthen the single-family home appraisal process.”
The deal will also improve quality control surrounding the appraisal process, and require mortgage lenders who sell loans to Fannie and Freddie to adhere to a Home Valuation Code of Conduct.
Additionally, the parties involved have agreed to establish the Independent Valuation Protection Institute, which will create an appraisal complaint process, mediation of appraisal disputes, and mortgage fraud reporting.
“Attorney General Cuomo and I understand these are strong steps which will improve our mortgage finance system,” said Lockhart. “This Code is one way of ensuring that homebuyers and secondary mortgage market investors get the fair and independent property valuations that they expect and deserve.”
Lockhart said he would closely monitor the situation over the next nine months to ensure best practices and implementation, but also called on state appraisal licensing bodies and federal agencies to take an active role and share timely information to combat the problem.
The new provisions will become effective on January 1, 2009.