Fannie Mae's and Freddie Mac's controversial new appraisal rules are now coming direct attack by the biggest lobby on Capitol Hill - the National Association of Realtors.
Though the association is saying nothing publicly, officials have confirmed to Realty Times that they are gearing up for a fight in Congress and elsewhere to derail the “Home Valuation Code of Conduct” (or HVCC) for 18 months.
The code, which took effect May 1, has been widely criticized for raising appraisal costs to consumers, encouraging the use of inexperienced appraisers willing to work for rock-bottom fees, and for giving too much control to unregulated “appraisal management companies,” some of them owned by major mortgage lenders.
The Realtors campaign is targeted initially at Fannie Mae's and Freddie Mac's chief regulator - James Lockhart, director of the Federal Housing Finance Agency - and New York Attorney General Andrew Cuomo.
Cuomo's office drafted the HVCC last year as part of a settlement with Fannie Mae and Freddie Mac. Cuomo threatened to subpoena Fannie and Freddie executives as part of an investigation of the companies' appraisal practices. No evidence that an investigation actually took place or turned up problems has ever been made public.
In a call to action memorandum to state Realtor association leaders last week, NAR laid out a strategy of fly-ins to lobby Congressional representatives, and said the association would pursue a legislative fix on the HVCC issue if Lockhart and Cuomo declined to go along with the idea of an 18 month moratorium.
The legislation could take the form of either a stand-alone bill or an amendment that could be attached to an appropriations bill already moving through Congress with a high likelihood of passage.
In identical letters to Lockhart and Cuomo, Charles McMillan, president of the National Association of Realtors, complained that the HVCC is causing significant problems for home sellers and agents - “delays in closings and cancelled sales, which result in artificially low existing home sales.”
In an unusual move June 23, Lawrence Yun, chief economist for the association, attributed a lower than expected increase in existing home resales in May to appraisal problems caused by the new code.
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional houses with distressed and discounted sales,” said Yun.
In his letter to Lockhart and Cuomo, McMillan said the heavy involvement of lender-owned appraisal management companies leads to conflicts of interest. The association wants regulators - or Congress - to prohibit lenders from using any appraisal report from an appraisal management company where the lender, or the lender's affiliate, has an ownership stake in the management firm.
Published: June 26, 2009
resource: http://realtytimes.com/rtpages/20090626_washingtonreport.htm
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