FINALLY!!This morning NY Attorney General Andrew Cuomo announced a deal with Fannie and Freddie and OFHEO to change the way the whole appraisal system works. This is surely going to shake things up ….   There’s absolutely no questions about it …. over-inflated appraisals fuelled unsustainable price appreciation during the housing boom, and those appraisals are a huge part of the blame for the current predicament the credit market is in.  

Under the agreement Fannie and Freddie Mac will not buy loans from brokers who select their own appraisers or lenders who use in-house appraisers or lenders who use appraisal management companies that they own or control.   The deal also sets up the “Independent Valuation Protection Institute,”which will monitor the new deal (or “code” as it seems to be called). Fannie and Freddie will pay $24 million to set that up. The Institute will have a hot-line for consumers and appraisers alike, it will report publicly on its activities and appoint a board of directors. The result? The agreement will result in growth of a new sector — the independent appraisal management company. Companies which have large affiliated appraisal units will have to consider spinning those units off.

Tags: Independent Appraisers

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