WASHINGTON – NCUA last week joined the banking regulators in urging regulators for Fannie Mae and Freddie Mac to scrap a proposal setting independent appraisal rules for the secondary mortgage purchasers.
The regulators told the Office of Federal Housing Enterprise Oversight the Home Valuation Code of Conduct proposed by Fannie and Freddie, “inappropriately attempts to regulate the corporate structure and internal operations of federally regulated lenders in connection with their mortgage lending operations,” according to a copy of a letter obtained by The Credit Union Journal.
The Code, the letter said, “contravenes appropriate risk-management practices of federally regulated lenders by banning the use of appraisals prepared by in-house appraisers, appraisers employed by affiliates, or appraisers at entities that also provide loan settlement services.”
The Code, it added, also restricts other practices commonly used to ensure quality controls, such as ordering a second or subsequent appraisal to ensure reliability of the collateral valuation.
The Agencies expressed concern that adoption of the Code for all loans sold to the secondary mortgage market giants could disrupt the mortgage lending process and raise costs to consumers.
The Code was voluntarily agreed to by Fannie and Freddie with the New York Attorney General, who raised concerns about the independence of mortgage appraisals.
Joining NCUA in the bid are the Federal Reserve, FDIC, Comptroller of the Currency and Office of Thrift Supervision.
