Fannie Mae and Freddie Mac are working with their regulator to adopt new appraiser independence standards that reflect changes mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The standards are supposed to replace Home Valuation Code of Conduct guidelines by Oct. 21.
And despite rumors to the contrary, the standards will retain the basic tenet of the original HVCC — a prohibition against mortgage brokers and loan officers selecting or compensating appraisers.
"The revised requirements will maintain the spirit and intent of HVCC and continue to provide important protections for mortgage investors, home buyers and the housing market," Fannie said in a notice to lenders.
Although the Dodd-Frank Act leaves appraisal decisions in the hands of appraisal management companies, it strives to prevent abuses, addressing such issues as AMCs forcing appraisers to work for lower fees.
The new law blocks AMCs from negotiating fees with appraisers. Refusing to pay an appraiser its customary fee will be considered a violation of the new appraisal standards.
Only a few states regulate AMCs. Under Dodd-Frank, AMCs affiliated with federally insured banks will be regulated by the Office of the Comptroller of the Currency.
All of the nation's megabanks — Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. — have affiliated AMCs. Independent AMCs are required to register with the states.
