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Commercial Real Estate Appraisal Articles
- Appraisal Institute Supports Cuomo's Efforts Toward Appraiser Independence
Excerpt from Appraisal Institute - Appraiser News Online Headlines, Archived Issue: February 2008, Vol. 9 , No. 3/4
"In order to strengthen the independence of the appraisal process, New York State Attorney General Andrew Cuomo has brokered an agreement with Fannie Mae, Freddie Mac and the Office of Federal Housing Enterprise Oversight, their primary regulator. The March 3 agreement eliminates mortgage broker-ordered appraisals, prohibits appraiser coercion, and reduces the use of appraisals prepared in-house or through captive appraisal management companies in underwriting mortgages. The agreement also enhances quality control in the appraisal process and establishes a complaint hotline for consumers and appraisers facing appraiser coercion."
"The agreements include a Home Valuation Code of Conduct that the government-sponsored enterprises will apply to lenders selling mortgages to Fannie Mae or Freddie Mac. At its core, the Code of Conduct states, 'No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery or in any other manner.' It also lists 10 examples of such activities that are specifically prohibited. In addition, the Code forbids the lender from using appraisers employed by the following when underwriting a loan: the lender; an affiliate of the lender; an entity that is owned, in whole or in part, by the lender; an entity that owns, in whole or in part, the lender; a real estate 'settlement services' provider, as defined in the Real Estate Settlement Procedures Act; or an entity that is owned, in whole or in part, by a 'settlement services' provider. Furthermore, the Code also requires the GSEs to set up a complaint hotline."
The full Home Valuation Code of Conduct, which becomes effective on January 1, 2009, is available at:
- http://www.ofheo.gov/media/agreements/3308HomeValuationCodeofConduct.pdf
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