Federal bank regulators, who had a role in setting standards for home appraisers, warned OFHEO that a deal with the two mortgage finance giants could suddenly reshape the industry in unexpected ways. Some at the Office of Thrift Supervision, the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp were annoyed that word of the deal reached them so late. There were also concerns that Wall Street firms that had nurtured the housing finance sector during the recent boom would not be held to the same standards.That being said, sources that spoke with HW said they still expect a deal to be reached -- and to include both Fannie and Freddie -- in the weeks ahead. No official press sources from Fannie, Freddie or OHFEO have commented on the record about the ongoing negotiations.
On the Brink of Appraisal Reform, Proposed Deal Hits Snags
The past few days have seen wide coverage of a groundbreaking settlement involving New York Attorney General Andrew Cuomo's office and both Fannie Mae and Freddie Mac, that would see both of the GSEs retool their approach to appraisals by ditching the use of in-house appraisals and brokered appraisal networks. The Wall Street Journal first reported on the potential deal Tuesday, and Fannie Mae CEO Daniel Mudd had gone so far as to fly to New York on Monday to appear side-by-side with the New York AG in announcing the changes -- but the deal has temporarily hit some speed bumps, according to sources familiar with the matter and a report published at Reuters. The proposal The negotiations on changing appraisal practices came after Cuomo supoenaed both Fannie and Freddie in November regarding an ongoing lawsuit targeting First American and its subsidiary appraisal shop eAppraiseIT. Negotiations had gone so far recently that Fannie Mae recently sent a letter to lenders warning them of the pending change; American Banker published a copy of the lender letter earlier this week. Under the proposal, Fannie would help establish an independent national appraisal clearinghouse that would randomly assign appraisal orders out to any appraiser in the clearinghouse, without regard to lender affiliation or broker-based relationship. The new program was originally slated to go into effect September 1. Snags in the deal Reuters reported Thursday that the deal hit a snag when federal regulators, perhaps ticked off that they weren't involved in the original Cuomo/GSE negotiations, raised a host of objections to the plan: