Cool Reception to Fannie Idea on Appraisals

American Banker (02/27/08) P. 1; Berry, Kate; Hochstein, Marc
In response to an investigation by New York Attorney General Andrew Cuomo into whether Washington Mutual pressured The First American Corp. and its eAppraiseIT LLC subsidiary to artificially boost home values, Fannie Mae will institute new appraisal policies on Sept. 1. At that time, the government-sponsored enterprise will cease buying mortgages whose appraisals were ordered by brokers and prohibit lenders from using in-house appraisers and appraisal management units. Lenders are balking at the new rules, insisting that appraisal units eliminate pressure on appraisers to meet a particular valuation. According to Title/Appraisal Vendor Management Association executive director Jeff Schurman, "What Fannie is saying in this context is you can't use independent appraisers that are engaged by a captive or affiliate, but you can use that same independent appraiser if they are engaged by some other appraisal management company." ValueAmerica Inc. Chairman and CEO Bob Murphy says conflicts of interest between lenders and appraisers have not been eliminated over the years, noting that Fannie Mae simply is ordering that the two be separated.