Changes to the Home Valuation Code of Conduct take effect in just a few weeks.
In a letter yesterday to New York Attorney General Andrew Cuomo, Federal Housing Finance Agency Acting Director Edward J. DeMarco said he has decided not to allow Fannie and Freddie — which are currently operating under government conservatorship and being funded by taxpayers — to fund the independent valuation protection institute as outlined in the code.
HVCC was created from cooperation agreements with Cuomo originally signed by Fannie and Freddie in March 2008. The Bush administration appointee heading FHFA at that time, James B. Lockhart, said in a statement that the “agreements should help restore confidence in the mortgage market by enhancing underwriting practices, reducing mortgage fraud and making home valuations more reliable.”
Lockhart was apparently correct.
“Freddie Mac and Fannie Mae each have found that appraisal quality has improved since the code’s implementation,” the latest letter to Cuomo stated.
But the aspect of the agreement requiring the institute’s implementation was determined before the two government-controlled enterprises were thrown into conservatorship.
“In light of the billions of dollars in taxpayer funds the enterprises have drawn since entering conservatorships, I cannot, as conservator, justify the enterprises funding the institute,” DeMarco stated.
Instead, Fannie and Freddie have been directed to provide a targeted HVCC complaint process. The process will address suspected HVCC violations.
A standardized form and process will be deployed online, and the two companies “will act on matters received, including referring cases to state regulatory officials identifying patterns and practices suggestive of fraud or other non-compliance with the code.”
The new process will be implemented within “the next few weeks.”
