Mortgage brokers are threatening to file legal action in response to new appraisal guidelines on conforming mortgages.
Fannie Mae and Freddie Mac have entered into cooperation agreements with New York's attorney general to only purchase loans that meet a new home valuation protection code for loans originated on or after Jan. 1, 2009.
Under the new code, mortgage brokers are prohibited from choosing or communicating with appraisers on conforming loans.
"These agreements amount to a de facto regulatory action by [the Office of Federal Housing Enterprise Oversight] which avoids the appropriate process," Roy DeLoach, executive vice president of the National Association of Mortgage Brokers, said in a statement yesterday. "The law provides for a process to implement regulatory and policy changes such as those contemplated and specified in these agreements."
DeLoach said the agreements will increase loan costs to borrowers. He noted his group is prepared to work with OFHEO, Fannie and Freddie's regulator, as well as New York, to help eliminate appraisal fraud.
But he said the agreements will leave mortgage brokers at a severe competitive disadvantage and suggested thousands of small business competitors will be removed from the mortgage marketplace.
"As it stands now, the National Association of Mortgage Brokers intends to consult with our legal advisors and to take appropriate legal action if necessary," DeLoach said.