Last week NAR released what the group described as a preliminary analysis of a survey of members, in which 70 percent reported an increased use of out-of-area appraisers after May 1, and 37 percent reported lost home sales.
NAHB said its own survey of about 500 builders found that 26 percent have seen sales contracts fall through because appraisals came in below the contract sales price.
NAHB Chairman Joe Robson, a Tulsa, Okla.-based homebuilder, in a press release called Freddie Mac’s bulletin to lenders "a step in the right direction."
NAR is calling for an 18-month suspension of the code. A bill that would accomplish that, HR 3044, was introduced June 25 and now has 19 co-sponsors. The bill has been referred to the House Committee on Financial Services.
The new appraisal rules were the result of an agreement between New York Attorney General Andrew Cuomo and Fannie Mae, Freddie Mac and their federal regulator, the Federal Housing Finance Agency.
Cuomo had subpoenaed Fannie and Freddie as part of an investigation into the packaging of mortgage loans into investments, after filing a lawsuit against First American Corp. and its appraisal management subsidiary, eAppraiseIT.
The companies were accused of allowing Washington Mutual to pressure them into inflating property appraisals. WaMu was not named in the suit, which is ongoing, and the companies have denied wrongdoing (see story).
Although the Home Valuation Code of Conduct applies only to loans to be purchased by Fannie Mae and Freddie Mac, the rules are also affecting valuations conducted for loans guaranteed by the Federal Housing Administration, trade groups representing appraisers say.
The code has resulted in "a significant transfer" of appraisals ordered by mortgage brokers to appraisal management companies, and many experienced appraisers don’t want to do FHA work for the companies because of limits on fees, the groups maintain (see story).
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