Industry NewsMortgage

Fannie, Freddie agree to adopt new appraisal standards

State, federal regulators seek to prevent coercion of appraisers

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Lenders who want to do business with Fannie Mae and Freddie Mac will no longer be allowed to use in-house staff appraisers or appraisal management companies they own or control under an agreement with regulators. Fannie and Freddie have agreed to new standards designed to ensure the independence of the appraisal process, and will provide $24 million in funding over a five-year period for independent monitoring of the new standards. The agreements, announced today, are an outgrowth of New York Attorney General Andrew Cuomo's yearlong investigation into the packaging of mortgage loans into securities sold to Wall Street investors. National banks "have a clear choice," Cuomo said in a statement. "Immediately adopt the new code and clean up appraisal fraud in the mortgage industry or stop doing business with Fannie Mae and Freddie Mac -- it is that simple." On Nov. 1, New York sued First American Corp. and its subsidiary eAppraiseIT, accusing the companies...