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Appraisers shunning FHA work

Rules for Fannie, Freddie loans have wider impact

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New rules governing appraisals on loans slated for purchase by Fannie Mae and Freddie Mac are also affecting valuations conducted for loans guaranteed by the Federal Housing Administration, trade groups representing appraisers say.The Home Valuation Code of Conduct, which went into effect May 1 for loans destined for purchased by Fannie and Freddie, has caused "a significant transfer" of appraisals ordered by mortgage brokers to appraisal management companies, the groups said. Many experienced appraisers are declining FHA assignments from appraisal management companies, the groups said in a letter to Housing Secretary Shuan Donovan, because of another policy adopted more than a decade ago that limits how much appraisal management companies can charge.Appraisal management companies are therefore assigning more FHA work to inexperienced appraisers, "adding unnecessary and substantial risk to the FHA program," groups including the Appraisal Institute and American Socie...