In Focus: Some Fear Precedent Set by Cuomo-GSE Agreement

American Banker (03/10/08); Hopkins, Cheyenne
New York Attorney General Andrew Cuomo was successful in getting Fannie Mae and Freddie Mac to approve new appraisal standards that prevent lenders who sell mortgages to the government-sponsored enterprises from using in-house appraisals or affiliated appraisal firms. Cuomo's investigation centered on allegations that Washington Mutual Inc. pressured an appraisal firm to bolster home values, but observers say he focused his efforts on the GSEs' appraisal standards because the fact that the lender is regulated by the Office of Thrift Supervision prevented him from dealing with the company directly. Some observers believe Cuomo's success with the new appraisal standards will enable Cuomo to take a similar approach in sidestepping federal preemption rules with regard to lending standards. Appraisal Institute President-elect Jim Amorin says the new appraisal requirement "for all intents and purposes, has the same weight legislation would," but others insist banks do not have to sell mortgages to Fannie Mae and Freddie Mac and are not bound by the new standards.