New Effort to Block GSE Appraisal Pact

Submitted by Ronald Tennant with Metorocities Mortgage:

American Banker (05/20/08) P. 3; Kaper, Stacy
The banking industry is pushing for the inclusion of an amendment from Sen. Elizabeth Dole, R-N.C., that would require federal regulators to set new appraisal standards as part of legislation to beef up oversight of Fannie Mae and Freddie Mac and permit the FHA to insure mortgages with balances exceeding home values. The amendment would eliminate an appraisal agreement that New York Attorney General Andrew Cuomo forged with Fannie Mae and Freddie Mac compelling lenders and brokers to use outside appraisers if they want to sell loans to the government-sponsored enterprises (GSEs). According to Stephen O'Connor, senior vice president for government affairs at the Mortgage Bankers Association, "[The Cuomo agreement, and others like it,] pose serious procedural and substantive concerns that present safety and soundness risk to the GSEs and financial institutions generally." The banking industry insists that the Office of Federal Housing Enterprise Oversight failed to comply with the Administrative Procedures Act by not issuing the agreement as a proposal for public comment. The Senate Banking Committee will vote on the legislation May 20; and observers say the amendment faces opposition from Sen. Charles Schumer, D-N.Y., who believes it would derail efforts to stamp out predatory lending.