GSE Deal with NY AG: LOs Cannot Select Appraisers

Fannie Mae and Freddie Mac, along with their regulator, have reached an agreement with New York Attorney General Andrew Cuomo on reforms that ban loan officers from selecting appraisers. The agreement also bans Fannie and Freddie from purchasing loans if a mortgage broker picked the appraiser. Struck back in March, the original agreement between the GSEs and the New York AG banned the use of in-house appraisers by mortgage lenders and the use of subsidiary appraisal firms. Fannie Mae said the new appraisal policies begin May 1. The GSE plans to issue guidance to its lenders on January 7. "The Federal Housing Finance Agency supports this effort by the enterprises to strengthen the appraisal process against the possibility of improper influence and coercion," said FHFA director James Lockhart. AG Cuomo said the revised appraisal rules eliminate systemic conflicts of interest. "Erecting and enforcing meaningful firewalls between appraisers and lenders, and forcing Fannie and Freddie to stop working with unscrupulous lenders and brokers, are key steps in cleaning up the mortgage industry and avoiding another crisis like this in the future."