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US House To Push To Sunset Home Appraisal Code

Jun 21, 2010

By Jessica Holzer, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- U.S. House negotiators on the sprawling financial- overhaul bill will seek to reinsert a measure to phase out a controversial new set of standards for home appraisals.

The Home Valuation Code of Conduct, adopted in May 2009 to ensure appraisers' independence, bars mortgage brokers and bank-loan officers from selecting appraisers.

Mortgage brokers and Realtors complain the rules have produced low-ball appraisals that have blown up deals, while appraisers say the change has hurt appraisal quality.

Mortgage lenders, however, are fighting to keep the new rules. Several major lenders own or have a stake in companies that have seen a surge in business as a result of the rules.

The House measure would sunset the code and require federal regulators to come up with a new set of protocols. It was not contained in the financial-overhaul bill that passed the Senate.

The code of conduct was adopted by the industry last May as a result of an agreement between the New York Attorney General and Fannie Mae (FNM) and Freddie Mac (FRE).

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