Money Talks

The problem? A lender/borrower will simply ask an appraiser to "get to" a certain price on the home. If the appraiser can't do it, the lender/borrower goes to a different appraiser who will. Obviously, this yields less than accurate appraisals.

The proposal? Fannie Mae and Freddie Mac have proposed a new "code of conduct." Inside are provisions that will keep lenders and mortgage brokers from paying appraisers (so they can't influence price). Instead, the lender would pay an outside management company which will handle the appraisers.

A solution? Not quite. Instead of a lender paying an appraiser, we'll see a lender paying a management company, which then pays the appraiser. These management companies will still want to hire appraisers likely to appraise for the price desired. So how does this solve anything?

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On the web...

• FreddieMac.com - Home Valuation Code of Conduct
• Bankrate.com - What in the world are Freddie Mac and Fannie Mae?
• CNN Money - Fannie appraisal deal questioned
• Washington Post - Appraisal Changes Face Resistance
• Chicago Tribune - Brokers, bankers unite to question worth of deal on appraisals

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