Fannie Mae and Freddie Mac, the two largest purchasers of residential mortgages, are sponsoring a new appraiser code of conduct designed to hold appraisers at arms-length from lenders. Beginning January 1, 2009, the two GSEs (Government Sponsored Entities) will only buy home loans from lenders who endorse this new code of conduct. This action is designed to control the proliferation of inflated appraisals that has partially contributed to the housing bust we’ve witnessed nationwide.
It’s no secret that the home’s appraised value has a lot to do with a mortgage transaction’s viability. It’s also no secret that WaMu in particular has been in recent news headlines for having worked with appraisers to artificially inflate some home values across the U.S. That said, I think this reform is a great idea. The full Reuters article can be viewed here.
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