Banking, finance, and taxes
Fannie Mae Dodges Appraisal Bullett (FNM)
Published:
Fannie Mae (NYSE: FNM) has announced a settlement that ultimately looks like will give the company a huge sigh of relief. It has entered into an agreement with the New York Attorney General and OFHEO (the Office of Federal Housing Enterprise Oversight) to assist the regulators in their efforts to enhance home appraisal practices on behalf of consumers.
The New York Attorney General’s office has also terminated its inquiry of Fannie Mae, which began in November 2007 as part of the Attorney General’s complaint against First American Corporation regarding that company’s appraisal practices. Fannie Mae is basically getting out of the appraisal woes almost scott free. It will take two steps "to assist regulators to enhance the quality and independence of the appraisal process":
The Institute will establish a telephone hotline for consumers to contact "if they believe the appraisal process has been tainted or if they believe they have been harmed by appraisal fraud." Appraisers also will be able to contact the Institute if they believe their independence has been threatened in any way. If you think about this so far after the fact, it’s really a wonder who this is really for and ultimately who it will benefit after the fact. Hopefully that call center won’t be based in India. Fannie Mae also noted that while the New York Attorney General office has concluded its inquiry, it will continue to work with the New York Attorney General and OFHEO on appraisal practices. Good luck.
The long and short of this is pretty simple. There were major appraisal games that were played from top to bottom and start to finish. If you went through a home purchase, refinancing, or used your house as a personal piggy bank for home equity from 2003 to 2006, you already know this. It sounds like Fannie Mae just won a cheap public relations coup over something that could have been a source of ugly headlines for years to come.
Jon C. Ogg
March 3, 2008
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