Irena Popilevsky

When you buy a home you can generally be expected to pay for the following items:

The real estate market is extremely busy these days. More and more homeowners are purchasing a home for the first time. Many homeowners are moving up or down or even out of town. Lately it takes around four months from contract to closing, compare to around 60-90 days. Could it be that we hit the bottom of the market? could it be that the banks are reviewing applicants more thoroughly? could it be that there are less money available to lend? or could it be that there are just fewer banks around? Well, there is probably a little of all of the above.

Just wanted to share my thoughts with you and hear your thought if you'd like to share them.


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15. May lenders rely on appraisals ordered by settlement service firms?
a.Yes. Settlement service firms may order appraisals if they comply with the Code.

16. Does the Code apply to a loan that is insured or guatanteed by federal agency and ultimately sold?
17. Does the Code apply to the Desktop Underwriter Property Inspection Report (Form 2075)?
a. No, Form 2075 is an inspection report. It is not an appraisal, and therefore the Code does not apply.

18. Does the Code apply to loss matigation?
a. The Code applies to loans originated and sold to either Fannie Mae or Freddie Mac. It does not apply to appraisals performed for loss mitigation purposes.

19. How will Fannie Mae audit compliance with the Code?
a. Compliance with the Code will be part of the lenders operational review.

To be continued tomorrow.

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8. Does section I.B.(9) specifically prohibit a lender from ordering a second appraisal?

a. No. Section I.B.(9) only prohibits a lender from ordering a second appraisal when they are attempting to influence the outcome of the first appraisal and are now "value-shopping". As arisk comtrol measure for certain loan products, it may be common for a lender to order more than one appraisal, and this subsection does not prohibit that practic.

9.Does the Code spacifically proibit communication with an appraiser by real estate agents?

a.No.

10.Does Section II of the Code requires the lender to provide the appraisal free of charge?

a. No. The Code requires the lender to provide, free of charge, a copy of any appraisal report completed in association with a specific loan. The lender may require the borrower to reimburse the lender for the cost of the appraisal.

11. What is the time frame for providing the copy of the appraisal?

a. The lender must provide the copy propmtly upon completion of the appraisal, but no less than three business days prior to closing. The lender may use any means to provide the copy, including but not limited to via mail, email, overnight delivery, etc., as long as the borrower receives the copy no less than three business days prior to closing.

12. Can you clarify the requirements around Section II of the Code requiring the borrower's receipt of the appraisal?

a. The Code requires that a borrower be provided a copy of the appraisal no less then three day prior to closing of the loan. The Code allows that the borrower may waive this three day requirement. Situations where a borrower is unaware of his or her right to a copy of the appraisal prior to the three days and is then provided a waiver of that right at the closing table, would not be compliant with the intent of the COde. The time period of rescission in a refinancing situation does not constitute a valid three-day period.

13. May landers submit to Fannie Mae their pipeline loans that were originated in good faith compliance with their, possibly different, interpertation of Section II of the Code?

a. Yes. however, Fannie Mae expects that processes which comply with the clarification of Section II will be implemented as soon as reasonably possible, but no later then September 1, 2009.

14. Does the Code prohibits an appraiser from collecting payment for the appraisal directly from borrower?

a Yes, for loans to be delivered to Fannie Mae. The Code requires the lender or any third party specifically authorized by the lender to select, retain, and provide for all compensation to the appraiser.

In today's chalenging market there are many issues we have to address. One of the major once is the role of the appraiser.

To help enhance the integrity of the home appraisal process in the mortgage industry in March 2008, Fannie Mae entered into an agreement with our regulator th Federal Housing Finance Agency (FHFA) and the New York Attorney General's office to adopt certain policies relating to appraisals for loans delivered to us.

Here are some of the questions and answers that may be of interest to you.

1. What loans are effected by the new home valuation code of conduct?
a) Fannie Mae has agreed to adopt the Home Valuation Code of Conduct for all conventional, single-family loans originated on or after May 1, 2009, that are delivered to Fannie Mae. For purposes of the code, origination date means the date of application. The Code will not apply to multifamily loans, or to loans insured or guaranteed by federal agency; the Code only applies to 1-4 units single family loans sold to Fannie Mae.The Code will not apply to loans sold to Fannie Mae after May 1, 2009 that were originated prior to May 1, 2009

2. What are the professional requirements for an appraiser under the Code?
a) The Code requires that an appraiser must be licensed or certified by the state in which the property to be appraised is located.

3. Does the Code allow an appraiser to update an appraisal for another lender?
a) Yes. The Code does not prevent an appraiser from performing an update of an appraisal for another lander.

4.Does the Code apply outside of New York State?
a) Yes. There is no geographic limitation.

5.Who besides Fannie Mae has agreed to adopt the Code?
a) As of this date, only FAnnie Mae and Freddie Mac have agreed to adopt the Code.

6. After May 1, 2009, is it permissible for Fannie Mae to purchase private label securities backed by mortgage loans that do not meet the requirement of the Code?
a) Yes. The Code applies only to 1-4 unit single-family loans sold to Fannie Mae by mortgage-related securities.

7. How does Section I.B.(8) impact how lenders may remove appraisers from a list of qualified appraisers?
a) Section I.B.(8) addresses the removal of an appraiser from a list of qualified appraisers in connection with influencing or attempting to influence the outcome of an appraisal. Any such removal would be subject to the requirements of the process outlined in that section. However, Section I.B.(8) does not preclude the management of appraiser lists for bona fide administrative reasons based on written, management-approved policies. Also, Section IV.B.(6) provides for lenders to have written policies and procedures implementing the Code including rules on appraiser independence, and to have mechanisms in place to report and discipline anyone who violates these policies and procedures.

I believe that this is plenty of information for you to diagest for one day. To be continued tomorrow. Look for additional questions and answers tomorrow.


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