US big bank regulator wants appraisal deal withdrawn
ju4 wa4i dia4n zo1ng he2 ba4o da4o :\n  By John Poirier\nWASHINGTON, May 27 (Reuters) - A top U.S. banking regulator\non Tuesday called for dismantling a recent agreement to create\nnew standards and an oversight body for mortgage appraisers,\nciting unintended consequences and conflicts with federal laws.\nIn March, mortgage finance giants Fannie Mae <FNM.N> and\nFreddie Mac <FRE.N> struck a deal with their regulator and New\nYork Attorney General Andrew Cuomo to create a watchdog aimed\nat preventing inflated home values. John Dugan, head of the Office of the Comptroller of the\nCurrency (OCC), said in a letter dated May 27 to Fannie and\nFreddie's regulator that real estate appraisals should be\nconducted free from influence and coercion by lenders, brokers\nand other mortgage players.\nTough standards for appraisals should rigorously enforced\nby federal and state regulators of mortgage lenders, brokers\nand appraisers, said Dugan, whose agency regulates some of the\nlargest U.S. banks such as Bank of America Corp <BAC.N>.\n"The OCC has substantial concerns about the unintended\nadverse consequences ... for the safe, sound and efficient\noperation of national banks' residential mortgage lending\nactivities, as well as for the cost of mortgage credit to\nconsumers," Dugan wrote to the Office of Federal Housing\nEnterprise Oversight (OFHEO).\nDugan said forcing lenders to use outside appraisers could\nundermine the quality and reliability of valuations and could\nraise costs to consumers.\nOutcry from the OCC adds heft to criticism from industry\ngroups such as the Appraisal Institute, and underscores\ncomments Dugan made to reporters in mid-April. The Mortgage\nBankers Association last month urged the chief executives of\nFannie Mae and Freddie Mac to withdraw the agreement.\nAs part of the agreement, Fannie and Freddie will uphold a\nnew code of conduct meant to keep mortgage lenders at arm's\nlength from home appraisers and will also spend $24 million to\njump-start the new oversight body. The deal helped prevent\nlawsuits from Cuomo.\nIn 2007, Cuomo launched an investigation to determine if\nhome appraisers were inflating the value of homes, which\ncontributed to the U.S. housing bubble and subsequent crash.\nStarting next year, the government-sponsored enterprises\nwill buy home loans only from lenders that endorse an appraiser\ncode of conduct that Cuomo said he hopes will become an\nindustry standard.\nThe new code will prohibit mortgage brokers from selecting\na home appraiser, while lenders may not use in-house assessors\nfor initial reports on the value of homes. OFHEO will host the\nnew watchdog group, which will maintain a consumer hotline and\npromote appraiser independence.\n"We see no legal basis for OFHEO to share or delegate\nrule-making authority to the NYAG," Dugan said, adding that\nnational bank laws prohibit the agreement from applying to\nOCC-regulated banks and their subsidiaries.\nSenator Charles Schumer, a New York Democrat, expressed his\nsupport for Cuomo. "This agreement cracks down on abuses that\nfederal regulators, to this day, have not seen fit to address,"\nSchumer said in response to Dugan's opposition.\n(Additional reporting by Al Yoon in New York)\n(Reporting by John Poirier)\n((john.poirier@thomsonreuters.com; 1 202 898 8399; Reuters\nMessaging: john.poirier.reuters.com@reuters.net))\nKeywords: USA HOUSING/APPRAISAL DUGAN