On Monday, Freddie Mac and Fannie Mae announced an agreement with NY Attorney General Andrew Cuomo and the Office of Federal Housing Enterprise Oversight under which the two largest purchasers of home loans will buy home mortgages only from lenders that meet new standards designed to ensure independent and reliable appraisals. According to a Fannie Mae news release, Fannie Mae will immediately adopt the Home Valuation Protection Code which will reportedly prohibit mortgage brokers from selecting appraisers and prohibit lenders from using "in-house" staff appraisers to conduct initial appraisals or from using appraisal management companies that they own or control. The new Code will apply to all loans originated beginning January 1, 2009.

Fannie Mae and Freddie Mac purchase roughly 60% of all home loans originated in the United States.

If you have any questions on this information, please contact Mr. John L. Day, Jr., Esq.

Mr. Day is a partner in the Bankruptcy Department of the Real Estate Default Group at Weltman, Weinberg & Reis Co., L.P.A. in Cincinnati, Ohio. Mr. Day can be reached at (513) 723-2206 or via e-mail at jday@weltman.com.