As you probably know, since early March we've been working with our lobbyists and legal team in Washington, D.C., to make critical changes to the proposed Home Valuation Code of Conduct (HVCC). Despite its good intentions, the HVCC, as drafted, has unintended consequences for the appraisal and mortgage industries already acknowledged by OFHEO. Thanks to your efforts, we have had some success in getting our voice heard in Congress.
Yesterday in Washington, Federal Reserve Chairman, Ben Bernanke testified before the Senate Committee on Banking about the overall health of the economy and the difficulties facing Fannie Mae and Freddie Mac. Senator Elizabeth Dole (R-NC) asked Chairman Bernanke specifically what the Fed is doing to ensure the HVCC does not further disrupt the housing and mortgage crises in this statement:
"... While everyone appreciates the goals of this agreement, the code leans heavily towards inconsistent and potentially counter-productive regulation of the lending industry. If implemented poorly, [it] could actually increase costs of obtaining appraisals and slow down the process of obtaining appraisals. Recognizing that the current settlement recommendations are inconsistent with current appraisal regulations and guidelines issued by the FFIEC sub-committee on appraisals. What are you doing to ensure the implementation of the code of conduct does not further disrupt the current housing and mortgage crisis on federally regulated banking institutions? What can you do?"
Fed Chairman Bernanke responded by saying that they are looking at the HVCC to ensure that it doesn't prevent banks from getting the information they need to make good appraisals or imposing excessive costs. He also commented that they will be examining the HVCC before it's implemented. (Click here to watch the video.)
Another important reason yesterday's events are newsworthy is the sweeping housing and mortgage finance package moving through Congress. According to Congressional Quarterly, the pending legislation would create a strong new regulator for Fannie Mae and Freddie Mac, with the authority to set capital standards and limits on the companies' portfolios.
While there's still work to be done, it is important you know that your voice has been heard in a very important way. In fact, since you became involved, almost every federal regulator, including the Fed, has written OFHEO to express their concerns about the HVCC. And, through your comments to Senator Dole as well as other Senators, and yesterday through Senator Dole to Fed Chairman Bernanke, it's clear that the HVCC has the attention of regulators at the highest levels, and they have concerns similar to ours.
At the very least the HVCC was brought to the Fed's attention in a public forum. Your efforts were not in vain.
We'll let you know how this all plays out as we receive word from our sources. So, stay tuned.