Yesterday, in response to questions posed during a congressional hearing regarding oversight of Fannie Mae and Freddie Mac, James Lockhart, former director of OFHEO and now director of the new Federal Housing Finance Agency (FHFA) which replaced it, told the House Financial Service Committee that implementing the HVCC agreement has "taken us longer than we expected". Lockhart told the committee that the January 1 implementation deadline may be delayed one to three months and that potential changes to the agreement are still being worked out. There was no word as to what those changes may be.
Though industry news from Washington has been highly unpredictable these past few weeks, it's likely that little of substance will be changed affecting independent fee appraisers, as the influential banking lobby has been more concerned with the provisions regarding AMC ownership and in-house appraisal staff. Some loosening of the mortgage broker "death sentence" has been intimated in recent weeks, as well. Interestingly, however, until this announcement, sources involved in the inner workings of the HVCC had indicated that no delay would be forthcoming.
At this time, our recommendation to appraisers is to proceed as though the HVCC is not delayed and the provisions are unchanged. Even if it is modified or delayed, the lender community is already moving toward an HVCC model to reduce legal liability—often by engaging AMCs. Many lenders have already done so, indicating that even if the deadline is extended, it may have little practical effect on when individual lenders choose to be substantially HVCC compliant.
Click here to view a webcast of the hearing (Windows Media)
Transcript of the relevant section (Timecode 49:42 - 50:43)
Rep. Paul Kanjorski (D-PA): Appraisal independence is very important. And how will the conservatorship affect the agreements with attorney general Cuomo?
Director Lockhart: We have been working with the attorney general on those appraisal standards and we are very near finalizing them and we hope within the next couple weeks to put them out. They have been modified somewhat. I think they still really show that we strongly support the independence. And because it has taken us longer than we expected to do it, we would expect to actually not have the January 1st implementation date. We expect to slip that a month or two, or maybe three. But we expect to have the appraisal standards out very shortly.
Kanjorski: Very Good
Click here to download a PDF of Director Lockhart's statement (no HVCC information is in the statement, but it is interesting reading regarding the status of the GSEs)