Hello, LOs!
You may remember that the Federal Housing Finance Agency asked Fannie Mae and Freddie Mac to make annual plans — starting by the end of this year — to advance equity in housing.
The regulator had some ideas (requirements, actually) for how to shape those plans, but yesterday, it was in listening mode. FHFA held a public listening session, and heard from a broad spectrum of advocates, including industry and government stakeholders.
One of the commenters, Horacio Mendez, president and CEO of the Woodstock Institute, said that a good first step toward advancing equity would be for the GSEs to stop cherry-picking appraisals when there is more than one performed.
Mendez noted in his brief testimony that lenders have complained that when two appraisals are performed — which would happen if the initial appraisal report is deficient, or in the case of certain risk policies — the GSEs choose the appraisal with the lowest value.
Mendez bluntly asked the FHFA, "Can you please stop that?"
In light of a recent Freddie Mac report that said appraisals in minority neighborhoods more often fall short of the contracted sales price, it would be interesting if the GSEs were encouraging lenders to submit the lower of the two appraisals.
In the case of Freddie Mac, according to its selling guide, when there are two appraisals, the policy is for the lender to select "the most reliable appraisal, rather than the appraisal that states the highest value."
Are the GSEs encouraging lenders to be over-cautious with appraised values? LOs, let me know what you've heard by sending an email to gkromrei@housingwire.com
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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