Cuomo’s Home Vaulation Code of Conduct Hits a Roadblock

The blog Appraisal Scoop has linked to a Press Release from the Federal Register which states that there is a new Federal Agency in charge of overseeing Fannie Mae and Freddie Mac, The Federal Housing Finance Agency.

FHFA was established to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Banks operate in a safe and sound manner,” said FHFA Director James B Lockhart. “We are working quickly to set up the regulatory framework needed to make certain that their operations and activities foster liquid, efficient, competitive, and resilient national housing finance markets.

The new agency, however, will not alter any existing rules or regulations.

According to the press release:

All existing regulations, orders and decisions of OFHEO and the Finance Board remain in effect until modified or superseded.

The creation of this new agency puts the breaks on the Cuomo Agreement. I do not believe all the parties involved with the HVCC have agreed to a final version. And, as such, it is my guess that the HVCC does not qualify as an existing rule. In addition, it is clear that the Federal Government is creating this new agency (FHFA) in part to extend their influence and power over Fannie and Freddie. Thus, the FHFA will be another party with greater influence over Fannie Mae and Freddie Mac that will ultimately have to agree to the HVCC.

The creation of this new agency also suggests that Cuomo is facing continued resistance. And while Cuomo still has his potential lawsuit against Fannie and Freddie. At this point, Fannie and Freddie have much more immediate concerns (like completely failing) than Cuomo’s potential lawsuit. My gut tells me the GSE’s along with their new Federal Overseer (FHFA) are balking at the HVCC and waiting to see if Cuomo will actually push forward with a lawsuit. I suspect we will either see the HVCC go by the wayside or the final agreement will be so watered down that it will lack any real enforcement power.

But we shall see.

-Justin Morton
Manager of Appraisal Specialties