Fannie Mae and Freddie Mac will institute a revised Home Valuation Code of Conduct, according to an announcement by Federal Housing Finance Agency (FHFA) director James Lockhart.

The code is based on an agreement between Fannie, Freddie, New York state attorney general Andrew Cuomo and the FHFA, and will go into effect May 1, 2009. Officials hope the code will improve the reliability of home appraisals.
The revised code is based on existing Fannie Mae and Freddie Mac guidelines set in place to ensure the accuracy of appraisals for loans sold to the two companies for their portfolios and securitization, and according to the FHFA, will help assure borrowers, home buyers and secondary mortgage market investors receive fair property valuations.
The code will apply to lenders that sell single-family mortgage loans to Fannie and Freddie, who will begin to receive information on the code and its implementation in early January.
“[Fannie Mae and Freddie Mac] have a strong interest in ensuring the soundness of the appraisal practices that lead to appraisal reports supporting the mortgage loans they purchase from lenders,” Lockhart said. “The code strikes a balance of assuring enhanced protections for appraisers while maintaining lender ability to address unprofessional appraisal practices and to perform quality controls on appraisals received.”