WASHINGTON (10/9/08)—There could be significant burdens on credit unions and other small lenders associated with parts of a new Home Valuation Code of Conduct (Code) and the Federal Housing Finance Agency should consider making revisions, according to the Credit Union National Association (CUNA). The Code is a result of an agreement earlier this year between the New York Attorney General, the Office of Federal Housing Enterprise Oversight—the precursor agency to the FHFA, Freddie Mac and Fannie Mae. Under the agreement, Freddie Mac and Fannie Mae may purchase loans only from financial institutions that meet new standards designed to ensure independent and reliable appraisals. One of the significant provisions of the Code requires lenders to maintain a telephone and email hotline to address appraisal complaints. This, CUNA warns, will impose significant new burdens on credit unions, the cost of which would have to be borne by credit union members—most unfortunately in the current credit climate as higher costs for mortgage credit. The increased burdens include a need to develop new disclosures and new procedures, and the incumbent need for additional staff training to both implement the new system and to investigate any complaints received. “As not-for-profit financial institutions, credit unions will have no choice but to pass these significant, additional costs on to their members, which will further increase the cost of mortgage credit. This will be especially unfortunate during the current mortgage crisis in which both the cost and availability of mortgage loans have been adversely impacted,” CUNA wrote in an Oct. 8 letter to FHFA Director James Lockhart. CUNA also noted, “The agreement allows Freddie Mac and Fannie Mae to provide exceptions for lenders with assets of $250 million or less, and we request that this be specifically included in the Code.” Earlier CUNA comment letters have requested clarification of the provisions in the Code in which the lender’s loan staff, or others who are connected with the loan staff or compensated based on the successful completion of the loan, will not be permitted to be involved in the selection of the appraiser or communicate with the appraiser. CUNA has also requested clarification of the provisions in the Code that prohibit lenders from using “in-house” appraisals or using an appraiser who is affiliated with the lender or with an entity owned by or which owns the lender. Use the resource link below to read the CUNA letter.