FHFALogo_notificationFederal Housing Finance Agency

FHFA Sends Congress Strategic Plan for Fannie Mae and Freddie Mac Conservatorships

Federal Housing Finance Agency (FHFA) Acting Director Edward J. DeMarco today sent to Congress a strategic plan for the next phase of the conservatorships of Fannie Mae and Freddie Mac (the Enterprises). The plan builds on the Acting Director’s February 2010 letter to Congress on the conservatorships and sets forth objectives and steps FHFA is taking or will take to meet FHFA’s obligations as conservator. Fannie Mae and Freddie Mac were placed into conservatorships Sept. 6, 2008 and have since received more than $180 billion in taxpayer support.
FHFA identifies three strategic goals for the next phase of the conservatorships:

Build. Build a new infrastructure for the secondary mortgage market;

Contract. Gradually contract the Enterprises’ dominant presence in the marketplace while simplifying and shrinking their operations; and

Maintain. Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.

“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” DeMarco wrote. “FHFA is contemplating next steps to build an infrastructure for the secondary mortgage market that is consistent with existing policy proposals and will support any outcome of the leading legislative proposals. FHFA looks forward to working with Congress and the Administration on a resolution of the conservatorships and a comprehensive review of the nation’s housing finance system,” said DeMarco.

Link to February 2010 letter

Ask Henry

Dear H2,
Would you consider houses of worship near the subject property to be external obsolescence?

Adele Schnabel

Dear Adele,
It is quite possible that anything not on the subject property — including a house of worship — could cause external obsolescence. Excess noise, traffic and other issues might ensue. It is up to you as the appraiser to assess whether or not these conditions exist and if they cause external obsolescence.


Ask Henry

UAD online course
Second Kitchen
Hi Henry!

I have a quick question for you.

I am doing an appraisal on an older 2-story home. The original kitchen is located on the first floor. Although the kitchen on the first floor is fully functional, the owners have done quite a bit of remodeling lately which includes installing another more elaborate kitchen on the second floor in the vicinity of a large family room. The location of this kitchen is really more ideal than the original kitchen, since it is located towards the rear of the home and has an unobstructed view of the water. There are two separate staircases leading to the second floor. I was considering allowing the newer, updated kitchen to represent the main kitchen and possibly give minimum credit for the older kitchen on the 1st floor. Hope I haven't confused things much but just wanted to run that by you. As far as resale goes, I think the newer, updated kitchen would be a strong selling point. I'm just trying to figure out the proper direction to take in the appraisal to avoid underwriter issues.

Ben Powell
Powell's Appraisal Services, Inc

Dear Ben,

Many houses have second kitchens. However, you have to be careful about 2nd kitchens on the upper floors as many zoning regulations would consider this to be a conversion to a two family house. You need to check with your building inspector to find out what applies in the subject community.

I cannot make a judgment about a house I have never seen. Generally, you have to decide how much extra value this second kitchen adds, keeping in mind that it might be an over-improvement and suffer from some functional obsolescence.


Ask Henry

USPAP vs FHA Requirements
Hi Henry,
I completed an appraisal for Lender A. Then, Lender B called and said Lender A is OK with them using my report. Now I've been notified that Lender B's underwriter wants clarification on a couple of items, such as right of way and community water.

They don’t want client name changed. Can I do this and stay compliant with USPAP? Thank you in advance for your advice.

Carlene S Mathison
Cornerstone Appraisal

P.S. I did check with Lender A and was told it is okay to do this "because it’s an FHA assignment & FHA has mandated portability."

Dear Carlene,
You are correct the FHA does permit the original lender to transfer the appraisal to a second lender under certain circumstances. Here is a summary of this ruling:

"Appraisal Transfer and Change of Client Name in Appraisal Report"

In cases where a borrower has switched lenders, the first lender must, at the borrower's request, transfer the case to the second lender. FHA does not require that the client name on the appraisal be changed when it is transferred to another lender.

In accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the lender is not permitted to request that the appraiser change the name of the client within the appraisal report unless it is a new appraisal assignment. To effect a client name change, the second lender and the original appraiser may engage in a new appraisal assignment wherein the scope of work is limited to the client name change. A new client name should include the name of the client (lender) and HUD.

There are a bunch of other requirements the lenders must comply with.

It is still my opinion that you are not required to do anything and in fact most anything you do will be treated as a new appraisal and you must comply with the USPAP requirements for making a new appraisal for which you should be paid.

I think you have a choice. Do nothing or tell lender B if they want you to do anything it will require you to make a new appraisal and you expect to be paid for it.



Push for National Flood Insurance Extension — with Reforms
Based on material provided by

As of Valentine's Day, Feb. 14th, 41 signatures had been secured on a letter from senators to the Senate leadership urging prompt action on legislation reauthorizing the National Flood Insurance Program.

At a press conference at the new Capitol Visitors’ Center, Senators John Tester (D-MT) and David Vitter (R-LA), the primary sponsors of the letter, said they would use the letter to persuade Senator Harry Reid (D-NV), the Majority Leader, and Sen. Mitch McConnell (R-KY) the Minority Leader, to put the NFIP long-term extension bill on the floor as soon as possible. Prompt action is needed because the current extension for the program ends May 31.

The current program has been operating on last minute extensions (with some breaks in the program) since September, 2008. As noted at the press conference by Charles Chamness, president and CEO of the National Association of Mutual Insurance Companies, the new flood season begins June 1, the day after the program expires.

Senator Tester acknowledges that support for the bill is not the holdup; the holdup is that Senator Reid is concerned that Senator McConnell will seek to use the "must-do bill" to push through controversial provisions opposed by Senate Democrats.

“Senator Vitter and I are very well aware that that this possibility exists on all bills, and we will have to work hard to ensure that the bill remains as narrow as possible,” Tester explained. Vitter added: “For no good reason, the NFIP was shut down for 53 days in 2010” because an extension to the program ran out. As a result, over 1,400 home closings were either cancelled or postponed. (He was citing data provided by the Property Casualty Insurers Association of America.) According to officials, in 2010, the NFIP lapsed four times and flood coverage could not be purchased or renewed for a total of 53 days.

Senator Vitter says Congress “must take the next step and pass legislation providing a long-term reauthorization of the program” before May 31. Also attending the meeting were officials of the Heartland Institute, the National Wildlife Federation, American Insurance Association, Taxpayers for Common Sense, American Rivers, NAMIC and RAA. All are supporting the effort to have the Senate act promptly on reauthorization legislation.

The Senate bill has no name. The House bill, H.R. 1309, the “Flood Insurance Reform Act of 2011,” passed last July by an overwhelming majority. The bill, sponsored by Representative Judy Biggert, (R-IL), would, among other provisions, extend the NFIP until Sept. 30, 2016. The Senate Banking Committee moved a similar bill "to the floor" in early September 2011. However, floor action has been pending since then. The letter was written to encourage movement on the reauthorization prior to the May 31st deadline.