As part of a settlement with New York Attorney General Andrew Cuomo, Fannie Mae and Freddie Mac will establish a home appraisal watchdog organization to help prevent fraud in valuing homes, Reuters reports.
This is one of the greatest, most dramatic reforms of the housing industry in the last 20 years, Cuomo said. We believe as a group that this will be a significant and dramatically positive reform.
Cuomo had filed subpoenas against the two mortgage financers to see if they had stood idle as Wall Street bought and bundled home loans at inflated amounts.
Fannie Mae said it will provide $12 million over the next five years to help establish the oversight body, which will operate within the Office of Federal Housing Enterprise Oversight.