The Federal Housing Finance Agency, which oversees Fannie and Freddie, put out a report Wednesday saying it "believes that the code is serving the intended purpose."

"Market participants should appreciate the difficulty facing appraisers when valuing properties in a declining market, especially when sharply dropping home prices and foreclosures are prevalent," the report said. "The challenges of appraising properties exist with or without the code. Market participant concerns in the current circumstances would create appraisal controversies even without the code. Indeed, the code should help mitigate these controversies by providing clearer protection for appraisers."

The agency also noted that Fannie and Freddie recently issued alerts advocating the use of qualified, experienced appraisers and are finalizing a complaint form for code violations.

Seeking to counter "misinformation" about the code, the report said:

• The code does allow communication with appraisers about errors, additional needed information and unprofessional conduct."The real bar is on communications that seek to influence the appraiser to adopt a set valuation, which is prohibited."
• The code "does not favor the use of (appraisal management companies) over independent or in-house appraisers. Significantly, for the first time, the code places the same requirements for appraiser independence on AMCs as the limits placed on lenders. Lender use of AMCs was increasing prior to the code and one of the key goals and results of the code was to strengthen appraiser protections when engaged by AMCs."
• Appraiser standards and Fannie and Freddie guidelines already require that an appraiser be competent and knowledgeable of the local market to perform an appraisal. "The use of unqualified in-state or out-of-state appraisers, unfamiliar with local conditions, should be reported to state appraiser licensing agencies."
• While the code may initially have slowed appraisal time as it was being implemented, there are other reasons loans are taking longer to process.
• The code does allow transfer of appraisals between lenders.

Click here to read - http://www.fhfa.gov/webfiles/14611/hvcc_NOTICE_7_22_09F.pdf