Yesterday, the New York State Attorney General, Andrew Cuomo, sent a letter to Fannie Mae concerning a complaint against First American Corp. regarding that firm's mortgage appraisal practices. We are concerned about the allegations in the complaint. If true, the appraisal practices described in the complaint would violate Fannie Mae's requirements for loans we purchase from lenders or securitize.

It is against our interest to purchase or guarantee mortgages with inflated appraisals, and so it is in Fannie Mae's interest that these appraisal practices be investigated. The Attorney General has indicated that he also plans to subpoena Fannie Mae for documents and testimony related to the appraisal process. We intend to cooperate fully with the Attorney General. We also will appoint, with the Attorney General's approval, an independent examiner to review the appraisal practices cited in the complaint. If the examiner determines we own or guarantee mortgages with inflated appraisals, our guide states that the lender must buy back the loans that do not meet our standards and requirements.

We look forward to working with the New York State Attorney General and other regulators to support the highest lending standards for the market and homebuyers.

Contact: 202-752-6720