Realtors and mortgage brokers are in an 11th-hour push to delay by a year new Fannie Mae (FNM) and Freddie Mac (FRE) rules governing real-estate appraisals.

The rules, which take effect May 1, have sparked criticism from many corners of the real-estate industry.

The National Association of Realtors complained in a letter last week that the industry was given scant guidance and too little time to implement the rules. Appraisers worry the rules, which will put middlemen between loan originators and appraisers, will squeeze their fees. Meanwhile, mortgage brokers say the changes will make them uncompetitive.

"This is going to be devastating for everyone," Marc Savitt, the president of the National Association of Mortgage Brokers, said Monday.

The rules arose from an investigation by New York Attorney General Andrew Cuomo into alleged collusion between mortgage lenders and appraisers to pump up home values. Fannie and Freddie, which became targets of probe, agreed in early 2008 to require all appraisers on mortgages they buy or guarantee to adhere to a new code of conduct.

The companies' regulator, the Federal Housing Finance Agency, signed onto the agreement. Then, in January, a few months after it had seized Fannie and Freddie, FHFA issued a revised code of conduct, incorporating input from the industry. Still, the industry complains it has not been fully heard.

"Unfortunately, it's a Fannie-Freddie agreement with Cuomo and their regulator, but the real compliance burden is on entities that are not a party to the agreement," Michael Carrier, a Mortgage Bankers Association official, said.

The rules are intended to reduce collusion and fraud in the appraisal industry, which has been blamed for generating wildly inflated home values during the housing boom. The new code requires lenders to go through third-parties, known as appraisal management companies, to order appraisals. Lenders with in-house appraisal staff must set up safeguards to ensure loan officers don't influence the home appraisal process.

Lenders, realtors and brokers agree the changes could push up costs for borrowers. In cases where Fannie or Freddie determine the code has been violated, they can force lenders to repurchase the loan. Borrowers shopping for a good rate could be asked to pay for additional appraisals, Carrier of the mortgage bankers group said, because lenders will be suspicious of appraisals they didn't order.

The code of conduct also prohibits mortgage brokers from ordering appraisals, requiring them to go through lenders. Mortgage brokers, who typically have close relationships with appraisers, argue this will push up costs, making it harder for them to compete with lenders.

The mortgage broker trade group filed a lawsuit earlier this year against FHFA Director James B. Lockhart to block the rule, but quickly dropped the suit. Savitt said he was "very hopeful" that FHFA would delay the rule.

Appraisers argue the new guidelines will drive the most experienced appraisers out of the business, hurting appraisal quality, because the appraisal management companies will squeeze their fees. Jim Amorin, the president of the Appraisal Institute, an industry trade group, said such companies take at least half of appraisers' fees.

The realtors group argued for a one-year moratorium on the new rules in a April 20 letter to the chief executives of Fannie and Freddie, Cuomo and Lockhart. The trade group, which supports the new code of conduct, said Fannie and Freddie only provided substantive guidance on the rule weeks ago. It also noted an industry survey by FNC Inc. finding that most lenders hadn't completed the necessary computer upgrades to comply with the new rules.

FHFA spokeswoman Stefanie Mullen said the rules would take effect as planned on May 1.

-Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com