Real Estate & Property Law
NY State Suit: Lender-Appraiser Scheme Inflated Home Values
Posted Nov 1, 2007 12:25 PM CDT
By Martha Neil
In violation of federal lending regulations, a major real estate appraisal company and two of the nation's biggest savings and loans participated in a scheme to inflate the value of homes throughout the country, contends a lawsuit filed by New York's attorney general.
It accuses eAppraiseIT, a division of First American Corp., of "caving in," as the Associated Press puts it, to pressure from Washington Mutual to use appraisers who could be counted on to inflate home values. The excessive appraisals put both homeowners and shareholders of the companies that granted mortgages based on these inflated values at risk, contributing to the current mortgage crisis, said N.Y. Attorney Gen. Andrew Cuomo at a press conference today. He also said that the alleged misconduct is part of "an industry-wide problem."
The state Supreme Court suit, which was filed in Manhattan, seeks to put an end to the alleged practice, recover profits and assess penalties.
None of the defendants responded to messages from AP this morning.