Cuomo says company inflated home appraisals

John O'Brien Nov. 1, 2007, 3:46pm


NEW YORK - One of the country's largest real estate appraisal management companies is the target of New York Attorney General Andrew Cuomo's latest lawsuit.

Filed Thursday in the New York County Supreme Court, Cuomo's suit alleges that eAppraiseIT was pressured into using a list of "Proven Appraisers" who provided inflated appraisals on homes.

Cuomo says he has several e-mails between EA and Washington Mutual that show Washington urged EA to participate in the scheme.

"The independence of the appraiser is essential to maintaining the integrity of the mortgage industry," Cuomo said. "First American (the parent company of EA) and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike.

"The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market. By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion."

Cuomo says that in April 2006, EA began a working relationship with Washington, which became the company's biggest client. Eventually, Washington complained that EA's appraisals weren't high enough. Washington profited from higher appraisals because it could close more home loans at greater values, Cuomo said.

Since April 2006, EA has provided approximately 262,000 appraisals for Washington. Cuomo provided the following timeline:

-On February 22, 2007, in response to a description of the WaMu "Proven Appraiser" program as one in which "we will now assign all Wamu's work to Wamu's 'Proven Appraisers'... (and) Performance ratings to retain position as a Wamu Proven Appraiser will be based on how many come in on value," eAppraiseIT's president told senior executives at First American: "We have agreed to roll over and just do it..."

-On April 4, 2007, eAppraiseIT's executive vice president stated in an e-mail to First American: "We as an AMC (Appraisal Management Company) need to retain our independence from the lender or it will look like collusion... eAppraiseIT is clearly being directed who to select. The reasoning... is bogus for many reasons including the most obvious - the proven appraisers bring in the values."

-On April 17, 2007, eAppraiseIT's president wrote an e-mail to First American explaining why its conduct was illegal: "We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation."

-On September 27, 2006, First American's vice chairman reported that a WaMu executive told him: "if the appraisal issues are resolved and things are working well he would welcome conversations about expanding our relationship..."

"Just as my office stepped in when colleges and loan companies were profiting at students' expense, this lawsuit and my ongoing investigation into the mortgage industry should send a clear message: Companies must play by the rules or they will have to account for their misdeeds," Cuomo said.

Want to get notified whenever we write about New York Attorney General ?
Next time we write about New York Attorney General, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

New York Attorney General
99 Washington Square
Albany, NY 12205

More News