New York Attorney General Andrew Cuomo announced today that his office sued Santa-Ana based First American Corp. and its eAppraiseIt mortgage appraisal unit for falsely inflating house values. According to the press release, Cuomo said First American allegedly conspired with Washington Mutual to use a list of “proven appraisers” to inflate mortgage appraisals in a bid to fund more loans. Apparently Washington Mutual had complained that appraised values were coming in too low, effectively killing loans in the process, forcing the bank to handpick appraisers to bump values higher, even if they weren’t accurate. “The independence of the appraiser is essential to maintaining the integrity of the mortgage industry,” Cuomo said. “First American and eAppraiseIt violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike.” Cuomo said emails documented the fact that eAppraiseIt executives knew their actions were wrong, but continued to break the law to secure future business with the mortgage lender and banking giant in the future. “First American helped set the current mortgage crisis in motion,” he said.First American executives initially defended their valuations, but subsequently gave in to Washington Mutual’s demands to use the “preferred appraisers”, the lawsuit says.
“We have agreed to roll over and just do it,” eAppraiseIt’s president wrote in an e-mail to senior executives at First American, the lawsuit states. First American’s vice chairman said a Washington Mutual executive told him that, “If the appraisal issues are resolved and things are working well he would welcome conversations about expanding our relationship.”
Washington Mutual hired First American’s appraisal unit, eAppraiseIt, in spring 2006 in order to comply with federal rules designed to ensure appraisals are done accurately and by independent analysts. Between April 2006 and October 2007, the company provided roughly 262,000 appraisals for Washington Mutual, according to Cuomo. The lawsuit, which was filed in New York Supreme Court, does not name Washington Mutual as a defendant. The news is another blow to First American Corp., who also announced a 48% drop in third-quarter profit today due to declining revenue in its core title insurance business
While Wamu was busy figuring out how to qualify under valued property they were turning away A Paper becasue the A paper doesn;t want to pay a YSP . Things like that just drive me crazy. When I told them I am taking my business elsewhere it was no big deal - "..we have all these sub primes we're going to make a ton of money off of. "
