Washington Mutual, a Seattle bank that’s a mid-sized player in Cleveland’s subprime foreclosure drama, is being accused by New York State Attorney General Andrew Cuomo of pressuring a major title insurance company and its appraisal arm to collaborate in a systematic over-appraisal scheme.
New York State Attorney General Andrew Cuomo’s office charged today in a civil lawsuit that the nation’s largest mortgage and property services corporation, its home appraisal subsidiary and the nation’s largest savings and loan giant conspired to inflate the value of home appraisals, earning higher profits for the bank but leaving homeowners holding potentially risky debt loads.
And the attorney general says his office has the e-mails to prove it.
According to civil court papers filed in New York City, at least 50 e-mails between executives from the mortgage and property services conglomerate, First American Corporation, its wholly owned subsidiary, eAppraiseIT, and Washington Mutual document a “raise the value” scheme…
To carry out the scheme, Washington Mutual allegedly asked that eAppraiseIT — which performs about 50,000 appraisals a month nationally — to use a “preferred list” of independent appraisers rather than appraisers from its own staff of more than 12,500 who, according to the court papers, were not bringing in the property values that Washington Mutual was seeking…
While profitable for Washington Mutual, the loans, especially in a declining housing market, put consumers at risk of being “upside down” on their home loans, the AG’s office said. In that situation, should they attempt to sell or refinance their property, they might owe more in loans than the property is actually worth.
“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 said.
Washington Mutual and two subsidiaries, WM Specialty Mortgage and Long Beach Mortgage, have recorded a total of 476 sheriff’s deeds (completed foreclosures) in Cuyahoga County since the beginning of 2005. 216 of them have been filed in the last ten months.