eAppraiseIT, WAMU Blow up, Fannie, Freddie

Editor's Note: Coast to coast appraisers are thinking: "I told you so." Many predicted that unchecked lender pressure and other shenanigans during the refi-boom, sooner or later, would have its consequences. Some said it would be another Savings and Loan-type crisis, with taxpayers footing the bill- again. What we are in the midst of may end up being much worse. Lenders are under close scrutiny and money is tight: the stock market is staggering and there's talk of an evitable recession in the wake of the sub-prime mess and housing collapse. Many appraisers rang the alarm bells years ago but few outside the industry stirred. Appraisers may have some satisfaction at being proved right but few feeling like enjoying "the last laugh"; most are suffering through this tough market just like everyone else.

"I Told you So?" eAppraiseIT, WAMU Blow Up, Fannie, Freddie

By Cary Barker, Asst. Editor, WRE

First American Corporation and its subsidiary eAppraiseIT, the company that attempted to shut down Pamela Crowley's MortgageFraudWatchList web site (read story), are now being sued by New York Attorney General, Andrew M. Cuomo, for allegedly caving into demands for higher appraisal values from their largest client, Washington Mutual, Inc. (WaMu), which violates state and federal regulations that call for independent home appraisals. 

Cuomo was the keynote speaker at a la mode's national conference in January 2006, where he got an earful from appraisers about lender pressure and the importance of appraiser independence. It seems he was listening.  
 

This rapidly unfolding story began November 1, 2007 when Cuomo filed a lawsuit against First American and eAppraiseIT. According to the complaint, WaMu became unhappy with eAppraiseIT appraisers when they supplied appraisal values that were too low for WaMu to close loans. WaMu's loan production staff was then allegedly allowed to personally select appraisers who they believed would provide the values WaMu wanted. The complaint also accuses eAppraiseIT of allowing WaMu to pressure appraisers to change values if they were too low.  (Read the complaint, New York vs. First American.)

"The independence of the appraiser is essential to maintaining the integrity of the mortgage industry," Cuomo said at a press conference held November 1. "First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike."

First American denied the allegations. "We vehemently disagree with his characterization of the facts," said Kenneth DeGiorgio, First American's General Counsel, in a conference call with analysts. "We're confident that once we've had the opportunity to set forth our response before an impartial arbiter, our activities will be found to be appropriate."