|
|
November 14, 2007 Vol.
133 |
Award Winner • Publication Excellence |
|
|
You are receiving WRE Online because you opted in at
www.workingre.com or purchased E&O insurance from
OREP.
WRE Online is delivered every other week with occasional Special
Editions. If you no longer wish
to receive emails from us, please use the link found at the bottom
of this newsletter to be removed from our mailing list.
If you use spam filters, please add
subscription@workingpublications.com
to your safe list to ensure delivery.
If you are having problems reading this message, please read it online
now:
www.workingre.com/workingre/eappraiseit-wamu-fannie-freddie.html
Editor's Note:
Appraisers
coast to coast are thinking: “I told you so.” Many predicted that
unchecked lender pressure and other shenanigans during the refi-boom
would, sooner or later, have its consequences. Some said it would be
another Savings and Loan-type crisis, with taxpayers footing the
bill- again.
(story
continues below) |
|
FREE Appraiser eBook:
Getting REO, attorney, and REALTOR® work
As markets shift, foreclosures and REOs can be a huge
opportunity for appraisers. This eBook is packed with
tips to help you land business from REALTORs®,
attorneys, lenders, AMCs, estate planners, homeowners,
financial counselors, CPAs and more. It doesn't matter
whether you use a la mode products or not, there are
valuable tips in this book for you.
So
download it now, absolutely free and with no
catches, and use these ideas to make more money right
away. For more appraisal marketing tips, visit
appraisermarketing.net for tons of articles, free
webinars, and more. |
(story continues)
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 feel like enjoying “the last laugh”; most are suffering
through this tough market along with everyone else.
Note to our readers: We
apologize if you are receiving multiple emails of the same
edition from time to time. We are aware of the problem and are
working on it. If this continues to be a problem, please email
cary@orep.org.
Appraisers: I Told you So - WAMU, eAppraiseIT
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, according to the complaint.
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.
(story continues below) |
New Software
Makes Scope of Work Writing Fast, Complete,
Powerful
USL Appraisal Report Documenter Software II
Click
for a Video Introduction to the USL Documenter by
David Braun
Click
for User Guide/Audio Tutorial -
Click
to read review of USL Software
• “This software represents a significant breakthrough in the overall reporting process.”
- Doug Smith, IFAS, review from Appraisal Today
• "The report documenting software provides professionalism in my appraisals and keeps
me from worrying about liability issues. I wouldn’t send an appraisal without it."
- Gregory Beck
|
|
(story continues)
This rapidly unfolding story began November 1, 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. (Find the
complaint, New York vs. First American, posted at
www.workingre.com.)
“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.”
|
Washington Mutual has not been sued because it is
regulated by federal rather than state agencies,
according to Bloomberg.com (http://www.bloomberg.com/apps/news?pid=20601087&sid=ajFo10xQYMd0&refer=home).
“I
think this is a good indication of what the appraisers
run into,” said Vicky Cassens Zillioux, Senior Partner
at Mortgage Lending Consultancy. “If the big guys can
get pushed around, imagine the appraiser’s experience.
Also, it points out that appraiser management companies
(such as eAppraiseIT) are not necessarily the solution
to the appraiser pressure issue.”
|
E&O Insurance Experts
Minimum Premium: $455
(appraisers)
Appraisers Same Day Coverage
Individuals & Firm Coverage
Serving Appraisers, Inspectors, Agents, Mortgage Brokers
Call or
Click today • (888) 347-5273
Yes
we answer the Phone!
"I am so pleased with your service and thoroughness. Thank you very much for being so responsible with our money and our E&O insurance. Although I have never had a claim, my confidence level in this process has increased. It is no surprise that several appraisers recommended your company to me. GREAT JOB! -Appraiser, Richmond, VA
Includes subscription to
Working RE Magazine
|
Emails Can’t
be Shredded
The
lawsuit is based on e-mails collected by Cuomo that were written
between executives at eAppraiseIT, First American and Washington
Mutual. The emails show that initially the executives at
eAppraiseIT had concerns regarding the compromised independence.
They wrote their concerns to the senior executives at First
American, but the suit claims that ultimately, First American
succumbed to WaMu’s demands in order to secure future business.
Washington Mutual has now suspended its relationship with
eAppraiseIT pending further investigation.
Here is one email from eAppraiseIT
President to senior executives at First American, released by
Cuomo’s office: “In short, we will now assign all WaMu’s work to
WaMu’s ‘Proven Appraisers’ (bypassing our Staff and Elites,
including the ones we hired from WaMu)…Performance ratings to
retain position as a WaMu Proven Appraiser will be based on how
many come in on value…We have agreed to roll over and just do
it.”
Read the NY vs.
First American Email Excerpts introduced as evidence at
www.workingre.com.
History
In
Spring 2006, WaMu closed its internal appraisal office, firing
all staff appraisers. They quickly became eAppraiseIT’s largest
client. EAppraiseIT has conducted more than 260,000 appraisals
for WaMu and has received over $50 million, according to the
lawsuit.
According to the indictment, the contract stipulated that if
WaMu disagreed with a given value, it could challenge the
appraisal by requesting a "reconsideration of value" (ROV). The
indictment claims that this allowed WaMu to pressure eAppraiseIT
appraisers to hit the values they wanted.
WaMu generally had
a good reputation among appraisers for not exerting pressure. Many
appraisers are surprised that WaMu is the first lender on the hook.
Earth Shakes
Cuomo has expanded into an industry-wide investigation between real
estate appraisers and lenders. On November 7, Cuomo subpoenaed
800-pound gorillas Fannie Mae and Freddie Mac, seeking information
on whether home loans purchased by the two biggest investors in U.S.
mortgages from WaMu were based on corrupted appraisals.
“In order to
fulfill their duty to consumers and investors, Fannie Mae and
Freddie Mac must ensure that Washington Mutual’s mortgages have not
been corrupted by inflated appraisals,” said Cuomo. “Our expanding
investigation into the mortgage industry has uncovered that
Washington Mutual improperly pressured appraisers to provide
inflated values that best served the lender’s interest. Knowing
this, Fannie Mae and Freddie Mac cannot afford to continue buying
Washington Mutual mortgages unless they are sure these loans are
based on reliable and independent appraisals.”
(http://www.northcountrygazette.org/news/2007/11/07/mortgage_subpoenas/)
Cuomo may have overstepped in going after Fannie and Freddie,
however, according to a letter from the Office of Federal Housing
Enterprise Oversight. You can the OFHEO Letter to Cuomo at
www.workingre.com.
Investment banks
were also subpoenaed but Cuomo has declined to name them at this
time.
Cuomo indicates his
office discovered a “pattern of collusion” between lenders and
appraisers which has led him to investigate other banks, including
Washington Mutual, for potentially pressuring appraisers.
“I don't believe
it's just about Washington Mutual,” Cuomo said at a press conference
November 7. “I believe it's widespread. I believe it's the rule not
the exception. And we're investigating Fannie Mae and Freddie Mac
and other investment banks as to the underlying practices that have
allowed this to go on for so long.”
Link to Los Angeles Times article:
http://www.latimes.com/business/la-fi-appraise2nov02,0,64399.story?coll=la-home-business.
Please do not reply to this email, send your comments
here.
|
|
