Remembering Countrywide
In May 2012, Brian Hale, former CEO of MetLife Bank, was hired as CEO of Stearns Lending.  Before serving as the CEO of MetLife Bank, which was forced to exit the residential mortgage market during his tenure, Hale was the Chief Operations Officer at Countrywide Home Loans, which was later revealed as having one of the most toxic mortgage portfolios in the nation.

Shortly after Hale was hired at Stearns, Scheri alleges that she observed a printed list of the names, addresses, and telephone numbers of appraisers in Dellorusso’s office.  When she asked what the list was, Scheri alleges that Dellorusso told her that he had been given a list of appraisers by Hale and that those were the appraisers that Trimavin would be using going forward. During this time, Trimavin had just finished purchasing a new Collateral Management System (CMS) from FNC as well as a select list of 8,500 appraisers rated with exceptional quality scores and vetted based on their qualifications, the suit alleges.

Instead of utilizing the list that Trimavin had, Scheri’s suit alleges that Dellorusso hired temporary workers to key in the printed appraiser list that Hale provided.  Additionally, once the system was rolled out, Scheri observed that the list of 8,500 “qualified” appraisers was never imported into the CMS system and that the rating system within the CMS only utilized those appraisers who were on the list Hale provided. 

Throughout her time as Chief Appraiser, Scheri alleges, she continued to receive threatening phone calls and emails from loan production personnel demanding that appraisers be added or removed from the approved appraiser panel.  In some cases, they would request that a second appraisal be performed by “their” appraiser when they did not like the value opinion of the original appraiser.  Scheri continued to respond that such actions were in violation of federal regulations and that she would not comply with such requests.

End of the Road
In December 2012, Scheri alleges that she was told by Dellorusso that he felt the stress of her job was affecting her and that she should consider transferring to a different position within the company.  Furthermore, Dellorusso told her that he believed a man could handle the stress of the job as Chief Appraiser better than she could, according to the suit.  Scheri responded that she wasn’t interested in moving to a different position as she had been hired to make sure Trimavin’s appraisal process was in accordance with applicable laws.

The next day, the suit alleges, Scheri was told that she was being insubordinate and that Dellorusso was going to make the decisions regarding the appraiser process and which appraisers would be placed on the panel.  Once again, Scheri alleges, she made it clear that the actions Dellorusso was taking were illegal and that she was not willing to risk her license and would not go along with it.

Within a few weeks, Scheri came across her job posted online.  After confronting Dellorusso and taking the issue to the human resources and legal departments, she was terminated by Trimavin in January 2013 because, the suit alleges, management indicated it had “lost confidence in her ability to manage.”  Scheri declined the severance package which included a confidentiality clause, and chose instead to sue Trimavin and Stearns Lending for unlawful retaliation and wrongful termination in violation of public policy. 

Stearns Denies Any Wrongdoing
For its part, Stearns Lending denies the allegations laid out in the suit.  Representing Stearns is attorney Greg S. Labate, Esq. Labate issued the following statement to Working RE: "TriMavin and Stearns Lending have thoroughly investigated the claims made by Ms. Scheri, a former employee of TriMavin, and have determined that her lawsuit has absolutely no merit whatsoever. TriMavin and Stearns Lending will vigorously defend themselves against Ms. Scheri's false accusations, and they look forward to their day in court to disprove these frivolous and malicious allegations.”

Appraiser Independence
Scheri’s allegations echo what many appraisers have been saying all along; that lenders continue to manipulate the appraisal process by using carefully filtered lists of appraisers who don’t cause “trouble” and by “blacklisting” (or not using) appraisers who resist compliance.

Earlier this year, in an interview with Working RE, Kyle Lagow, the appraiser whistleblower at Countrywide Financial, said that even though his case helped lead to a $1 billion settlement between the Department of Justice and Bank of America, he doesn’t see that much has changed in the appraisal industry.  “The same people who were in charge when this fraud took place are still here. My supervisor at Landsafe, the area manager, is still there. The appraiser who was completing 400 appraisals a month in Texas still has his license. So you tell me, what’s changed?” said Lagow.

Appraiser Thomas J. Inserra, MBA, MAI, SRA, who served as the National Chief Appraiser for the FDIC/RTC during the 1990s, reports that from what he’s seen across the industry of late there are still many lenders who are breaking the law and conducting business the way they did during the real estate boom. “There are still many hold-outs who continue to believe they can simply waive or ignore rules, laws or procedures that they just don't like. In fact, some would argue that there is a new wave of ‘dumb’ lenders going back to the old practices,” says Inserra.

Conducting business like in the “good old days” means sidestepping the appraisal process with appraisers continuing to face challenges to their independence.  “I have had recent conversations with CEOs and top executives of very large financial institutions who say they believe that to be competitive today and into the future, they must focus on comprehensive risk management. And they shake their heads in disbelief over what some lenders are doing today- a total repeat of the conduct that led to the crisis- manipulation and control of the appraiser process to the point of breaching independence and attaining advocacy,” says Inserra.

Editor’s Postscript: Full Circle
The “firewall” imposed between appraisers and lenders by the Home Valuation Code of Conduct (HVCC) ended direct business relationships between appraisers and their mortgage broker/lender clients. It resulted in a land-office business for a new crop of appraisal management companies (AMCs) and the demise of many small appraisal businesses.  With this monumental shift came a significant pay cut for most residential real estate appraisers and a diminution in their ability to compete on quality and service and personal relationships.

With so many appraisers forced out of business in recent years, things have improved for those who remain. Fees are rising due to supply and demand.  And the tables have turned a bit with appraisers better able to pick and choose which AMCs they will do business with rather than the other way around.  Appraisers are negotiating higher fees and more reasonable turn times. With so much work, they can choose to work with the very best clients. But even in these “better days,” many insist that the pressure to influence value still exists in many forms.

Scheri’s case, if true, brings the issue of appraiser regulations and independence full circle.  Veteran appraisers will remember that HVCC was born out of an investigation into WaMu and eAppraiseIT, by then New York Attorney General Andrew M. Cuomo’s, that eventually wound its way up to the honchos at Fannie Mae/Freddie Mac, who quicker than you can say “golden parachute,” settled with Cuomo by agreeing to HVCC.  As HVCC ended the investigation into Fannie and Freddie, it marked the beginning of the end for many appraisers.

This is from a WRE story at the time: “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.”  Sound familiar? The allegations in Scheri’s suit echo what many appraisers have been saying all along, that the behavior that prompted intense scrutiny and regulation is alive and well.

Another Stubborn Appraiser
Veteran appraisers may also remember the story of another stubborn appraiser, Pam Crowley, CRA, who gave a clarion call prior to the real estate collapse.  Fed up with relentless lender pressure in 2005, Crowley began collecting evidence from appraisers and forwarding it to the GSEs, regulators and others.  She eventually took the project online with AppraisalFraudwatchlist.org in 2007 (now defunct).  That same year, Crowley was sued for defamation by eAppraiseIT (of Cuomo lawsuit fame- see above). The suit was dropped by eAppraiseIT in 2008.


New Appraiser Independence Survey

1. Since HVCC was implemented (5/09) “Appraiser Independence” for you has:|
A. Increased
B. Decreased
C. Remained about the Same

2. How often do you feel there is an attempt to influence your value conclusion?
A. Never
B. Infrequently
C. Occasionally
D. Fairly Often
E. Regularly

3  Within the last year, you believe you were “dropped” from an AMC/Lender roster or lost work for not meeting conditions/requests that you felt were contrary to an accurate appraisal:
a. Never
b. Infrequently
c. Occasionally
d. Fairly Often
e. Regularly