First American Issued Phony Appraisals, Charges NY AG; Execs Knew It & Allowed It Anyway, Says Suit

(original post 11-2-07; modified 11-13-07)
The New York State Attorney General's Office announces:

• Attorney General Andrew M. Cuomo [Thursday] announced that he is suing one of the nation’s largest real estate appraisal management companies and its parent corporation for colluding with the largest savings and loan in the country to inflate the appraisal values of homes. In a scheme detailed in numerous e-mails, eAppraiseIT (“EA”), a subsidiary of First American Corporation (NYSE: FAF), caved to pressure from Washington Mutual (“WaMu”) (NYSE: WM) to use a list of preferred “Proven Appraisers” who provided inflated appraisals on homes. The e-mails also show that executives at EA knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu.

• “The independence of the appraiser is essential to maintaining the integrity of the mortgage industry. First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike,” said Attorney General Cuomo. “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.”

For more, see New York AG Press Release - NY Attorney General Sues First American And Its Subsidiary For Conspiring With Washington Mutual To Inflate Real Estate Appraisals.

To view the New York AG's lawsuit, see Cuomo vs. First American Corporation and First American eAppraiseIT.

Go here to view E-Mail Excerpts in eAppraiseIT Case.

For CBS News coverage, see N.Y. AG: Appraisers Inflated Home Values (Real Estate Appraisers Colluded With Banks To Inflate Mortgage Values, Andrew Cuomo Says).

For an earlier story on the NY AG investigation of eAppraiseIT, which reportedly appraises up to 15,000 homes a year in New York, see New York Subpoenas First American Appraisal Unit (Bloomberg.com).

11-12-07 supplement:

For a recent story on inflated appraisals, see Banks bullying appraisers to boost values bad news (Kenneth Harney syndicated article).

Go here for other posts on the NY AG's investigation of First American / eAppraiseIT. Cuomo OFHEO Fannie Mae Freddie Mac