New York Attorney General Eric Schneiderman secured a $7.8 million settlement from eAppraiseIT for colluding with the former Washington Mutual bank to inflate property appraisals, his office announced today.
The suit was first filed by Schneiderman’s predecessor, Andrew Cuomo, in 2007, against eAppraiseIT, which was a subsidiary of First American Corp. The unit is now part of CoreLogic. Meanwhile, Washington Mutual’s lending practice collapsed in September 2008, largely due to bad home loans, and was folded into JPMorgan Chase.
The Attorney’s General complaint claimed eAppraiseIT succumbed to pressure from lender Washington Mutual and allowed its loan officers to select property appraisers for loans it originated. The lender sought the highest valuations so that its mortgage loans would be most profitable. During the trial, appraisers testified that they were removed from the “proven appraiser list” — despite years of experience — because they weren’t valuing properties’ to WaMu’s satisfaction.
“Coercion of appraisers to inflate home values and the erosion of appraisal independence directly contributed to the housing crisis. By giving in to lender pressure, these corporations violated a principle that is vital to restoring and maintaining a healthy housing market,” Schneiderman said in a statement.
eAppraiseIT, which handled some 260,000 appraisals across the country and 10,000 in New York, had tried to avoid the lawsuit by claiming its industry was under federal regulation, not that of states. But two seperate courts ruled against it over the past two years.
A CoreLogic spokesperson told Reuters the firm is shutting down CoreLogic Valuation Services, of which eAppraiseIT is now a subsidiary. eAppraiseIT is on the hook for $4 million in civil penalties and $3.8 million in litigation fees, according to the announcement. – Adam Fusfeld