Washington Mutual Appraisal Scandal
Author: Rob K. Blake | Date: January 15, 2008 | Filed In: Mortgage News
Washington Mutual Mortgage along with eAppraiseIT, their appraisal firm, was accused of over inflating the appraisal values of homes by New York’s attorney general, Andrew Cuomo.
Washington Mutual Mortgage allegedly colluded with eAppraiseIT, an appraisal management subsidiary of First American Corp. to “meet the numbers”. The lawsuit said that eAppraiseIT succumbed to pressure from Washington Mutual Mortgage to use appraisers who overvalued homes allowing the bank to close more home loans.
The lawsuit further alleged that First American, needed to keep and win more business from Washington Mutual Mortgage so it went along with the scheme. Washington Mutual Mortgage and eAppraiseIT both deny the allegations.
Cuomo said,
“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. … By allowing Washington Mutual to hand-pick appraisers who inflated home values, First American helped set the current mortgage crisis in motion.”
And he has the emails to prove it….
April 4, 2007, e-mail from eAppraiseIT’s executive vice president to eAppraiseIT executives regarding eAppraiseIT’s liability for using WaMu’s proven appraisers:
“… we as an AMC (appraisal management company) need to retain our independence from the lender or it will look like collusion. Imagine a simple mortgage broker saying he will give us the work if we use his ‘proven’ appraiser. We say no. This is very similar to that except they (Washington Mutual Mortgage) are very big. …”
April 17, 2007, e-mail from an appraiser to eAppraiseIT:
“This is the second Wamu (Washington Mutual Mortgage) Appraisal quality assurance issue I have received from Wamu in the past 2 months. Both as a result of an appraisal I completed that did not come in to their predetermined value for a ‘valued’ Wamu client. I was pressured for 2 weeks to change both my value and the conditions of my appraisal report … both of which were violations of USPAP, FANNIE MAE and the Supplemental Standards I am required to observe and am bound by my license to complete.”
So now we see the big banks like Washington Mutual Mortgage are equally responsible for many of the same allegations the mortgage broker side of the industry is getting smeared with….profiting from rate increases, profiting from appraisal manipulations, and selling risky loan programs.
Yet the banking side doesn’t get legislation promoted attempting to legislate them out of existence like the mortgage brokers do..
Case In Point: HR 3915 “The Mortgage Reform and Anti-Predatory Lending Act of 2007” if passed will effectively eliminate mortgage brokers from the home lending landscape. This bill basically blames all the foreclosures on the brokers and seeks to create enough hurdles to prompt most brokers to close their doors.
Now I’m the first guy in line ready to criticize my mortgage broker brothers, but only into acting better than the big banks. And here we finally have a lawsuit proving my point all along which is the banks are just as responsible if not more so for our current housing meltdown…so why don’t we see legislation attempting to wipe out big mortgage banks like Washington Mutual Mortgage?
They have a more powerful, better funded lobby…some say even more powerful than the NRA.
The banking lobby gets everything they go after…from profitable changes in credit card laws all the way to overhauling the bankruptcy process.
On November 6th, when Barney Frank and his Financial Service Committee meet to decide the fate of the mortgage industry.
Ask yourself:
“Can Mr. Frank and his Committee members support choice for the American mortgage consumer and strike this legislation down or will they succumb to the same pressure applied by Washington Mutual Mortgage that eAppraiserIT executives succumbed to in Mr. Cuomo’s lawsuit?”
God knows the mortgage broker lobby has attempted to show the Committee the error of their ways, but with no money to spend how much clout do you think they really have?
Maybe you could help by contacting your Congressman and voicing your opposition to HR 3915….
I doubt it will make a difference, if history is any indication, the banking lobby will get their way here too.
Get ready for a monopoly hold…a stranglehold really…by big banks like Washington Mutual Mortgage, Bank of America, and Wells Fargo on the mortgage market.
You’ll know who to thank at least.
And Mr. Cuomo don’t get too “high and mighty” since your Federal compatriots just knuckled under to the same pressures from the same people you’re naming in your indictments…the Washington Mutual Mortgages of the world.
This country is going to the dogs faster than I expected and this big bank example of eliminating competition by using “government by corporation” is nothing if not the end of free markets.
Good Luck!
PS: If you’d like to read my review of Washington Mutual Mortgage Review…click the link.
Author: Rob K. Blake
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Hi All –
I work with a Seattle-based law firm that is investigating Washington Mutual Mortgage and First American Corporation based on complaints the companies have conspired to artificially inflate housing appraisals.
As I am sure you are all well aware the appraisal of a home is important when determining the loan you will receive, including monthly payments, APR and more. If these prices were artificially inflated to benefit Washington Mutual Mortgage and First American it could mean you have overpaid for your home and subsequently have an inflated mortgage.
This could also cause problems if you ever fall behind on your loan—another lender isn’t going to accept the inflated value of your home–meaning you can’t refinance.
If you have a home loan from Washington Mutual Mortgage you can learn more about this investigation by visiting http://www.hbsslaw.com/wm.htm .
Lisa,
If true, what Washington Mutual Mortgage did is despicable.
Thanks for fighting the good fight for the American mortgage consumer.
And thanks for the link…
As I speak, we are ready to settle with Wa Mau on one of these inflated deals with Wa Mau.
We knew for some time something stank when we tried for 18 months to get information on the account owned by my father-in-law’s estate prior to his passing.
If there is any contact information someone could provide us on who can get justice for us in any way please publish on this site the information.
I wasn’t sure until I started reading about this rip-off that It could really happen.
Thank All of you for bringing it to light.
James Franklin
Thanks for the article. I agree. Large Lenders such as WAMU, Wells Fargo etc. are just as guilty, if not more guilty at appraisal inflation, and false advertisment, than most of our brokers.
I think we need to notify our congressman and level the playingfield. Banks need to be blamed as well. Afterall banks have the final say on the loans.
Have been trying to relieve WaMu of one of their “bank owned-homes”. It would be a cash trasaction, as is property. The home is in a 55+ community with a set preservation fee as well as a recreation center fee to be added to the 125,000$ asking price. The grounds around the house require much attention, as the home has now been vacant well over a year, to say nothing of the abused interior. The person who was showing the property to me would not even consider submitting my offer. His comment was that he wouldn’t bother with anything under 110,000$. Consequently, I’m continuing to look for a home. It must be to WuMu’s advantage to continue to hang onto all the baggage they have.
I wanted to let you know from an appraisers point of view. I must play all the games that are layed out by Fannie Mae, who makes all the rules, yet I must play them better than they. You see, I follow a higher law in my appraisal practice, the 2nd greatest law in the universe states that I must treat others as I would like to be treated. Therefore, when performing an appraisal assignment, I must be aware of all the facts. Such as, how much is the loan, how much is the value needed, and how much is ethical to value the home. When I know all the facts, I let the lender know if this will work. If the value is not ethical, then I do not do the appraisal, and I do not take the fee. I can only take someone’s money if it’ll give them the loan.
You see, I wouldn’t nor anyone else would pay for a piece of paper that won’t get me a loan. Not even Fannie would pay $350 for my opinion of value unless they got a loan for it. So, to sum up, I do my work ahead of time, and let everyone know whether it’ll work or not. Then everybody is happy. Thanks for listening. C.H.