Countrywide Appraiser Lawsuit

Posted by: Chris Palmeri on October 16, 2008

A somewhat overlooked player in this whole mortgage meltdown is the appraiser who is supposed to offer up unbiased opinions on the worth of a property before a loan is made.

A group of Idaho appraisers claims that industry leader Countywide, swallowed up by Bank of America earlier this year, has forced them to generate artificially high appraisals that helped Countrywide sell more loans on Wall Street. The suit claims Countrywide punished appraisers who did not comply by blacklisting them for up to a year.

The suit, filed by the Seattle plaintiffs’ firm Hagens Berman Sobol Shapiro, claims more than 2,000 appraisers appear on Countrywide’s Field Review List, which is given out to mortgage brokers working with the firm. The suit claims this is essentially a “do not use” list.

Those appaisers on the list were denied work, the suit claims, because any appraisal submitted to Countrywide from a blacklisted appraiser went to LandSafe, Countrywide’s in-house appraisal operation, for review. Those reviews typically found problems with the reports.

This is not the first lawsuit against Countrywide involving appraisals. Earlier this year a former Countrywide mortgage exec claimed he too was pressured to use infalted appraisals provided by the company’s LandSafe unit.

Reader Comments

linca

October 21, 2008 9:48 AM

Funny how everyone is pointing fingers as to how we got in this mess. It is answered in one word GREED. Yep....there is your reason! That wasn't so hard was it?

Bill Lodi

November 11, 2008 12:36 PM

I am a Cert/Res appraiser in Ma and Fl. I have tried to get on the approved appraisal list at CountryWide but was told that there are not accepting new
applications for appraisers at this time...........I wonder if they would give me that in writing ?

Amber

February 3, 2009 12:26 PM

I think countrywide deserves to get in trouble. I think they are one of the reasons why the housing market is they way it is now. I have a loan thru them and they totally screwed me too. I would not refer my enemy to there company!!

Dennis, a loan officer

May 11, 2009 10:46 AM

Countrywide in 2006 and 2007 pushed the negative adjustable loan to 99% of their customers. The CEO supposedly received a $40M bonus when leaving the company in shambles. The new appraisal rule does make sense due to the rampart abuse by lenders. It will, ironically, further hurt the consumer. A loan has to be sent to a lender then the appraisal network orders the appraisal which will add $100 to $195 in cost and a one week delay. The appraiser only gets $250 instead of $400. The appraisals are coming in at about 20% lower than otherwise perceived value. This well intended change will terminate many refinance attempts in this climate of fear. My own equity line lender just froze my balance while the loan to value is under 70%. I think that this new rule will finish off most transactions.

Elijah

September 29, 2009 1:23 AM

I think you may be right Dennis, or something is giving the banks a good excuse not to refinance good loans rather than bad. Two family members with good fixed loans, good credit etc, paid banks for appraisals which came in at 10% below market but about right for the area. Both different banks turned down the appraisals or loans, with excuses connected to the appraisals.

Bank of America who owned the original loan on a log home, says after the apprasal "oh, we don't do log homes anymore", and daughter having trouble getting apprasal fee back from BA.

Second daughter, with beautiful remodeled tri level or finished basement home, gets told her appraisal is not acceptable because no comparables of homes with finished basements in the area. The appraiser minimized the appraisal on square footage and age etc, and found comparables with other tri levels and two story homes, but bank did driveby and lowered the loan amount or appraisal amount by 80,000, without any full walk through etc.

Now she and her husband are not only waiting for the refund on the appraisal, but lost out on the lock in of the lower interest rate back in June. All of us have had to deal with all sorts of excuses about new appraisal rules, agents in training, no return phone calls etc. The bottom line is if your up to date, have good credit and just want to refi or get equity out for lower fixed interest rates than your current fixed rate. Your screwed. Talk about customer service and real conspiracies. If inflation hits and interest rates go up to 1980 levels, young people should count on buying houses at 17 and 18% interest, and God knows what the credit card rates will be.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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