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.
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.