New York Attorney General Andrew Cuomo accused a major real estate appraisal company of colluding with First American and Washington Mutual. The company eAppraiseIT may have been pressured to provide inflated home appraisals, a violation of federal law.
His accusations hint at a more widespread practice that would explain the widespread problems in the subprime mortgage industry. Indeed, it is unlikely that these companies are the only ones responsible for current problems plaguing the industry.
According to Cuomo’s office, he has proof through emails that executives knew they were in violation of federal regulations. There is evidence that not only did they know that appraisals were being inflated, they intentionally chose appraisers likely to provide inflated home values.
Anyone familiar with subprime mortgage loans know what a burden that their terms place on homeowners. Some payments are hundreds of dollars higher than they would be with a better credit score.
Apparently that was not enough. In addition to a high interest rate, these homeowners had the added burden of trying to pay down a much higher mortgage balance. In case of a need to sell, many could not sell the home for what they owed on it.
No decision has yet been made on a civil lawsuit filed by Cuomo’s office. It has yet to go to court as of this posting. Many other mortgage lenders are likely watching this case closely, because they could be next.
The troubles may just be beginning for Washington Mutual.
http://blog.stopccdebt.com/washington-mutual-in-big-trouble/