New York state Attorney General Eric T. Schneiderman on Friday announced a $7.8 million settlement with eAppraiseIT, formerly one of the nation's largest real estate appraisal management companies, and its parent corporation, First American Corporation, for colluding with savings and loan giant Washington Mutual to inflate the values of homes.
The settlement resolves charges that the corporation violated appraiser independence laws, which regulate the conduct of real estate appraisers.
The settlement was entered into with CoreLogic Inc., formerly known as The First American Corporation and CoreLogic Valuation Services, successor-in-interest to its subsidiary eAppraiseIT.
“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,” said Attorney General Schneiderman.
The Attorney General's office originally filed a complaint against First American and eAppraiseIT, a company that performed over 260,000 appraisals nationally for Washington Mutual, Inc. (WaMu). The complaint charged that WaMu pressured eAppraiseIT to allow WaMu's loan officers to select property appraisers for WaMu-originated mortgages.
This was a clear violation of the Uniform Standards of Professional Appraisal Practice (USPAP) and federal and state law. This practice led to inflated property valuations and enabled WaMu to originate a greater number of mortgages than would have been possible had appraisals been performed by fully independent appraisers, according to the Attorney General’s Office.
First American sought to have the case dismissed, arguing all the way to the New York Court of Appeals that New York's action was preempted by federal law. The Court of Appeals rejected these arguments. The United States Supreme Court denied First American's petition to hear the case.