CNN is reporting that New York Attorney General Andrew Cuomo is accusing a major real estate appraisal company of colluding with the nation’s largest savings and loan companies to inflate the values of homes.
Cuomo announced a lawsuit against eAppraiseIT that accuses the First American Corp (Charts, Fortune 500). subsidiary of caving in to pressure from Washington Mutual (Charts, Fortune 500) to use a list of “proven appraisers,” who he claims inflated home appraisals.
He also released e-mails that he said show executives were aware they were violating federal regulations. The lawsuit filed in state Supreme Court in Manhattan seeks to stop the practice, recover profits and assess penalties.
We’ve heard rumors of something like this taking place, which has been yet another major cause of the run up in real estate prices. Until now it was only rumor, but it appears that if the NY Attorney General has evidence then the parties involved may be held responsible.
“It runs through the entire mortgage spectrum,” he said. “Everyone is relying on the appraisal … The appraisal is really the linchpin of the home buying transaction.”
What ever happened to the home buyers taking responsibility and not getting into mortgages they can’t afford? Buyers, Lenders, Brokers, Agents, and nearly everyone involved were drinking the same Kool-Aid.
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