Thursday, November 01, 2007

The whole system is corrupt

From yahoo news:

ALBANY, N.Y. (AP) -- New York Attorney General Andrew Cuomo said Thursday a major real estate appraisal company colluded with the nation's largest savings and loan companies to inflate the values of homes, contributing to the subprime mortgage crisis.

"This is a case we believe is indicative of an industry-wide problem," Cuomo said in a news conference.

Cuomo announced a lawsuit against eAppraiseIT that accuses the First American Corp. subsidiary of caving in to pressure from Washington Mutual Inc. to use a list of "proven appraisers" who he claims inflated home appraisals.

Driven by a hungry market for bonds backed by home loans, mortgage lenders expanded subprime lending dramatically in 2005 and 2006. In many cases, they made loans to people at low initial "teaser" rates, which reset substantially higher one to three years later at levels some borrowers couldn't afford.

The inability of many of those borrowers to cover loan payments once they reset led to the credit crisis. More than 50 lenders have gone out of business this year, tens of thousands of people have lost their jobs in the industry, foreclosures have soared nationwide and it has become more difficult for home buyers to get home loans.

"The independence of the appraiser is essential to maintaining the integrity of the mortgage industry," Cuomo said, citing several e-mails between the companies' executives.

"First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike," he said. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market.

"By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion," Cuomo said.
Neither company responded to messages left Thursday morning.

Cuomo said eAppraiseIT and the parent company knew its actions were illegal, citing an April 17, 2007 e-mail from eAppraiseIT's president to First American that said, "We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation."

"This is another example where the federal government is asleep at the switch," Cuomo told reporters.

18 comments:

Ichabod said...

I take offense to this post. The whole system is not corrupt! I have a good, close trustworthy friend named David Crisp, and he told me himself that there is NO corruption going on!

Silentone said...

If I read the article correctly, First American owns Eappraiseit.. Seems to me the there is little if any protection for the consumer when there is such relationships... ie. CountryWide/Landsafe Credit and appraisal, Builders who own their own mortgage and escrow companies, etc. There needs to independance in each facet of the buying/selling process to protect the consumer.

Cow_tipping said...

This sounds like the perfect opportunity to let the houses go back to the mortgage company. Its clearly their doing. The sheeple will get their credit dinged, but that is a small penalty IMHO for their greed.
Cool.
Cow_tipping.

Gwynster said...

Crispy,

What just kills me is the people who refused to acknowledge that this crap was going on. How many people still believe their house appreciated 300% since 99? A whole lot and it seems like they all live in this craptastic valley.

Bakersfield Bubble said...

CountryWide/Landsafe Credit and appraisal


___________________________

Nice!!

Some from the NY AG was here on this blog (IP Addresses). Hopefully he/she saw that!

Bakersfield Bubble said...

gwynster-

I cant wait until this story blows up even more!

Silentone said...

Gwynster said:
"How many people still believe their house appreciated 300% since 99? A whole lot and it seems like they all live in this craptastic valley."

Come one, get real. Bakersfield was not isolated in the real estate market value explosion...it was virtually nationwide. Ours had just been so low for so long that when the run up began, it just impacted us here in this craptastic valley percentage wise more.

30yrexp said...

It is no suprise that this has happened. I have had 30 years in this business and been thru 4 of these "corrections". The problem is the consolidation of the LENDER,BUILDER,REALTOR,TITLE CO, and
APPRAISAL WAREHOUSING Units being ONE and the SAME.

CountryWide has LandSafe. Chase has Quantrix... WAMU had EAppraiseIt.. Bank of America uses (I believe) RELS as does Wells Fargo.


They all go for the Appraiser with the lowest bid.. typically a newly licensed,unexperienced appraiser.. and cuts their fees..makes unrealistic turn around times (not allowing for full research time) and if not make value.. dump them.

Another reason is the AVMs.. Zillo...What's Yer House Worth web sites... Many lender's use these to make loans...

Pure
B.S. and a major factor..

Lenders.. FNMA and FredieMac are the responsible ones and without a doubt the APPRAISAL INSTITUTE is also a major factor in this fiasco..

One should investigate the INSTITUE which has made up our rules and regulations.

Silentone said...

Included in the group of questionable relationships are the Real Estate Companies that have their own mortgage company (and escrow) "in-house" for the "convenience" of their clients..... convenience???nooooo --again it is greed... the broker wants to get a piece of the "action" and then applies pressure to the agents in that office to steer the clients to the in-house mortgage company by offering a bigger commission split. And the mortgage officers who work there are under tremendous pressure to make sure that the clients get approved irregardless because they don't want the broker in there screaming at them if they can't make the numbers work.
Again it goes to arm's length relationship between the parties in a real estate transaction. There should be cooperation and communication but there should also be some distant to avoid the WAMU/EappraiseIT situation.

Fred said...

who are some of the local real estate offices that have there own mortgage companies?

OJ said...

Every other Realtor in Inglewood is a Broker too and many, if they have their own firm, have their own escrow, too.

Silentone said...

(Sorry for the delay in responding took a little while to dig up the names)Coldwell Banker America West has Westwind Mortgage, Coldwell Banker Riverlakes (couldn't find out the name), Coldwell Banker Preferred has Buena Vista, Stroope has one, Watson-Touchstone when they were individual companies, they each had their own and since they "merged" they have one big one, Roberson has All American, Remax Golden Empire has American Star, Global has theirs, the Luter bros have one, Bakersfield Premier has one...Signature I think and the list just goes on and on..... Evidently it is legal, it just doesn't feel ethical for compensation to be paid to the realtors ... seems that if it was in the best interest of the customers, there wouldn't need to be compensation and.....

30yrexp said...

I placed a comment yesterday that was not included in the posted comments.

I will try again.

I have been in the
Appraisal Business for 30 years.

I have had problems with the fact that Real Estate Companies...Builders... Major Lenders....Title Companies have their own Appraisal firms. I have tried to fight them by not doing and work for them.. and I have been BlackBalled but still in Business.

I am getting some work back from companies ..but not for new work..but for REOs. amazing .

All of the AMCs APPRAISAL MANAGEMENT COMPANIES.. are at fault for this mess.

They hire the new guys trying to get work.

and they hire Kirk Newton Jr. types

Sorry to be so clear. but it is the truth


Countrywide with LandSafe
Chase with Quantrix
Wells Fargo with RELS
Bank Of America with (I think RELs)
and of course Washington Mutual..

Lost lots of work.. 30 years in this business.. lost lots of work because I would not take payments of $ 150 for a job in Lake Isabella.

In today's market the time to do a good job far exceeds their Time Constraints and they get a Hell of a lot more money than they pay to the Appraiser..

Stick it to the new guys..

THAT IS THEIR MOTTO

Chin said...

30yrexp-
Speaking as an appraiser's wife of 15+ years, I've never heard anyone in the industry speak truer words. We've experienced all the things you speak of and more. We've also lost money over the years by refusing to lower our standards just so the lender can make another bad loan. Most lenders know darn well who the shady appraisers are, and they're the ones who get the work. Let them have it. Our integrity and reputation are worth a lot more to us than a lousy $400. We may be poorer than we could be with that attitude but our consciences are clear. Amazing to me what people will do to one another for money.

banana.republic.us said...

The funny thing about frauds in a bull market is no one cares. Everyone's happy so long as money is being made.

When stuff stops going up in value the whole world is outraged and politicians pass laws, regulators start regulating and banksters pull in the sidewalks and turn off the lights.

People are strange, but predictable. LOL

strawberry note said...

Wells Fargo, who owns RELS Valuation is providing a smoke screen to auditors and congressmen. RELS absolutely gives work only to the appraiser with the lowest bid in our locale, who often is a a newly licensed,unexperienced appraiser who will cut fees & do unrealistic turn around times that doesn't allow for adequate research & analysis. They will dump you if you are late, don't make the value, or require repairs. If even one loan officer complains about you, you're toast. It is all a farce. The system is worse now than before the sub prime collapse and the supposed "fix" of HVCC. I sadly await the next Great Depression.

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Anonymous said...

The HVCC is a joke and everyone knows it. What did you expect from a document authored by one of the worst influences to the housing market Mr. Cuomo. I suggest you search "Cuomo, HUD and fraud". There are many who believe it was actions taken by him while sec. of HUD that are directly related to the crisis we are currently in. Authored by Cuomo and accepted by fannie and freddie, arguably the most corrupt government sponsored entities of all time.

The most ridiculous aspect of the HVCC is the fact that it was spawned by Mr. Cuomos investigation of eappraiseit and WAMU. Eapraiseit was the defendant and Mr. Cuomo enacts a code that in effect steers a majority of the appraisal business towards his defendant. Whats next pedophiles must perform community service at a daycare.

Not to mention that prior to becoming attorney general Mr. Cuomo was on the board of an AMC named AMCO.