Appraiser independence issue explodes onto the front page
Today, this issue has exploded onto the front pages thanks to New York Attorney General Andrew Cuomo. Cuomo announced that he is suing a unit of title insurer First American called eAppraiseit over allegedly inflated appraisals performed for Washington Mutual. You can read the full 31-page complaint here (PDF link). Suffice it to say there are some pretty ugly looking emails in there -- emails that Cuomo maintains show that Wamu essentially selected appraisers who would play ball on values so the firm could close more loans. First American denies the charges; Wamu had no comment, per this Bloomberg story.
Definitely keep an eye on this case. When all is said and done, we could see wholesale changes to the appraiser selection and verification process.
UPDATE: Washington Mutual released the following statement late this afternoon:
"We are surprised and disappointed by the allegations in the complaint related to eAppraiseIT. We are suspending our relationship with eAppraiseIT until we can further investigate the situation. We have absolutely no incentive to have appraisers inflate home values. In fact, inflated appraisals are contrary to our interests. We use third-party appraisal companies to make sure that appraisals are objective and accurate.
We have no further comment at this time."