The story of appraisal hasn't gotten much play in the housing crisis narrative, and this is a significant oversight. Several reports on IndyMac highlighted issues with appraisal, but for whatever reason none of them ignited into anything throwing of heat. Teri Buhl, familiar to Dealbreaker readers from Housing Wire, however, has been minding the store here.
Despite calls for reform, Countrywide is still showing signs of committing the same predatory lending sins under new owner Bank of America. As Congress rushes the lending reforms through the House this month, banks are still fighting to keep control of how they run the mortgage business, and keep collecting lucrative fees in every step of the lending process.Exhibit A is a $2.8 billion class action lawsuit filed on March 7th against a BofA subsidiary called Countrywide-KB Home Loans and its wholly owned appraisal firm Landsafe, Inc. The suit accuses the two subsidiaries of an appraisal inflation scheme affecting over 14,000 borrowers, and is a product of a yearlong investigation examining home buyers in California, Arizona, and Nevada. Leading the charge were the Laborers' International Union of America (LIUNA) and Seattle-based law firm Hagen Berman. The law firm is presently litigating over three class action cases against Countrywide.
Cuomo is, of course, all over this new twist, pushing matters all the way into the GSEs, which he insists knowingly bought loans tainted with fraudulent appraisals. With borrowers penning "liar loans," banks like IndyMac actively fabricating income details for applicants, ratings agencies applying AAA stamps to anyone with what appeared to be a default correlation model, GSEs knowingly buying "sexed up" appraisals (allegedly) and securitization drawing monoline protection without the assets to back losses, you have to wonder, what part of the mortgage process was not actually tainted by fraud?
Buhl points us to an excellent diagram on the tentacle-laden topography that is the appraisal relationship map. Catch it after the jump.
Exclusive: Banks' Appraisal Conflicts Could Continue Under New HVCC Rules [The Mortgage Lender]
Posted by guest , May 29, 2009 1:53PM
Is that the Kremlin org chart circa 1967?
my head hurts.
Posted by guest , May 29, 2009 1:59PM
Both chartered in 1987!!!
Posted by Anal_yst , May 29, 2009 2:03PM
Jonathan Miller of Miller-Samuel has actually talked about this sorta stuff quite a bit, he's probably one of the best sources for info, esp in the NYC and tri-state area.
Posted by guest , May 29, 2009 2:36PM
What's the trouble? The bank lobby is getting what they want. All is fine.
Posted by guest , May 29, 2009 2:37PM
Is it 4:00 yet?
Posted by guest , May 29, 2009 2:47PM
I went to UVA.
Posted by guest , May 29, 2009 5:16PM
Great Reporting. At least Cuomo tried to make a needed change in the mortgage industry and he doesn't even have the power of a bank regulator.
Posted by guest , May 30, 2009 12:23PM
Compounding insult CountryWide now named Bank of America Home Loans received $1.9 billion in TARP funds on Apr 17, 2009 as Incentive Payments for Home Loan Modification. Along with 13 other predatory mortgage servicers, this recent dole amounted to 15+ Billion in TARP $$ to the perpetrators, despite FTC settlements acknowledging epidemic mortgage servicing fraud.
http://bailout.propublica.org/entities/573-countrywide-home-loan-servicing
Despite toothless FTC Mortgage Servicing Fraud settlements, it continues unabated.
http://www.ftc.gov/os/caselist/0323014.shtm FTC v. Fairbanks/SelectPortfolioServicing
http://www.ftc.gov/os/caselist/0623031/index.shtm FTC v. EMC/Bear Stearns
Posted by guest , Jun 26, 2009 3:14PM
This week my financial/housing journo peers finally caught on to problems in appraisal reform via HVCC. I guess it took Larry Yun (Realtors/Mortgage Broker lobbyist) to come out with a press spin on how he thinks HVCC is slowing the housing rebound to wake them up to an important story idea.
Teri Buhl
http://www.businessinsider.com/why-new-regulations-havent-fixed-home-appraisals-2009-6