New York AG settles WaMu appraisal case
New York Attorney General Eric Schneiderman announced a $7.8 million settlement with eAppraiseIT, and its then parent corporation, First American CoreLogic.
The company split into two entities in 2010 and eAppraiseIT went with CoreLogic as part of the valuation services.
Immediately after, First American Financial Corporation (FAF) provided title insurance and settlement services to the real estate and mortgage industries. CoreLogic (CLGX) provided consumer, financial and property information, analytics and services to business and government.
Since the split both companies expanded their services greatly outside these traditional roles. For his part, Schneiderman's office is charged with investigating potential housing and mortgage grievances from the boom. This particular investigation, sources tell HousingWire, started long before he took his current position.
“We are glad to have put this matter behind us," said CoreLogic, in a statement. "The case involved a single customer relationship of one remote subsidiary that ended nearly five years ago. In connection with our decision last year to exit certain non-core businesses, we announced in May that we were closing CoreLogic Valuation Services, the successor to eAppraiseIT."
"Wind down of that business has been underway for several months and will be completed by month end," the text adds. "In conjunction with that activity it made sense to dispose of this case."
Schneiderman's office alleged that eAppraiseIT colluded with savings and loan giant Washington Mutual to inflate the values of homes. "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.
"We will continue to litigate cases arising out of the financial crisis vigorously and take defendants to trial as needed," Schneiderman added.
The settlement is based on 10,000 appraisals for WaMu in 2006 and 2007, and related communications with employees. Emails show a pattern of favoritism that created a "proven appraiser list" for Washington Mutual.
One email produced during trial stated: "The appraisal list that eAppraiseIT ... is using has been totally scrubbed. But instead of keeping good appraisers, they went for the BADddd ones."
The settlement provides that the defendants will pay $4 million in civil penalties and $3.8 million in costs, fees and disbursements incurred during this protracted litigation, according to the AG's office.