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Federal judge rules Quicken Loans wrongly influenced home appraisals

Lender loses latest court battle

A judge slapped Quicken Loans with nearly an $11 million penalty after it found the nonbank guilty of allegedly and wrongly influencing home appraisal values during the time leading up to the financial crisis.

But Quicken Loans is quick to fight the ruling, stating it, along with its affiliated company Title Source, will appeal the rulings issued by the Federal District Court in West Virginia in the class-action case of Alig et al. v. Quicken Loans and Title Source.

The case dates back to homeowners in West Virginia who refinanced with Quicken Loans and had an appraisal ordered between Oct. 18, 2004 and April 10, 2009.

According to an article in the Miami Herald by Kenneth Harney:

“Quicken allegedly provided appraisers advance ‘estimates’ of property values in assignments on home financings, effectively communicating the amounts Quicken needed to fund the loan. Plaintiffs in a class action suit affecting 2,770 homeowners said appraisers working for Quicken had overstated the market worth of their properties, putting them underwater on their loans from the start. One home-owning couple said in the original complaint that Quicken’s appraiser had reported their property was worth $151,000, significantly higher than its actual value of $115,500. The court determined that Quicken’s practices constituted ‘unconscionable’ conduct under the West Virginia Consumer Credit and Protection Act.”

“U.S. District Court Judge John Preston Bailey called Quicken’s conduct ‘truly egregious’ in that it ‘flew in the face of prudent lending practices for the benefit of Quicken’s bottom line.’”

Quicken Loans highly contested the claims, telling HousingWire: “This case is the latest example of predatory plaintiff law firms, this time Bordas & Bordas and Bailey & Glasser, manipulating our nation’s legal system by inventing a class of so-called ‘aggrieved’ plaintiffs to enrich themselves financially at the expense of lenders thereby, driving up the costs of financing to homeowners and future homebuyers.”

A Quicken Loans spokesperson stated that it’s irrational to conclude that the customary practice in the 2004 to 2009 timeframe where homeowners willingly provided their estimate of their homes value to the appraiser could somehow result in a judgment against lenders for damages.

Instead, the spokesperson said, “If any party would be aggrieved by appraisers assessing a higher-than-market value to the homes that serve as collateral for loans, it is the lenders who would be damaged by this inadequate collateral.”

The Miami Herald also quoted Dave Stevens, who is the president and CEO of the Mortgage Bankers Association, the largest trade association representing lenders, defended Quicken Loans and argued that “it was a common industry practice during the time these loans were made to provide [an] owner’s estimate of value to appraisers, until the law changed nationwide in 2009.”

 

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