Wishing you all the best for this Holiday Season from the Sunshine City in the Sunshine State.
* eAppraiseIT accused of inflating home appraisals
* Agrees to pay $7.8 million to end lawsuit
* eAppraiseIT now part of CoreLogic Inc
* NY AG Schneiderman took case to trial
* Schneiderman to bring new mortgage-related action soon
The case, filed in New York state court in 2007, is one of the few related to the housing meltdown that the government has brought to trial. The trial was in recess when the settlement was reached.
Schneiderman is co-chair of the federal mortgage fraud task force formed in January to probe actions that led to the financial crisis. He has said he plans to take legal action against other targets soon.
Homes that were appraised above their value, allowing mortgage companies to issue bigger mortgages, are among the causes cited by experts for the housing bubble and subsequent financial crisis.
EAppraiseIT, a major appraisal management company during the housing boom, was accused of colluding with Washington Mutual, which had been of the largest U.S. mortgage lenders until the housing market collapsed.
In another sign that the Federal Government is turning its focus towards prosecuting the securitization players who may have contributed to the Mortgage Crisis, the FDIC filed separate lawsuits against LSI Appraisal (available here) and CoreLogic (available here) earlier this month. In the suits, both filed in the Central District of California, the FDIC, as Receiver for Washington Mutual Bank (“WAMU”), accuses vendors with whom WAMU contracted to provide appraisal services with gross negligence, breach of reps and warranties, and other breaches of contract for providing defective and/or inflated appraisals. The FDIC seeks at least $154 million from LSI (and its parent companies, including Lender Processing Services and Fidelity, based on alter ego liability) and at least $129 million from CoreLogic (and its parent companies, including First American Financial, based on alter ego liability).
The Court found that plaintiffs presented sufficient evidence to establish common questions of fact and law, holding that common questions and answers need not uniformly apply to all class members. The Court also found that the analysis of individual appraisal fees would not create individualized issues, but instead would provide additional support for plaintiffs’ claims that an inflated appraisal scheme existed. Finally, the Court also held that the Real Estate Settlement Procedures Act’s treble damages, attorney’s fees and government enforcement mechanisms did not make class action an inferior method of litigation.
The Bureau of Consumer Financial Protection (Bureau) is proposing to amend Regulation B, which implements the Equal Credit Opportunity Act (ECOA), and the official interpretation to the regulation, which interprets the requirements of Regulation B. The proposed revisions to Regulation B would implement an ECOA amendment concerning appraisals that was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). In general, the proposed revisions to Regulation B would require creditors to provide free copies of all written appraisals and valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling. The proposal also would require creditors to notify applicants in writing of the right to receive a copy of each written appraisal or valuation at no additional cost.
The Board, Bureau, FDIC, FHFA, NCUA, and OCC (collectively, the Agencies) are proposing to amend Regulation Z, which implements the Truth in Lending Act (TILA), and the official interpretation to the regulation. The proposed revisions to Regulation Z would implement a new TILA provision requiring appraisals for “higher-risk mortgages” that was added to TILA as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. For mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the proposed rule would require creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used.
"The bulk of my testimony has to do with ensuring appraiser independence, and the value and importance of appraiser independence," Gregoire said.
"Buyers don't expect the appraiser to just rubber stamp the sale price," he said. "They want a good, honest, objective appraisal by somebody that has the necessary qualifications to do a credible job."
As long as the appraiser can demonstrate that his data is supported and correct, the lender should just lay off," Gregoire said.For those interested, the testimony I am offering on behalf of the National Association of REALTORS is at this LINK, along with that of the other panel members.
AppraiserLoft, the company in question, has been at the center of several non-payment and late-payment claims from appraisers, former employees and other parties, before and after it shuttered suddenly in October, according to public records.
In this bundle of cases, administrative law judge Diane Mihalsky found that the company failed to pay Arizona appraisers for completed work within the required 45 days set by Arizona state law -- 181 times. It appears AppraiserLoft either resolved or made attempts to resolve 10 of those cases, but appraisers in the remaining 171 cases say they haven't seen payments yet, court documents show.
Mihalsky, in a June 6 order, recommended that the Arizona Board of Appraisal fine AppraiserLoft $5,000 for each of the 171 violations, totaling $855,000, and revoke the company's license as an appraisal management company.
Because this is so frequently misunderstood by appraisers, let me say this first: the relevant time period for suing an appraiser or AMC about an allegedly bad appraisal has nothing to do with USPAP's minimum 5-year record keeping requirement. (Don't throw those workfiles away!)
(v) Has required or attempted to require an appraiser to sign any indemnification agreement that would require the appraiser to hold harmless the appraisal management company or its owners, agents, employees, or independent contractors from any liability, damage, loss, or claim arising from the services performed by the appraisal management company or its owners, agents, employees, or independent contractors and not the services performed by the appraiser.Both HB 517 and HB 887 revise the definition of appraisal management company and appraisal management services.
(c) "Appraisal management company" means a person who performs appraisal management services regardless of the use of the term "appraisal management company," "appraiser cooperative," "appraiser portal," "mortgage technology company," or other term. (d) "Appraisal management services" means the coordination or management of appraisal services for compensation by: 1. Employing, contracting with, or otherwise retaining one or more licensed or certified appraisers to perform appraisal 370 services for a client; or 2. Acting as a broker or intermediary between a client and one or more licensed or certified appraisers to facilitate the client's employing, contracting with, or otherwise retaining the appraisers.The term "subsidiary" is defined with respect to the relationship between appraisal management companies and banking entities.
(t) "Subsidiary" means an organization that is owned and controlled by a financial institution that is regulated by a federal financial institution regulatory agency.To comply with the Dodd-Frank Act, an exemption was created for appraisal management companies owned and controlled by a federally regulated financial institution.
Please be advised you are hereby notified the record you have posted was ordered sealed by the Court. As a result, the dissemination of sealed confidential information by you, Frank Gregoire as well as the entities listed below are in violation of §943.059, Florida Statutes. Perhaps you should have kept up your site as you indicate "As details are provided, we will update". However, due to your negligence in updating, confidential information is being disseminated on a public forum. Consequently, anyone individually or authorized individuals concerning the entities as named below involved in any manner whatsoever with Appraiser Active are now exposed to criminal s well as civil damages due to said dissemination of confidential records. The link you are directing your audience to will paint the picture more clearly as it states "Not Found" however your site tells a different story than information accessible to the public and is apparently in violation of, at a minimum, laws of The State of Florida.
Pursuant §943.059 A criminal history record of a minor or an adult which is ordered sealed by a court pursuant to this section is confidential and exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I of the State Constitution.... Any person who violates the provisions of this paragraph commits a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.
I expect you will immediately remove said information from your site and cease and desist the dissemination of such information in accordance with applicable laws. You are hereby commanded to immediately remove all contents of said file (example attached). If said file is not removed immediately (within 24 hours) I intend to initiate legal action as well as report said violation to the authorities concerning Frank Gregoire individually, Gregoire & Gregoire, Inc. and Appraiser Active etal.
Your immediate attention to this matter is necessary.
PLEASE GOVERN YOURSELF ACCORDINGLY.
One of the fees being scrutinized might surprise you: appraisal charges. Why do they need clarifying? Doesn’t just about everybody who applies for a mortgage, whether it’s to buy a house or refinance, have to pay $450 to $600 — sometimes more — to find out what the property is worth?and
Say you’re charged $550. There is no hint that the appraiser may be getting $250, with the rest going to the management company and the lender. The CFPB is considering whether to shed light on this by mandating two disclosures: what the appraiser is paid and what the management company is taking.
Frank Gregoire, a past chairman of the Florida Real Estate Appraisal Board, which oversees and regulates the industry in that state, says that while appraiser independence is important, banks and their affiliated management firms are raising the costs of appraisals to consumers without improving services.
Defenders of management firms, such as Donald E. Kelly, executive director of the Real Estate Valuation Advocacy Association, strongly disagree. Kelly says management firms perform the “back office” functions — including reviews and quality control — “that in the past were done by lender staff and employees.” In other words, they earn the money they get. And there’s no pressing need for consumers to see additional disclosures. They just need to know the bottom line.
475.6245 Discipline of appraisal management companies.—
(1) The board may deny an application for registration of an appraisal management company; may investigate the actions of any appraisal management company registered under this part; may reprimand or impose an administrative fine not to exceed $5,000 for each count or separate offense against any such appraisal management company; and may revoke or suspend, for a period not to exceed 10 years, the registration of any such appraisal management company, or place any such appraisal management company on probation, if the board finds that the appraisal management company or any person listed in s. 475.6235(2)(f):
(v) Has required or attempted to require an appraiser to sign any indemnification agreement that would require the appraiser to hold harmless the appraisal management company or its owners, agents, employees, or independent contractors from any liability, damage, loss, or claim arising from the services performed by the appraisal management company or its owners, agents, employees, or independent contractors and not the services performed by the appraiser.
Licensed in Real Estate since 1976, Frank is a second generation REALTOR®, Broker and Appraiser. In addition to his Real Estate Brokers License, he is a State-Certified Residential Appraiser and Appraisal Instructor.
As a member of the Board of Directors of the Florida Association of REALTORS and the National Association of REALTORS, he has been involved in FAR and NAR Appraisal and Public Policy related committees since 1992. Frank is past Chairman and a current member of the National Association of REALTORS® Appraisal Committee.
Frank was appointed by Governor Jeb Bush to the Florida Real Estate Appraisal Board in February, 2000 and served eight years, four as Chairman. During his service as a member of the Florida Real Estate Appraisal Board, he represented Florida on the Appraisal Foundation State Regulator Advisory Group and as a member of the Board of Directors of the Association of Appraiser Regulatory Officials.
In addition to providing Expert Witness services in Administrative Hearings, Florida and Federal Courts, Frank is often quoted by local and nationally syndicated real estate columnists and appears as a speaker on appraisal and mortgage related topics. Articles by Frank have been published in the REALTOR® Magazine, the Journal of Property Economics and his blog, Appraiser Active.
As president of Gregoire & Gregoire, Inc., a Residential Real Estate Appraisal firm based in St. Petersburg, Frank is active valuation and consulting for a wide variety of clients.