Posted on 11/01/2007 12:08:08 PM PDT by Lancey Howard
New York's attorney general today sued a major real estate appraisal company for allegedly colluding with Washington Mutual to inflate the value of thousands of homes, the first strike in a widening investigation of allegedly fraudulent practices that contributed to nationwide troubles in the housing market.
Investigators working for Andrew M. Cuomo (D) this morning filed a civil fraud lawsuit against eAppraiseIT, a subsidiary of First American Corp., in New York state court. Officials at the unit buckled under pressure to boost the value of homes for sale under threat of losing the business of WaMu, their largest client and the nation's second-biggest mortgage lender, state authorities said.
(Excerpt) Read more at washingtonpost.com ...
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Big Corporate is eeeeeevviiilll!
How come when Private sectors fails on something, the Government comes down full weight on the problem?
How come Big Government does not live by the rules of the Corporate World? I can point out a couple of big failures, like war on drugs... it’s a quagmire! pull out! war on poverty... it’s a quagmire! we’ve lost the war on drugs and poverty!
Expect lawsuits by the holders of devalued mortgage securities, against those who put the securities on the market.
Accountants, lawyers, rating services, etc. Each got paid upfront fees, to attest of the value, of the very loans now going unpaid, etc.
The real law suits should be aimed at the mortgage companies. They apply undue preasure to “Make Value” or you get no more business. Mortgage loan officers should be licensed in every state. Appraisers have to be.
Blood from a turnip.
soon to follow the gamblers in vegas sue casinos....
Cuoma said WaMu (the lender, Washington Mutual) is not a target of the lawsuit because there are questions about whether state officials have enforcement authority over federal institutions.
We are licensed in most states.
Hmmmm...but when governments do the same thing so they can raise property tax assessments, it's perfectly OK? ;)
Something doesn't smell right.
Thursday November 1, 11:52 AM EDT
LOS ANGELES (AP) — A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday.
A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc.
The current figure was 33.9 percent higher than the 333,731 properties in foreclosure in the second quarter of this year.
The number of homes with foreclosure filings in Massachusetts surged more than twelvefold to 9,625 properties from last year, the largest year-over-year increase in the country. The state's number was more than double the second quarter's and was the second highest increase after Delaware.
There was one foreclosure filing for every 196 households in the nation during the most recent quarter, RealtyTrac said.
All but five states — Kentucky, New Mexico, Oklahoma, South Dakota and Utah — reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said.
A single property can sometimes receive more than one notice in a three-month period.
In all, 635,159 filings were reported in the third quarter, up 99.5 percent from the year-ago quarter and up 30 percent from the second quarter of this year.
RealtyTrac CEO James J. Saccacio said in a statement that August and September accounted for the highest monthly totals since the company began issuing foreclosure filing reports in January 2005.
"Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," he said.
Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.
The loans were initially attractive options for buyers because of their cheaper "teaser" interest rates that kept monthly payments low, but even a small percentage increase can translate into a far higher payment.
With home sales in decline and prices down or flat in many regions, more homeowners are landing in foreclosure because they can't afford to sell their homes after falling behind on payments.
The three states with the highest foreclosure rates during the third quarter were Nevada, California and Florida, RealtyTrac said.
Nevada reported one foreclosure filing for every 61 households, with 16,817 filings on 12,982 properties.
That marked a 22.8 percent increase in filings from the previous quarter and a tripling from the year-ago quarter.
California led the nation in total foreclosure filings and reported one filing for every 88 households.
The state had 148,147 filings on 94,772 properties, an increase in filings of 36 percent from the previous quarter and nearly four times more than the year-ago period.
In Florida, there were 86,465 foreclosure filings on 60,992 properties during the third quarter, RealtyTrac said. Foreclosure filings rose 51.5 percent from the previous quarter and more than doubled from the same quarter last year.
Florida's foreclosure rate amounted to one filing for every 95 households, RealtyTrac said.
Rounding out the top 10 states in foreclosure rates were Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.
——— On the Net:
RealtyTrac Inc.: http://www.realtytrac.com
DOW off 362 today after a 135 pt run up yesterday. Brokers are beginning to see the writing on the wall. Even more, the S&P 500 was off more than 41 pts. and that, my friend, is a significant drop in value. My bet is investors are going overseas with their cash now and we’re stuck to weather the inflation run.
Some of these homes sold for a couple of hundred thousand dollars more than it would cost to rebuild them.
Does an appraiser use these inflated figures as a general rule and do they always have to use the price of a home sold as a comparable?
While this was going on, my home of course increased in value which was good. On the other hand you have a lot of homeowners bitching that I’m not paying my fair share of taxes while their home and mortgage is “upside down”.
The correct way to appraise a home is to find the most recent comparable homes nearby. You start in the subdivision/neighborhood. If there aren’t enough (not just too low of value but legitimately too few sales like the subject property you are appraising) you can start moving outward from there as long as the adjacent neighborhoods are actually similar, in same school district, etc...if there were sales that sold high because of those bidding wars then that’s as valid a sale as the next one.
The way appraisals were “stretched” (for fraudulent situuations as this case is discussing) was to use comparables from areas that were slightly nicer but an appraisal reviewer 100 miles away wouldn’t know that.
Or...they used homes just a bit larger than the subject but within tolerance and pushed a bit more out of it. There are other ways it is done as well.
Here’s a question that the courts don’t want: How do the homeowners who took out mortgages on fraudulently overpriced homes get their mortgage reduced back to the actual value of the property?
“Here’s a question that the courts don’t want: How do the homeowners who took out mortgages on fraudulently overpriced homes get their mortgage reduced back to the actual value of the property?”
GREAT question!!
So will these homeowners get a refund for the taxes they overpaid.
After being solicited last week, I just signed up to be available to do residential appraisal work for them. I guess that first order request may take a while. GEEZ!
From what I’ve heard on the inside, in NC and I guess elsewhere, effective Jan 1, 2008, any FDIC bank or mortgage subsidiary will no longer be allowed to have anyone in company directly order an appraisal. Instead, third party appraisal management companies with a rotation pool of appraisers will be utilized.
It’s only a matter of time before this extends into all mortgage lending, not just that which is subject to FDIC regulation.
This should kill off the crappy appraisers or at least reduce their impact on one company in particular.
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