NY AG Sues FirstAm Over Inflated Appraisals

New York Attorney General Andrew Cuomo has announced that he is suing First American Corp. and its eAppraiseIT unit for allegedly colluding with Washington Mutual Inc. to use a list of preferred appraisers to inflate mortgage appraisals.According to the AG's office, eAppraiseIT -- in a scheme detailed in numerous e-mail messages -- caved in to pressure from WaMu to use a list of preferred "proven appraisers" who provided inflated appraisals on homes. The e-mail also shows that executives at eAppraiseIT knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market," Mr. Cuomo said. "By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion." Howard Glaser, a mortgage industry consultant based in Washington, says the Cuomo action marks the most significant legal action to date by the state or federal government in the wake of the mortgage meltdown. "The Cuomo suit sheds light on what has been an open secret in the mortgage industry, pressure by banks on appraisers to hit a particular target value in order to close a loan," he said.