Friday, November 25, 2011

FDIC Sues 29 Appraisers Over Loans By Downey Savings

In the two weeks leading up to Thanksgiving Day, the FDIC sued 29 individual residential appraisers and a rafter of mortgage brokers in 12 separate lawsuits.  All of the appraisers sued in this round reside in California -- in the last three years, the FDIC has so far sued a total of over 150 appraisers and appraisal firms about appraisals in AZ, CA, FL, GA, IL, IN, MD, MI, MN, NV, NY, SC, TX and UT.  In addition, the FDIC has identified approximately 350 additional appraisers as having delivered negligent appraisals to the two AMCs it has sued.

The FDIC's complaints against the 29 most recent defendant appraisers uniformly allege that the appraisers were professionally negligent by overappraising the value of properties securing loans by failed Downey Savings in 2004-2007.  The average claim against each appraiser is $314,674, which is the amount claimed as damages by the FDIC for unpaid principal, interest, late charges, foreclosure costs and other fees on each nonperforming loan.  The complaints concern both origination and review appraisals and include both supervising and trainee appraisers as defendants.

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Tuesday, November 22, 2011

Cuomo v. eAppraiseIT: New York's Highest Court Rules that the People's Case Against eAppraiseIT Will Go Forward

In an opinion published today concerning the 2007 lawsuit filed by then Attorney General Cuomo against First American Corporation and its former appraisal management company eAppraiseIT, New York state's highest court -- its Court of Appeals -- has ruled that the trial court properly denied eAppraiseIT's motion to dismiss.  In a 6-1 majority opinion with one strong dissent, the Court of Appeals ruled that the NY Attorney General's claims about fraud and state statutory violations by eAppraiseIT in connection with appraisals for WaMu were not preempted by federal law.  As a result, the People's case against eAppraiseIT will now go forward.  The case had been on hold in the trial court while the Court of Appeals considered eAppraiseIT's appeal.  It is possible that the case could be tried in  Justice Ramos' trial court within the next several months -- Justice Ramos is noted for quipping in a later denial of eAppraiseIT's summary motion:

"[W]e're trying now, in the context of this litigation, to point a few fingers . . . Something went wrong, very wrong, and how many millions of mortgages are being foreclosed right now?  I dare say quite a few of them were WaMu mortgages that were Eappraiseit appraisals."

Here is an excerpt from the Court of Appeals' opinion (a full copy can be found here):

Earlier posts about the 2007 lawsuit filed against eAppraiseIT by then Attorney General Cuomo include:

Cuomo v. eAppraiseIT: New York's Highest Court Held Oral Argument on eAppraiseIT's Appeal Today

Cuomo v. eAppraiseIT: Court Poses Tough Questions in Its Denial of eAppraiseIT's Motion for Summary Judgment -- Case Heads toward Trial

Cuomo v. eAppraiseIT: No Surprise that Appellate Court Affirms Denial of eAppraiseIT's Motion to Dismiss
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Wednesday, November 16, 2011

FDIC Suffers Another Setback in Its AMC Litigation -- Court Grants CoreLogic's Motion to Dismiss Gross Negligence Claim (with Leave to Amend)

Caption of 11-14-11 Order
In a November 14 ruling in the FDIC's lawsuit against CoreLogic and its various subsidiaries, Judge Carter dismissed the FDIC's gross negligence claim (with leave for the FDIC to amend) based on the economic loss rule for the same reasons he previously dismissed the FDIC's similar claim against LSI Appraisal (see post about LSI's motion here).  He also granted CoreLogic's motion to dismiss the FDIC's alter ego-type claims and dismissed small parts of the FDIC's contract claims, again with leave to amend.  The result of this is that the only defendants now in this lawsuit, subject to any future attempted amendment by the FDIC, are CoreLogic Valuation Services (formerly known as eAppraiseIT) and First American Solutions, which entered into a performance guaranty with WaMu for eAppraiseIT's obligations.  The parent corporation CoreLogic, Inc. is out of the case, again subject to the FDIC's attempt to amend its original complaint in order to state a valid claim.

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