Banking Law

The hits just keep on comin' for Countrywide, don't they?

A group of appraisers in Idaho filed a class-action lawsuit Thursday against Countrywide Financial Corp. ??? Now, Bank of America Corp..., after its recent acquisition ??? claiming the company used ???strong-arming tactics to intimidate appraisers to generate reports in line with Countrywide???s business objectives.???



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The suit alleged Countrywide used improper appraisal techniques that benefited the lender and punished those who did not participate by blacklisting individuals and companies; in turn, causing ???substantial damage to thousands of appraisers,??? in addition to distorting real estate prices.

???The integrity of real estate appraisals is more important than ever and time and time again Countrywide is showing its customers and partners that it only cares about profits and market control,??? said Steve Berman, managing partner at Hagens Berman Sobol Shapiro, the firm representing the appraisers.  ???The bottom line is our nation???s at a breaking point where we can???t take anymore corporate dishonesty in the home market??????

According to Berman, if appraisers don???t ???play ball??? with Countrywide by producing a report affirming the appraisal value Countrywide expects, they???re blacklisted.  The suit alleged, as of Aug. 28, 2008, more than 2,000 appraisers appeared on ???the list.???

The claim stated that any appraisal submitted to Countrywide from a blacklisted appraiser was automatically sent to LandSafe, who can render an appraisal ???unusable??? if it doesn???t fall within Countrywide???s guidelines. The claim called LandSafe a ???captive puppet??? of Countrywide, enabling their unethical business practices.

And according to the complaint, Countrywide has been using the blacklist practice for more than four years.

The complaint states the plaintiff, Capitol West Appraisers, refused to succumb to Countrywide???s alleged pressure ??? as a result, the company was placed on the list.

The allegations are reminiscent of those made by appraiser Jennifer Wertz settled against Wamu not long ago, which also alleged blacklisting by another major mortgage lender when an outside appraiser (Wertz) refused to "play ball" with the lender's (Wamu's) desire for whatever appraised value supported the loan it wanted to make, "fair market value" be damned. With what happened subsequently to Wamu, I'd say Jennifer settled her lawsuit at a prime time, notwithstanding snide remarks by some appraisers that she "took the money and ran." If she did, "good on her." We also discussed a lawsuit filed last January in Houston by a former employee of a Countrywide unit, who alleged that he'd been fired for blowing the whistle on Countrywide's alleged practice of pressuring outside appraisers to inflate appraised values. None of this was news to outside appraisers.

New York  Attorney General Andrew Cuomo negotiated a Home Valuation Protection Program and Cooperation Agreement with OFHEO, Fannie Mae and Freddie Mac, in accordance with which a Valuation Code of Conduct was to take effect January 1, 2009. According to Appraisal Scoop.com, that adoption date has been pushed off one to three months. The HVCC was supposed to stop these types of abuses. Insiders have their doubts. Others predict it may spell the end of the independent real estate appraiser.

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