Word on the street today is that Capitol West Appraisers, based in Boise, has filed a class-action lawsuit in federal court in Seattle against Countrywide Financial, claiming the lender used intimidating tactics to obtain favorable reports.
The lawsuit claims Countrywide forced appraisers to use improper methods designed to benefit the lender and punished by blacklisting those who didn't play by those rules. The actions of the giant home mortgage lender caused damage to thousands of appraisers nationwide and distorted real estate prices in the marketplace.
Apparently, Countrywide was asking appraisers to come with higher values to match loan amounts and Capitol West appraisers didn't believe the homes were worth that much. Lawyers for Capitol West Appraisers contend the group suffered business losses of up to $8,000 per month because they refused to play by Countrywide's rules and were blacklisted. They are hoping for class-action status because there are so many appraisers who have been similarly injured for adhering to ethical business practices.
This is one scenario of the fraud that is THE major contributing factor in our current mortgage and economic mess. I'd be surprised if there is a real estate professional out there that didn't personally run into someone who was encouraging or committing or looking the other way during fraudulent transactions and activities during the heyday several years ago.
As a listing agent I personally held up a closing for 3 weeks by refusing to sign a settlement statement that specified that a lot trade was a cash down payment. Sitting at the closing table with the buyers, sellers and lender, I pointed out the fact that they were calling a lot trade a $400,000 cash down payment, and I wasn't going to sign it. It was Loan Fraud 101. It would be an understatement to say that they were all upset. Three weeks later, at our third attempt, we closed. It took that long for the buyer to figure out how to structure the deal so that it could be accurately reflected on the HUD. On another transaction I represented buyers who were using a lender that wanted to commit loan fraud and actually told me "everyone's doing it." NO! Everyone's NOT doing it!
I suspect as time goes by we will see more and more fallout like this lawsuit by Capital West Appraisers. Because everyone WASN'T doing it. Unfortunately, enough people WERE doing it that we are all going to pay a heavy cost for years to come.
Janna Rankin Scharf provides a superior level of real estate services to home buyers and sellers in Coeur d'Alene and Kootenai County, Idaho. Visit www.JannaScharf.com to search for homes in the Coeur d'Alene MLS for anywhere in spectacular North Idaho.
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Janna Rankin Scharf AB, GRI, CSP, CNS, CLHMS 208.651.9700
Janna,
It's true. Not everyone was doing it. Now I have to go check out the group you posted this to: Jacked!!!!
Mike in Tucson
Janna, and what a shame it is that some of us will get smeared in the process of weeding out and invetigating and finding the guilty. A client said to me on the phone today talking about another sales man.... well you know he was just being a salesman. I had to remind him he was talking to me and polietly ask that he not clump me with the man who had been dishonest to him, because I always tell the truth (except to the DMV when they ask my weight).
I hadn't heard about this. Jeez. What's next? I hope Capital West triumphs in court.
Debi
Morning Janna,
You are so right, there were many that lost deals because they wouldn't play the game. To me, a paycheck wasn't worth loosing a slice of who I really was and am!
Janna, there is not enough room in the Comment Box for me to trully address fraudulent activities in our respective industries!
I am glad to see your post though, because there has been many a time when I have felt the pressure from parties in the transaction to look the other way. Whether it was a "small" kickback from the seller to the buyer after the close of escrow or a suggestion that I use a stated income loan "to get the borrower approved," I've seen a ton.
My lending bretheren have not helped matters. It's so bad that I have different categories of fraud. That I lable "intentional" and that I lable "innocent," which is just as bad of course. "Innocent" fraud is action that is fraudulent but unbeknownst to the loan officer because they are just ignorant of RESPA or HUD or any of the other dozen govnerning agencies.
Regards Countrywide and the appraisal company lawsuit - I have not read past the headlines. However, I find it hard to believe that Countrywide (as a company) made a decision to demand inflated appraisals. That seems pretty dumb even by their standards.
Fraud is going to be pretty tough for loan officers to get away with going forward. One of President Bush's actions on mortgage reform this year was to make it mandatory that all "loan originators" be licensed via a NATIONAL system. That means that you can no longer commit fraud in California and then move to Nevada when you get your license suspended. Now you will be unable to get a new license in ANY state!
Of course the originators working for banks and credit unions are exempted from licensing so I'm not sure they are included in the new database.
See, I tried to keep this short and I'm already going off the deep end...!