Tagged: FDIC

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What is the FDIC Suing Appraisers About? Some Examples of the FDIC’s Specific Allegations?

The FDIC continues to sue residential appraisers in connection with origination appraisals and review appraisals performed for failed lenders between 2003-2009 on loans now in default. It may be helpful, or scary, for appraisers and AMCs to see for themselves exactly what kinds of alleged USPAP violations or other errors the FDIC is claiming in lawsuits against appraisers. Therefore, I have copied below the FDIC’s actual allegations against several appraisers. These are word-for-word the entirety of the FDIC’s claimed errors against these appraiser defendants. Please don’t shoot the messenger. I’m a lawyer, not a USPAP expert, but even I know...

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Questions & Comments RE Customary and Reasonable Fees

Where To Direct Questions and Comments Regarding Customary and Reasonable Fees The appropriate agency to receive your concern about a creditor’s compliance with the Truth in Lending Act (TILA), including the requirement for the creditor or the creditor’s agent (including an AMC) to pay an appraiser a customary and reasonable fee, is the agency that enforces TILA with respect to the creditor. With respect to insured depository institutions of more than $10 billion and their affiliates, the Consumer Financial Protection Bureau (CFPB) is the appropriate agency. For other non-depository institutions, the appropriate agency to receive the complaint is the CFPB...

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The 8 Biggest Appraiser Liability Cases in the U.S.

I have described below the 8 biggest appraiser liability cases with which I am familiar that are currently pending in the U.S. These are cases that specifically name appraisers, appraisal firms or appraisal management companies as defendants. That’s an important distinction because the appraisal industry has been fortunate that only a small fraction of litigation about financial losses blamed on appraisal deficiencies actually names any appraisal defendants. Yet, the stakes below are very significant for the appraisal industry because the realistic measure of damages at issue in just these 8 cases — not the plaintiffs’ puffed-up alleged damages — is...

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FDIC Settles Claims Against WaMu

The FDIC Settles Claims Against WaMu’s Top Officers. What’s the FDIC’s Case Against LSI Appraisal Worth? In March of this year, the FDIC sued Washington Mutual’s former CEO Kerry Killinger, its former chief operating officer Stephen Rotella and its former head of residential lending David Schneider for $900 million in alleged damages resulting from their “gross negligence” in running WaMu’s residential lending business. The FDIC claimed that their negligence caused what it is the biggest bank failure in U.S. history. It also alleged that two of them unlawfully transferred assets to their wives to protect the assets from potential collection efforts. Despite those...

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FDIC Sues 29 Appraisers Over Loans By Downey Savings

In the two weeks leading up to Thanksgiving Day, the FDIC sued 29 more individual residential appraisers. All of the appraisers sued in this round reside in California. The FDIC’s complaints against them 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 for approximately $350,000. The complaints concern both origination and review appraisals. One of the recently sued appraisers has now been sued twice by the FDIC. This is the third appraiser to be sued twice by the FDIC. Another...

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FDIC Suffers Setback Against LSI

The FDIC Suffers a Setback in Case Against Lender Processing Services and LSI Appraisal As reported in prior posts, the FDIC, as receiver for failed lender Washington Mutual, sued appraisal management company LSI Appraisal and its corporate parent Lender Processing Services for breach of contract and gross negligence on May 9, 2011 (see post here), and on July 22, LSI and LPS filed a motion to dismiss. In that motion, LSI argued that the FDIC’s gross negligence claim should be dimissed based on the economic loss rule, that the FDIC’s alter ego claims against LSI’s affiliated corporate entities (including LPS)...

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Update on FDIC v. CLGX (CoreLogic – eAppraiseIT):

FDIC’s lawsuit against CoreLogic – eAppraiseIT… FDIC Reiterates Threat that Appraisers Are the Legal Agents of AMCs in a Late – Filed Brief CoreLogic, parent of the AMC formerly known as eAppraiseIT…The FDIC is now contending that independent contractor appraisers are the legal agents of appraisal management companies (AMCs) in both of its cases against LSI Appraisal and CoreLogic. Based on this contention, the FDIC asserts that the AMCs should be liable for all damages attributable to the alleged negligence of their panel appraisers. The FDIC first asserted this argument in a brief filed in its case against Lender Processing...

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Residential Appraisals: Opportunities to Enhance Oversight of an Evolving Industry – GAO

Yesterday, the GAO released its analysis of the Real Estate Appraisal Profession and its regulatory framework titled Residential Appraisals: Opportunities to Enhance Oversight of an Evolving Industry. Full report can be reviewed or downloaded below. Summary of analysis: Real estate valuations, which encompass appraisals and other estimation methods, have come under increased scrutiny in the wake of the recent mortgage crisis. The Dodd- Frank Wall Street Reform and Consumer Protection Act (the Act) mandated that GAO study the various valuation methods and the options available for selecting appraisers, as well as the Home Valuation Code of Conduct (HVCC), which established appraiser...

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Appraisal Institute Warns Appraisers About Liabilities When Working with Some AMCs

CHICAGO (May 12, 2011) – The Appraisal Institute today cautioned real estate appraisers about signing agreements imposed by some appraisal management companies that seek to hold residential appraisers responsible for AMCs’ actions. Its president warned that consumers could be the ultimate losers. “Appraisers should be very careful about signing any agreement, especially one that makes them responsible for another party’s actions,” said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. “While there are some fine AMCs doing business today, many AMCs shift liability onto appraisers. For many professional appraisers, it’s simply not worth the risk.” Magdziarz, as president of the...

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FDIC Files Appraisal Complaint Against LPS and CoreLogic

The Federal Deposit Insurance Corp. has filed a complaint against Lender Processing Services and CoreLogic related to appraisals performed for Washington Mutual, HousingWire reported May 11. The FDIC is seeking to recover roughly $283 million in losses allegedly tied to appraisals that an LPS subsidiary and a CoreLogic affiliate conducted for WaMu. The FDIC took WaMu into receivership in 2008 and facilitated its sale to JPMorgan Chase. WaMu had a total of $307 billion in assets at the time. HousingWire reported that regulatory filings by the two companies indicate that the FDIC alleged LPS Appraisal LLC and CoreLogic Valuation Services,...

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