New York attorney-general Andrew Cuomo yesterday alleged that real estate appraisal company First American conspired with one of the largest US banks to inflate home prices. Financial Times.
He said the scheme was widespread in the industry and helped fuel the mortgage crisis. ‘We tend to look for cases that are emblematic of systemic industrywide fraud and we believe this case does that,’ he said.
The lawsuit said FA's eAppraiseIT subsidiary gave in to pressure from Washington Mutual, the biggest savings and loan company, to use a preferred list of appraisers who provided inflated values for homes.
WaMu allegedly profited from the scheme because it allowed the lender to close more home loans at greater values. eAppraiseIT in turn became WaMu’s biggest client, according to the lawsuit.
WaMu was not named as a defendant. Cuomo said this was in part because of jurisdictional questions about his office’s authority over federally regulated bank’s such as WaMu.