WaMu accused of appraisal fraud

Source: Money

Lawsuit claims the lender told an appraiser to offer a rosier housing outlook so risky mortgages could get approved.

NEW YORK (Money) -- A former real estate appraiser for Washington Mutual is suing the bank, claiming she was blacklisted last year for providing a housing market forecast that was too gloomy.

Jeniffer Wertz, who is seeking unspecified damages, says WaMu stopped accepting her appraisals in mid-2007 a month after she reported that her local housing market in California was "declining."

A pessimistic outlook makes it harder to extend outsized, risky mortgages to borrowers whose homes can't support them. But Wertz's assessment shouldn't have been controversial at the time. According to the National Association of Realtors, home prices in her hometown of Sacramento fell $9,000, or 2.5 percent, to $356,500 in the second quarter of 2007. And most economists were already characterizing the housing market as a bubble that was ready to burst.
Home sales sink, outlook darkens

In the lawsuit, which was filed a week ago, Wertz says she completed appraisals on two houses in May and then quickly got a call from a WaMu (WM, Fortune 500) sales manager demanding she change her outlook to "stable" so a loan could be approved.




Read more: http://money.cnn.com/2008/01/17/real_estate/wamu_lawsuit.moneymag/?postversion=2008011712

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A rather interesting glimpse of the practices that were used.

Assuming you can get an offer at all, and you're dreaming if you think you will.

The dumbest name in banking.....:puke: :grr: :hi:

We have been quietly talking about this for quite a while. I am very serious when I say there has been pressure put on most real estate appraisers across the country to "hit" a value if they want to keep getting assignments from specific lenders. They WANT the appraisals to show a value that supports the loan. If they don't get that value to support the contract for purchase they won't hire the appraiser again--they just call one who WILL give them what they want to see.

I have been supremely grateful that I am not forced to rely on the mortgage industry for my paycheck, and articles like this one just reaffirm it.




Laura

I had my house and property appraised for a refinance a few years ago, and the appraisal value came in at just what would justify the loan amount.

The odd thing with that was that we had a LOT of equity, which meant that the appraisal ended up being about 3/4 of the county tax assessment, which was tending to be very conservative (they may be more accurate now...) The assessor's value was probably about 1/3 the actual value of the property at the time.

I was a loan processor/closer for years and years. Appraisers either brought the appraisals in at sales price or an appraised value that supported the loan on a refinance - or they just didn't get any work from anyone.

Realtors share a lot of the blame in thoses cases. If the appraisers brought the prp[erty in low they simply blacklisted them.

I made an offer on a property in spring 2006 at $368,500. An appraisal done for Wells Fargo (and may THOSE bastards rot in hell for all eternity) came in at -- surprise! surprise! -- $368,500. When I questioned the coincidence, I was told by the loan officer at WF: "Our appraisers always do that. They don't really do an appraisal, as such. They just make sure the property is worth about what the buyer is offering and then put in the purchase price."

In this particular case, the appraiser wasn't even in Arizona, but Minnesota. He based is "appraisal" on the fact that the seller was asking $405,000 and had accepted an offer of $368,500.

Have you lost a lot of the value?