A follow-up article in today’s Wall Street Journal (free today) –
In his letters to Fannie and Freddie, Mr. Cuomo wrote that inflated appraisals, giving a false idea of the value of collateral backing those loans and securities, could hurt shareholders of those companies and investors in mortgage-backed securities they guarantee. Many appraisers have complained for years they feel pressure from lenders and mortgage brokers to sign off on unrealistically high home-value estimates.
Mr. Cuomo directed Fannie and Freddie to appoint examiners to look particularly at mortgages acquired from WaMu and any other loans made on the basis of appraisals by First American Corp.’s eAppraiseIT LLC subsidiary. Last week, his office filed a lawsuit against First American, alleging it violated federal and state laws by allowing WaMu to control the selection of appraisers hired to assess collateral for loans.