WAMU Appraisal Fraud – The People of the State of New York by Andrew Cuomo, Attorney General of the State of New York, Plaintiff-Respondent, v First American Corporation, et al., Defendants

Decided on June 8, 2010
SUPREME COURT, APPELLATE DIVISION
First Judicial Department
Luis A. Gonzalez, P.J.
David B. Saxe
James M. Catterson
Rolando T. Acosta, JJ.
406796/07

1308

[*1]The People of the State of New York by Andrew Cuomo, Attorney General of the State of New York, Plaintiff-Respondent,

v

First American Corporation, et al., Defendants-Appellants.

Defendants appeal from the order of the Supreme Court, New York County (Charles Edward Ramos, J.), entered April 8, 2009, which, insofar as appealed from as limited by the briefs, denied their motion to dismiss the complaint on the ground of federal preemption.

DLA Piper LLP (US), New York (Richard F. Hans,
Patrick J. Smith, Kerry Ford
Cunningham and Jeffrey D.
Rotenberg of counsel), for
appellants.
Andrew M. Cuomo, Attorney General, New York
(Richard Dearing, Benjamin
N. Gutman and Nicole
Gueron of counsel), for respondent. [*2]

EXCERPTS

This appeal calls upon us to determine whether the regulations and guidelines implemented by the Office of Thrift Supervision (OTS) pursuant to the Home Owner’s Lending Act of 1933 (HOLA) (12 USC § 1461 et seq.) and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) (Pub L 101-73, 103 STAT 183 [codified in scattered sections of 12 USC]), preempt state regulations in the field of real estate appraisal.

The Attorney General claims that defendants engaged in fraudulent, deceptive and illegal business practices by allegedly permitting eAppraiseIT residential real estate appraisers to be influenced by nonparty Washington Mutual, Inc. (WaMu) to increase real estate property values on appraisal reports in order to inflate home prices. We conclude that neither federal statutes, nor the regulations and guidelines implemented by the OTS, preclude the Attorney General of the State of New York from pursuing litigation against defendants First American Corporation and First American eAppraiseIT, LLC. We further conclude that the Attorney General has standing to pursue his claims pursuant to General Business Law § 349.

In a complaint dated November 1, 2007, plaintiff, the People of the State of New York, commenced this action against defendants asserting claims under Executive Law § 63(12) and General Business Law § 349, and for unjust enrichment. The complaint alleges that in Spring 2006, WaMu hired two appraisal management companies, defendant eAppraiseIT and nonparty Lender’s Service, Inc., to oversee the appraisal process and provide a structural buffer against potential conflicts of interest between WaMu and the individual appraisers. The gravamen of the Attorney General’s complaint asserts that defendants misled their customers and the public by stating that eAppraiseIT’s appraisals were independent evaluations of a property’s market value and that these appraisals were conducted in compliance with the Uniform Standards and Professional Appraisal Practice (USPAP), when in fact defendants had implemented a system allowing WaMu’s loan origination staff to select appraisers who would improperly inflate a property’s market value to WaMu’s desired target loan amount.[FN1]
Visit 4closureFraud.org for the latest info.   No charge and not selling anything unlike sites that copy and paste this entry as their own without permission or accreditation.
We find defendants’ assertions that the Attorney General lacks standing under General Business Law § 349 and that his complaint fails to state a cause of action are without merit. Indeed, the Attorney General’s complaint references misrepresentations and other deceptive conduct allegedly perpetrated on the consuming public within the State of New York, and “[a]s shown by its language and background, section 349 is directed at wrongs against the consuming public” (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 24 [1995]). Therefore, we find that the Attorney General’s complaint articulates a viable cause of action under General Business Law § 349, and that this statute provides him with standing.

Consequently, we conclude that defendants have failed to demonstrate that HOLA, FIRREA or the OTS’s regulations and guidelines preempt or preclude the Attorney General from pursuing the causes of action articulated in his complaint. We additionally find that the Attorney General has standing under General Business Law § 349. We have reviewed defendants’ remaining contentions and we find them without merit.

Accordingly, the order of the Supreme Court, New York County (Charles Edward Ramos, J.), entered April 8, 2009, which, insofar as appealed from as limited by the briefs, [*13]denied defendants’ motion to dismiss the complaint on the ground of federal preemption, should be affirmed, without costs.

All concur.
Order, Supreme Court, New York County (Charles Edward Ramos, J.), entered April 8, 2009, affirmed, without costs.

Opinion by Gonzalez, P.J. All concur.
Gonzalez, P.J., Saxe, Catterson, Acosta, JJ.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JUNE 8, 2010

Read entire opinion below…

~

4closureFraud.org

The People of the State of New York by Andrew Cuomo, Attorney General of the State of New York, Plaintiff-Respondent,  v  First American Corporation, et al., Defendants-Appellants
[scribd id=32783134 key=key-4ipmkvcq5r31p0rdrc3 mode=list]

Comments
2 Responses to “WAMU Appraisal Fraud – The People of the State of New York by Andrew Cuomo, Attorney General of the State of New York, Plaintiff-Respondent, v First American Corporation, et al., Defendants”
  1. The investigation that prompted this suit originally included Fannie Mae and Freddie Mac. Fannie and Freddie, to avoid more scrutiny from AG Cuomo, entered into a settlement agreement now known as the Home Valuation Code of Conduct (HVCC). The HVCC, through intent, design or chance, caused most appraisal assignments to be made through the entities that have already demonstrated their inability to adhere to the standards claimed in their ads and promotional material (integrity, honesty, ensure appraiser independence, assure the client of appraiser competency).

    Isn’t it interesting that First American (or Core Logic, or whatever they call themselves today) is a partner with many of the big bank owned/controlled Appraisal Management Companies?

    Isn’t it also interesting that the Financial Reform Legislation passed by the US House (H.R. 47173) exempts bank owned/controlled AMCs from state regulation? It requires the federal banking regulatory agencies to develop regulations for these AMCs.

    Isn’t it interesting that these very same federal banking regulatory agencies did such a bang-up job with their “close scrutiny”, “attention to detail”, and “rigorous oversight” in the boom years leading up to the current financial crisis?

    The public should not trust Appraisal Management Companies and cannot trust the regulation of bank owned/controlled Appraisal Management Companies to Federal Agencies.

  2. Alina says:

    This is great new case law. Cuomo does it again. Can we clone him?

    Anyway, the banks claim preemption under the National Bank Act. Not so, they do not have blanket preemption rights. For all of you where the Plaintiff claims that it does not have follow state laws such as registration, read Cuomo v. Clearing House (SCOTUS) and Rose v. Chase (9th Cir).

Leave a Reply

Your email address will not be published. Required fields are marked *