The United States District Court for the Northern District of California granted class certification in a mortgage loan appraisal suit alleging defendants conspired to inflate appraisals to increase the sale of loans in the secondary market. The Court found that plaintiffs presented sufficient evidence to establish common questions of fact and law, holding that common questions and answers need not uniformly apply to all class members. The Court also found that the analysis of individual appraisal fees would not create individualized issues, but instead would provide additional support for plaintiffs’ claims that an inflated appraisal scheme existed. Finally, the Court also held that the Real Estate Settlement Procedures Act’s treble damages, attorney’s fees and government enforcement mechanisms did not make class action an inferior method of litigation.
Click here for the opinion. (Document 249)
Case5:08-cv-00868-RMW Document197 Filed05/25/10 Page1 of 33
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
FELTON A. SPEARS, JR. and SIDNEY
SCHOLL, on behalf ofthemselves and all
others similarly situated,
Plaintiffs,
vs.
FIRST AMERICAN EAPPRAISEIT,
(alk/a eAppraiseIT, LLC),
a Delaware limited liability company,
Defendant.
CLASS ACTION
PLAINTIFFS’ NOTICE OF MOTION,
MOTION FOR CLASS CERTIFICATION
AND MEMORANDUM IN SUPPORT
DATE: July 2, 2010
<excerpts>
Spears et al v. Washington Mutual, Inc. et al…Document 197 _ Page15 of 33 at 23
Spears et al v. Washington Mutual, Inc. et al…Document 197 _ Page16 of 33 at 9
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4closureFraud.org
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CASE FILE California Class Action CERTIFIED
Oh sure…the appraiser shows up and asks you how much do you want it appraised for.
What’s not fraudulent about that?
As an appraiser, I think it is important to lend some understanding of appraisal fraud in this situation. During the run up in real estate prices in the 2000’s, it was actually very easy to appraise properties. There were pleanty of comps and almost every sale was higher than the last one as buyers were literally standing in line if the sale fell though for any reason, and willing to offer more. It made our jobs pretty easy. However, I’m sure various lenders put pressure on their favorite appraiser, every once in a while to bring the appraised value up so that the various closing costs could be met. However again, underwiting guidelines were so weakened from prior standards during the 1980’s and 1990’s that the guidelines encouraged 105% financing, no doc loans, neg am etc. to borrowers who were banking on the market continuing or at the very least maintaining it current levels. Those that had experienced the late 1970’s and early 1980’s boom in bust cycle in mortgage financing and real estate especially condos, apparently were causous but even took the risk, based on the number of overall foreclosures today. The point is that the bankers who controlled the underwriting, knowingly lowered standards to cause the irrational over-exuberence in the real estate market and once it was saturated and they has sold off their “litterally fraudulent loans”, they shorted the COD market that they had underwritten. The lowered underwritting standards pumps so much money in to the real estate market, that it was this that really caused real estate prices to rise so rapidly, hense the inflated appraisals. Why eAppraiseIt is a defendent in this suit is interesting to me. Appraising is considered both and art and a science and it is difficult to prove fraud by the appraiser because the market is not perfect and thus a certain percentage differential in the opinion of value has legally been considered acceptable historically.
As a mortgage broker, St. Elmos Fire, I can tell you that more times than naught I was told by a Realtor “well, I have my own appraiser who can get my listing price” and as an appraiser you also know that you could manipulate comps with percentages on adjustments, etc. to make the numbers work. In actuality, your theory above probably did contribute to the added crisis but a lot of these appraisers were receiving ‘kick backs’ from realtors and builders alike to raise values. Besides, with so many sales occurring during the boom and values rising faster than the sun it would have been prudent on an appraiser to know that this was a volitale market. Even I knew it was a bubble and soon to burst as I knew a market could not continue to bear such upswings in value. C’mon, there are ethic principles to abide by. Not that I am a saint by any means but for these situations back then my answer more or less was ‘hit the road, jack and don’t ya come back no more,no more’. New regulations in my industry have weeded out most of the bad and it’s now time for the other parts of the industry to do the same!
They should also look into Florida and WAMU
I second that motion because that is where my loan and housing situation stemmed from though the house is in wisconsin