New York AG sues First American for Appraisal Conspiracy

Press Release here.

 In a scheme detailed in numerous e-mails, eAppraiseIT (“EA”), a subsidiary of First American Corporation (NYSE: FAF), caved to pressure from Washington Mutual (“WaMu”) (NYSE: WM) to use a list of preferred “Proven Appraisers” who provided inflated appraisals on homes.  The e-mails also show that executives at EA knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu.

And you can bet it was to secure more title and mortgage processing business:

We all own the fraud

Today, the Washington Post reported the vast increase in mortgage fraud.  This isn’t news to anyone who follows the new wires, but it will be news to main street.  According to the FBI:

“Fraud for profit is committed mostly by industry insiders….”

The nature of real estate transactions makes it very difficult to perpetuate fraud by oneself.   Either willing or unwitting accomplices are required.   Real Estate Agents, appraisers and title agents have to cooperate for many of these frauds to occur.  Once upon a time the industry didn’t let bad actors in the door.  Now we just look the other way – its someone else’s problem. 

“The only thing necessary for the triumph of evil is for good men to do nothing. “  – Edmund Burke

With each fraud the reputation of our industries is tarnished.  Its time for all of us to do something.