SEATTLE - A group of Idaho appraisers today filed a class-action lawsuit against Countrywide (NYSE: CFC) claiming the company used strong-arming tactics to intimidate appraisers to generate reports in line with Countrywide's business objectives. Download Capitol_West_vs_Countrywide.pdf
The lawsuit, filed in U.S. District Court in Seattle, claims Countrywide forced appraisers to use improper appraisal techniques that benefit the lender and punished those who did not participate by blacklisting individuals and companies for up to a year, denying them work.
One of the plaintiffs, Capitol West, saw its monthly revenues fell by $8,000 as a result of being on the Field Review List and a Countrywide employee told the business it will remain on the list for at least a year, according to the lawsuit and a Seattle PI.com article.
Countrywide, the largest home mortgage lender, has the reach and influence necessary to affect an appraiser's business if they fail to follow the company's guidelines, the suit claims.
The lawsuit claims Countrywide's actions caused substantial damage to thousands of appraisers on top of distorting real estate prices in the marketplace.
"The integrity of real estate appraisals is more important than ever and time and time again Countrywide is showing its customers and partners that it only cares about profits and market control," said Steve Berman, managing partner at Hagens Berman Sobol Shapiro. "The bottom line is our nation's at a breaking point where we can't take anymore corporate dishonesty in the home market - a role Countrywide's becoming notorious for."
The lawsuit claims Countrywide's interest lies in property passing appraisals its way, rather than determining whether an appraisal is fair and accurate and in accordance with industry standards (Uniform Standards of Professional Appraisal Practice or USPAP).
"We believe if an appraiser doesn't 'play ball' with Countrywide and produce a report affirming the value Countrywide expects, it places the appraiser on its 'Field Review List,' or blacklist, which it then sends to mortgage brokers who hire appraisers," said Berman.
As of Aug. 28, 2008, more than 2,000 appraisers appeared on the Field Review List and Countrywide's been using the blacklist practice for more than four years, according to the complaint.
The suit claims that to further complicate matters, any appraisal submitted to Countrywide from a blacklisted appraiser automatically goes to LandSafe, a subsidiary of Countrywide, for review. LandSafe's role is to find problems within the appraisal and reconfirm to Countrywide the report isn't accurate - rendering it unusable because it doesn't fall within Countrywide's guidelines, the complaint claims.
The complaint states the plaintiff, Capitol West Appraisers, refused to succumb to Countrywide's alleged pressure to compromise its integrity and independence and refused to commit fraud and violate federal and state laws - as a result the company made the Field Review List.
Since appearing on the list, the complaint claims Capitol West's business declined and revenues plummeted - losing $8,000 a month. The impact goes beyond appraisers and affects the marketplace as a whole, further damaging the industry, leading to overvaluations and distorting home prices nationwide, they claim.
Capitol West filed the lawsuit on behalf of its business and all other appraisers nationwide who've been placed on the Field Review List. The lawsuit cites violations of federal law under the federal Racketeering Influenced and Corrupt Practices Act (RICO).
You can learn more about this case by visiting http://www.hbsslaw.com/CFCappraisers.
Source: Hagens Berman Sobol Shapiro
About Hagens Berman Sobol Shapiro
Hagens Berman Sobol Shapiro is based in Seattle with offices in Chicago, Boston, Los Angeles, Phoenix, San Francisco and New York. Since the firm's founding in 1993, it has developed a nationally recognized practice in class action and complex litigation. Among recent successes, HBSS has negotiated a pending $300 million settlement as lead counsel in the DRAM memory antitrust litigation; a $340 million recovery on behalf of Enron employees which is awaiting distribution; a $150 million settlement involving charges of illegally inflated charges for the drug Lupron, and served as co-counsel on the Visa/Mastercard litigation which resulted in a $3 billion settlement, the largest anti-trust settlement to date. HBSS also served as counsel in a $850 million settlement in the Washington Public Power Supply litigation and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. For a complete listing of HBSS cases, visit www.hbsslaw.com.
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