Recently Ohio Attorney General Marc Dann announced that "multiple lawsuits have been filed in four Ohio counties against ten companies for undue influence on an appraiser. (video on Marc Dan)
AG Marc Dann sued the 10 mortgage lenders as part of an initiative to enforce Ohio's predatory lending laws, which were effective on January 1, 2007. Dann's suit alleges that the lenders pressured appraisers to inflate property values, causing borrowers to pay more than their homes were worth. Dann is asking for injunctions, civil penalties, and reimbursement for affected consumers.
The complaints state that these companies have committed unconscionable acts or practices in violation of the Consumer Sales Practices Act by knowingly compensating, instructing, inducing, coercing, or intimidating appraisers for the purpose of improperly influencing the independent process."
According to the indictments obtained by the Originator Times, Dann’s office is alleging that appraisal order forms used by all ten companies contain a "suggested value," "estimated value," or similar titled space and therefore is a violation under the Consumer Sales Practices Act of Ohio.
In the case of Wall Street Mortgage Bankers, their form also included instructions to the appraiser that read,
"If the preliminary research shows that the value is not there please DO NOT do appraisal and contact the agent."
Dann's office maintains that "appraisal inflation occurs when the appraisal value of a home is far higher than the true market value of the property. This can happen when the broker or lender pressure the appraiser to “puff up” a property value based upon the desired loan amount, or the figure needed to “make the deal work” as opposed to the actual value of the property to be purchased or refinanced."
Dann went on to say, “I’m committed to ridding this state of appraisal inflation and other symptoms of mortgage fraud that has ripped families apart and led to an unprecedented number of foreclosures in this state. I won’t allow this unethical exertion of power over appraisers who face this choice of doing the right thing or losing business entirely to continue.”
- Click here to read the Columbus Dispatch's article on the lawsuit.
- You can also check out the Crain's Cleveland Business article.
- Click here to reach Ohio's Office of Consumer Affairs.
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