The office of New York’s attorney general has reached a $7.8 million settlement with companies it says contributed to the housing-market meltdown by helping to inflate home values.
The attorney general’s office said that eAppraiseIT colluded with the savings-and-loan firm Washington Mutual, Inc. It reached the settlement with eAppraiseIT successor-in-interest CoreLogic Valuation Services and its parent company, Santa Ana, Calif.–based CoreLogic, Inc. (NYSE: CLGX).
Washington Mutual pressured eAppraiseIT to allow Washington Mutual’s loan officers to select property appraisers, according to the attorney general’s office. The practice was illegal under federal and state law, the office said, adding that it also inflated property values and boosted the number of mortgages Washington Mutual could process.
“Coercion of appraisers to inflate home values and the erosion of appraisal independence directly contributed to the housing crisis,” Attorney General Eric Schneiderman said in a news release. “By giving in to lender pressure, these corporations violated a principle that is vital to restoring and maintaining a healthy housing market. Today’s settlement demonstrates our office’s commitment to investigating the causes of the mortgage crisis and holding wrongdoers accountable. We will continue to litigate cases arising out of the financial crisis vigorously and take defendants to trial as needed.”
Prior to the settlement, the collusion case went to trial before the New York Supreme Court. That trial, which took place in June, occurred after the defendants unsuccessfully attempted to have the case dismissed. New York’s Court of Appeals rejected the dismissal arguments and the U.S. Supreme Court denied a petition to hear the dismissal case.
The settlement calls for the defendants to pay $4 million in civil penalties and $3.8 million in costs, fees, and disbursements from the litigation process. The defendants are no longer in the appraisal business, according to the attorney general’s office.
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