Jennifer Wertz is a home appraiser who began working for Washington Mutual (NYSE: WM) through a third party about 18 months ago. In court papers filed in Superior Court in California (Sacramento), Wertz claims that she was designated a "preferred" vendor whose work was "proven".
Since then, however, things have gone downhill, and now the financial giant has a David and Goliath situation that would naturally turn even uglier if other Davids (or Jennifers) showed up alleging similar behavior.
Wertz's suit against WAMU is neatly summarized in two allegations (#17 and #19 in her January 10, 2008 filing):
17. On or about May 21,2007, RICHTER [ed note: previously identified as a Washington Mutual Sales Manager] informed Plaintiff that a loan for which laintiff
had prepared an appraisal report had been declined because Plaintiff had indicated in her report "declining" market conditions. RICHTER insisted that Plaintiff change her appraisal report to indicate "stable" market conditions so that the loan could be approved. RICHTER, however did not provide any evidence to contradict Plaintiffs opinion and the facts supporting the decline of market conditions. RICHTER then told Plaintiff that if she did not change the appraisal report, that,she RICHTER would have Plaintiff blocked or prevented from doing any WAMU appraisal work.
and
19. On or about June 13,2007, LSI informed Plaintiff that Plaintiff had been blocked by WAMU, that WAMU would not give Plaintiff any more appraiser work because of two of Plaintiffs appraisal reports.
It has certainly be an old saw, if not an axiom, that home appraisers favored by lenders bring in high appraisals so that borderline lending situations are not quite so close. In our informal poll today, homeowners gravely nodded when we shared the story. Those who had refinanced believed that appraisers helped the process because they were friendly with the lender or wanted to stay in the lender's good graces.
The latter is simply poor judgment if it occurred. But what Ms. Wertz is alleging is much more serious. This would be the smoking gun zealous consumer advocates (yes, we're supposed to be one too, but we believe in stories having two sides) use to prove that the subprime mortgage crisis led to an economic crisis and was caused by greedy lenders.
And the ankle bone is connected to the.....
We still say greedy consumers had more than a share in creating this mess. Ms. Wertz's day in court will be interesting and closely watched, however, and heaven help us all if she is not the only appraiser to make similar allegations.
Labels: appraisal, mortgage, WAMU, Washington Mutual, Wertz
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