BofA, Countrywide Class Action Targets Fraudulent Home Appraisals

A class action filed on June 10 alleges that mortgage provider Countywide Financial Corp., home appraisal company LandSafe Appraisal, Inc., and Bank of America conspired to charge home buyers for appraisals that were fake.

According to the complaint, Countrywide and Bank of America conducted a “devious scheme” between 2003 and 2008 which “allowed Defendants to eliminate the delay associated with performing and fulfilling the strict requirements of a USPAP appraisal, and rapidly close loans, all to the financial detriment of consumers who were forced to pay for legally-mandated USPAP ‘appraisals’ that were never performed.”

“In the end,” the class action complaint asserts, “Countrywide charged borrowers hundreds of millions of dollars for legally-mandated USPAP appraisals that were never performed.”

The Countrywide fake appraisal class action states that “USPAP” stands for Uniform Standards of Professional Appraisal Practice, which imposes strict rules that should be followed by all financial insrtitutions before issuing a mortgage for a home.

The complaint contends that full appraisals are mandated by federal law for financial institutions like Bank of America and Countrywide Financial, “because it provides a buyer or homeowner with an accurate, objective and supportable opinion of a property’s value; and it protects the financial and public policy interests in real estate transactions involving federally-regulated and federally-insured institutions.”

According to the class action complaint, instead of conducting appraisals to USPAP standards, Countrywide Financial set up its wholly-owned subsidiary LandSafe as its only “approved” vendor to do phony appraisals. That way, the home buying process could not be slowed down or stopped by the appraisal, and Countrywide could continue selling as many mortgages as possible, in order to make money by selling them to Wall Street firms.

The complaint asserts that LandSafe paid large fees to appraisers who agreed to “inflate property values” or otherwise doctor the appraisals so the home loan could be completed.

Not only were the appraisals faked, the complaint alleges, but Countrywide Financial made prospective home buyers pay between $300 and $600 for them. The class action argues that there was no reason for consumers to pay for an appraisal that was not actually performed.

Bank of America is included in the class action because it merged with Countrywide Financial in July of 2008, and Bank of America stated that it intended to “clean up” Countrywide’s liabilities. The class action also alleges that Bank of America continued the practice of making consumers pay for fake appraisals through the end of 2008.

Plaintiffs Elizabeth Williams, Beckie Reaster, and Rebecca Murphy state that they paid for fraudulent or misleading appraisals through Countrywide Financial and LandSafe. All three Plaintiffs were informed by Countrywide that they would have to pay for an appraisal through LandSafe. All three Plaintiffs contend that the appraisals they received from LandSafe were not done according to USPAP standards, and plaintiffs would not have paid for the misleading documents had they known the truth.

The Countrywide home appraisal lawsuit seeks to represent a Class of all persons who “between January 1, 2003 and December 31, 2008, obtained an appraisal from LandSafe in connection with a loan originated by Countrywide.” The class action requests restitution of the charges for the fake appraisals, treble damages, interest on those amounts, and a court order stopping the fraudulent conduct.

The plaintiffs are represented by Christopher R. Pitoun, Steve W. Berman, and Thomas E. Loeser of Hagens Berman Sobol Shapiro LLP.

The Bank of America, Countywide Fraudulent Home Appraisals Class Action Lawsuit is Elizabeth Williams, et al. v. Countywide Financial Corp., et al., Case No. 2:16-cv-04166, in the U.S. District Court for the Central District of California.

UPDATE: On Dec. 21, 2016, Bank of America, Countrywide, and LandSafe asked a California federal judge to dismiss a class action accusing the companies of conducting fake home appraisals, saying the claims were brought too late and are time-barred.