BofA, Countrywide Seek Dismissal of Fraudulent Appraisals Class Action

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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.

Lead plaintiffs accused mortgage provider Countywide Financial, home appraisal company LandSafe Appraisal Inc., and Bank of America of conspiring together to charge home buyers for appraisals that turned out to be phony.

The plaintiffs also allege that the home mortgage companies made the appraisals artificially high.

The companies shot back, arguing that the claims were brought too long after the statute of limitations.

According to the defendants’ motion to dismiss the class action, the claims are for appraisals that occurred in 2006 and 2007 and the applicable statutes of limitations for claims based on those transactions range from one to four years.

The defendants also say that the plaintiffs cannot argue that there wasn’t a way for them to know that the appraisals were artificially high.

“The complaint contains no allegations of any due diligence, and there are no allegations explaining why plaintiffs would have been unable to ascertain the correct value of their residences at the time of the 2006 and 2007 transactions or in the 1-4 years to follow if they had exercised due diligence,” say the defendants in their motion.

According to the class action complaint, the claims should have also been tolled because of a whistleblower lawsuit in 2013. However, the defendants argue that the whistleblower complaint was not a “prerequisite” to the plaintiffs learning that the appraisals were artificially high.

“The inquiry, however, is whether plaintiffs within the limitations period could have learned of the alleged injury — that the appraisals supposedly contained inflated valuations — and not whether they could have learned of the alleged fraud asserted by the whistleblower,” the companies said.

The home mortgage companies also pointed out that one of the class action claims, under the Real Estate Settlement Procedures Act, only has a statute of limitations of one year. That claim, argue the defendants, should be time-barred even if the whistleblower lawsuit allows the other actions to proceed.

The defendants further argue that the class action claims should be dismissed because the appraisal documents informed the home buyers that appraisals were being conducted to benefit the lenders in the transaction. 

“There can be neither reliance nor proximate cause of any injury where the borrower is not the intended user / beneficiary,” say the defendants.

Finally, Bank of America and Countrywide argue that since they are regulated by federal agencies, state law claims should not apply to them.

The plaintiffs are represented by Christopher R. Pitoun, Steve W. Berman and Thomas E. Loeser of Hagens Berman Sobol Shapiro LLP; Daniel Alberstone, Roland Tellis, Mark Pifko and Evan Zucker of Baron & Budd PC.

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.