Countrywide required customers to hire one of its subsidiary companies to obtain appraisals without providing the proper disclosure forms, and overcharged them for the appraisals, according to allegations in a Racketeering Influenced and Corrupt Practices Act (RICO)-based class-action lawsuit filed in U.S. District Court in Seattle this week.
The suit, filed by a group of homeowners in Washington state, alleges Countrywide forced homeowners to use its subsidiary company LandSafe to obtain appraisals without providing an affiliated business arrangement disclosure that notifies customers that Countrywide owned the appraisal company, as is required by the Real Estate Settlement Procedures Act (RESPA).
“As we investigated Countrywide for our clients, it was immediately obvious that Countrywide is a well-oiled operation,” said Steve Berman, managing partner and lead attorney at Hagens Berman Sobol Shapiro, the law firm that filed the lawsuit. “Unfortunately, the company’s efficiencies are focused on soaking every penny from consumers and independent appraisers in ways we believe violate the law.”
The suit further alleges LandSafe would outsource the appraisals for as little as $140, but then charge customers like Washington residents Carol and Gregory Clark, plaintiffs in the case, as much as $410 for the service.
In 2007, The Clarks refinanced their mortgage with Countrywide, the nation’s largest mortgage company, and now, a subsidiary of Bank of America. The suit represents them and seeks to represent all homeowners that purchased new or refinance mortgages through Countrywide and LandSafe.
Because of its dominance in the market and ownership of LandSafe, Countrywide, the suit claims, had excessive influence on the appraisal process that took away from the independent verification of properties’ value, and that hundreds of thousands of homeowners are victims of this scheme.
The suit also said Countrywide blacklisted appraisers that refused to work for the fee schedule set by LandSafe, putting them on its “Field Review List,” a database of appraisers Countrywide refused to use unless the mortgage broker also submits a report from a second appraiser.
“When you control the entire appraisal process, including your hands around the necks of appraisers financially speaking, you have a lot of influence,” Berman said.
A spokesperson for Bank of America said the company had not been served with a copy of the lawsuit, but that the company thinks the suit has no merit.
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