New York vs. Appraisal, Mortgage Fraud

New York's attorney general engaged in some more name-dropping today, announcing that he has expanded a probe of appraisal and lending practices to government-sponsored entities Fannie Mae and Freddie Mac.

Last week, the office announced a lawsuit charging that First American Corp. and a subsidiary caved to pressure by Washington Mutual and inflated appraisals. First American and WaMu have disputed claims in that lawsuit, and WaMu is not listed as a defending party.

Fannie and Freddie officials said in statements today that they planned to cooperate with the investigation. (See Inman News article.)

A.G. Andrew Cuomo (pictured here) announced plans to issue subpoenas to the secondary mortgage market giants.

The subpoenas seek:

• Information about all mortgage loans Fannie Mae and Freddie Mac have purchased from any bank, including Washington Mutual, and mortgage-backed securities associated with those loans
• Information about due diligence practices of Fannie Mae, Freddie Mac;
• Information about appraisals and valuations by the originating lenders;
• Policies and procedures related to valuing properties and appraisals.

Also, Cuomo has announced support for legislation introduced by U.S. Rep. Paul E. Kanjorski, D-Pa., that takes aim at fraud in the appraisal industry.

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