Industry News

SEC, OTS looking at WaMu lending practices

Probes follow N.Y. attorney general's allegations of inflated appraisals

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The Securities and Exchange Commission and the Office of Thrift Supervision are looking into allegations that Washington Mutual Inc. originated, securitized and sold mortgages that were made using inflated appraisals. The allegations were made in a lawsuit filed against WaMu's appraiser by New York Attorney General Andrew Cuomo. WaMu said in a statement that it is cooperating fully with SEC and OTS inquiries, although the company has spent "a month and a half investigating these allegations (and) we can say with confidence that there has been no systematic effort by WaMu to inflate home appraisals." The New York attorney general's office filed suit Nov. 1 against First American Corp. and its subsidiary eAppraiseIT, accusing the companies of providing inflated property appraisals for WaMu. The lawsuit alleges the companies were pressured by WaMu to use a list of preferred appraisers who provided inflated property valuations First American Corp. denies wrongdoing and has ...