More legal trouble ahead for Countrywide

by Francis Monfort21 Feb 2018

It looks like there’s more legal trouble ahead from Bank of America’s Countrywide unit.

A class-action lawsuit has been filed against Countrywide Financial Corp., Bank of America, and LandSafe Appraisal Services. The suit accuses Countrywide and LandSafe of conducting fraudulent appraisals to boost the number of loans originated by Countrywide.

The lawsuit claims that in the mid-2000s, Countrywide and – which was purchased by Bank of America during the financial crisis – required borrowers to get their appraisals through LandSafe, which Countrywide owned, as a condition of their loans. LandSafe was also purchased by BoA during the crisis, but has since been sold to CoreLogic.

The suit alleges that LandSafe prepared fraudulent property appraisals in an effort to help Countrywide close loans more quickly. It claims that as part of the scheme, LandSafe cherry-picked appraisers, withheld information and intentionally side-stepped the Uniform Standards of Professional Appraisal Practice (USPAP) to create appraisals that benefited the lender. Borrowers were charged between $300 and $600 for each appraisal, the lawsuit stated.

The lawsuit alleged that the companies violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO). RICO laws were originally designed to combat organized crime, but have also been implemented in cases of corporate misconduct.

The US District Court has certified the suit as a class action. District Judge Christina A. Snyder ruled that the plaintiffs provided “substantial evidence that could be used to prove an alleged RICO scheme on a class-wide basis.”

Countrywide was one of the faces of the 2008 financial crisis. In 2012, the federal government accused the company of knowingly selling toxic mortgage-backed securities during the run-up to the economic collapse and imposed a $1.27 billion penalty. That penalty, however, was voided by an appeals court in 2016. The court ruled that Countrywide’s actions in selling the toxic mortgage bonds hadn’t amounted to fraud.


Related stories:
Government fraud case against Bank of America officially dead
Lawsuit claims Wall Street giants colluded in violation of antitrust laws
 

COMMENTS

  • by Rosie | 2/21/2018 11:07:13 AM

    I had so much trouble with Countrywide and almost lost our home!

  • by LA Appraiser | 2/21/2018 11:36:06 AM

    Most independent appraisers left Contrywide soon after their expansion into wholesale lending in the late 90’s. Appraisers were removed from their internal panel list if the reports reflected a declining housing market.

  • by DigDug | 2/21/2018 1:32:02 PM

    Every mortgage that Countrywide did was done because a borrower wanted that mortgage. Borrowers were whining every day for their properties to appraise high enough for them to be able to get the mortgage they wanted. I know, I heard them. You can criticize Countrywide for a lot of things, but to go after them for this now is a case of someone trying to make a name for themselves and/or finding a deep pocket (BofA now) that doesn't want the publicity that would come of this.

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