Tuesday, August 7, 2012

WASHINGTON MUTUAL BANK MORTGAGES IDENTIFIED IN LAWSUIT FILED BY FDIC AGAINST LSI APPRAISALS, LPS, AND LENDER PROCESSING SERVICES TAX SOLUTIONS

A MURDER OF CROWS
 This post discusses a federal court case filed by FDIC as Receiver of Washington Mutual Bank on the basis of appraisal fraud  and negligence and argues that 75% of WaMu home mortgages with properties appraised by LSI Appraisals Inc contained egregious and errors costly to borrowers and the lender alike.  Within the original complaint Exhibit C is proving to be a veritable nugget of gold in that it contains direct information about 220 WaMu loans made in 2006-2007 based on appraisals by LSI.  The FDIC made this information a matter or public record yet in other lawsuits being waged by distressed homeowners the FDIC refuses to produce any documentation as to how they arrived at their conclusions.  What is noteworthy is that the loans had major write-offs that occurred before September 20, 2008 when WaMu became a failed bank and was put into Receivership with the FDIC.  As usual the FDIC and JPMorgan Chase Bank NA are playing games with homeowners, courts, judges and juries across the land.  The name of the game is "OBFUSCATE" meaning to darken, to make obscure, to be evasive, unclear or confusing.  The crows OBFUSCATE by refusing to comply with discovery so that the scales of justice weigh wrongfully in their favor.  An absence of justice anywhere is an absence of justice everywhere.  It's time the Crows at FDIC, JPMorgan Chase Bank NA, and LPS were held to account and are required to comply with discovery. Exhibit C may be helpful to victims of foreclosure and the bad acts of WaMu, Chase, the FDIC and related alter-egos.



On May 9, 2011 as Plaintiff, the FDIC as Receiver of Washington Mutual Bank filed a complaint against LSI Appraisal, LLC; Fidelity National Information Services, inc, Lender Processing Services Inc; Lender Processing Services LLC; LPS Property Tax Solutions Inc, f/k/a Fidelity National Tax Service, Inc; LSI Title Company; and LSI Title Agency in US District Court, Central California, Santa Ana, Case Number 8:11-cv-00706-JST-MLG.  The FDIC brings this case in its capacity as Receiver of the failed bank, Washington Mutual Bank, claiming that WaMu suffered as a direct and proximate result of the gross neglicence of LSI Appraisal, LLC and its repeated breaches of contractual provisions designed to protect the bank. (Links to Complaint, Exhibit C, and 2nd Amended Complaint are at bottom of page.)

In July 2006 WaMu hired LSI to provide appraisal services for residential properties in all fifty states and the District of Columbia. LSI represented and warranted that each and every appraisal service it provided would conform too federal and state law, regulatory guidelines, and all applicable industry standards.  LSI agreed to serve as the "gatekeeper" with respect to the appraisal services it provided for WaMu. Further LSI agreed to insure the competency and qualifications of its appraisers to conduct a meaningful quality control review of the appraisals and to police WaMu's loan staff and act as an intermediary between WaMu's loan originators and LSI's appraisers.  LSI promised to inform WaMu of any inappropriate contacts or requests by WaMu employees concerning an appraisal or the assignment of an appraisal. (See exhibit A, page 29 of the Complaint).

LSI provided appraisal services from July 2006 through November 2007.  During this period LSI provided or approved more than 386,000 appraisals for residential loans that WaMu originated or purchased.  WaMu quickly became LSI's largest client.  WaMu paid LSI over $127 million for its services.

   

EXHIBIT C of the Complaint identifies at least 220 loans made by WaMu in reliance on LSI's appraisal services.  Each loan was held by WaMu for investment and allegedly not sold into the secondary market. These loans are identified by Loan Number, Original Amount, Loss Amount, Loan Date, Property Address, City, State and Appraiser.  See Exhibit C link below which sets forth basic information and sets forth the damages to WaMu with respect to each loan.  The damages total $154,519,071.  Exhibit D of the Complaint contains the key to a code number explaining the primary deficiencies in each of the 220 appraisals. 

FDIC contends that LSI did not for the most part conduct any meaningful, substantive review of the 220 appraisals provided to WaMu.  As of 5/0/2011 the FDIC had reviewed in depth only 292 of the thousands of appraisals for WaMu.  Based on FDIC analysis, less than 4% of the appraisals were found to be fully compliant with applicable professional standards.  75% of appraisals reviewed were found to contain multiple egregious violations of USPAP and applicable industry standards.  WaMu relied on these appraisal services when making residential loans to its borrowers.WaMu would not have made these residential loans but for the inflated appraisals provided or approved by LSI.

 One example cited is Loan No. 3017902135 on Exhibit C.  In May 2007 LSI appraised a property in Agoura Hills California for $5,540,000 that resulted in a $4,155,000 loan.  The appraiser failed to adequately analyze the subject property contract or listing history as called for by the Fannie Mae Uniform Residential Appraisal Report form.  The subject property's original listing price was $4,795,000 which was increased to $5,200,000 on January 22, 2007, then again to $5,540,000 (the contract price) On January 24, 2007.  By failing to adequately analyze the subject contract and listing history, the appraiser failed to disclose that the contract price was actually $340,000, or 6.5%, higher than the already increased listing price, despite having been on the market for 485 days. The appraiser disclosed the prior site-only sale for $1,295,000, although he failed to explain how, 18 months later, he valued the site at $3,000,000. The appraiser provided inappropriate comparables. In the end the borrower defaulted on the loan, and WaMu charged of $1,391,500.15.

VIEW DOCUMENTS OBTAINED THROUGH PUBLIC RECORDS:

 

FDIC as RECEIVER of WASHINGTON MUTUAL BANK  v  LSI APPRAISALS, LENDER PROCESSING SERVICES INC, LPS PROPERTY TAX SOLUTIONS -- COMPLAINT WITH EXHIBITS Filed 5/9/2011 US District Court, Central California, Santa Ana 8:11-cv-00706-JST-MLG - Case 8:11-cv-00706-JST-MLG

EXHIBIT C 

FDIC as Reciever of Washington Mutual Bank v LSI Appraisals LLC and LPS Property Tax  Solutions Inc   -- Second Amended-Complaint  -- Case 8:11-cv-00706-JST-MLG





2 comments:

  1. LSI UTILIZED THE CHEAPEST APPRAISER AND DID NOT CARE ABOUT QUALITY JUST THEIR OWN PROFIT. WAMU DID NOT GET WHAT THEY PAID FOR AND AS A RESULT WENT UNDER. AMC'S SHOULD BE BANNED AND APPRAISERS SHOULD BE CONTRACTED DIRECTLY BY THE LENDER.

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  2. While the IRS offers amnesty programs for criminal tax evasion, the state tax amnesty programs are more likely to be applicable to the average taxpayer. State governments often run tax amnesty programs to boost revenue. The programs are available periodically, and usually allow taxpayers with past due balances to pay their balances off without paying the penalties and sometimes without interest as well.

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