Homeowners Angry at Washington Mutual's Appraisal Tactics

Piscataway, NJMore and more homeowners are complaining that they were given inflated appraisals on the value of their homes by Washington Mutual. The problem is that now they owe more on the home than what it is actually worth, and with the housing market dropping, many are facing foreclosure.

Peggy B. (not her real name), says, "My home is in foreclosure status because the mortgage payments are disproportionate to the value of my home. This transaction has ruined my life—emotionally, financially and health-wise."

Other people have complained that Washington Mutual will not shift from the over-appraised value of the home, preferring instead to try selling the home for its appraised value. Tracy P. (not her real name) says, "My house was over-appraised and I tried to short sale the home. They will not move from the over-appraised value. In addition, prices have dropped in my market and they refuse to acknowledge that the trends are going lower."

Homeowners are now left wondering if they paid more for their home than they needed to. One review of nine post-closing appraisals by Washington Mutual's preferred appraisers found that appraisals were inflated for between $5,000 and $720,000.

According to the [Washington Post], a 2006 national survey of appraisers found that 90 percent of 1,200 appraisers have been pressured to inflate the appraisal of a home. A similar study conducted in 2003 found that 55 percent reported being pressured. Furthermore, two out of three appraisers who refused to inflate a home's appraisal lost their client's business entirely and many did not get paid properly for the work they had done.

Washington Mutual allegedly pressured an appraisal company to use appraisers from Washington Mutual's list of preferred appraisers. However, even when preferred individuals were not used, it appears that Washington Mutual pressured appraisers directly to change their reports. New York Attorney General Andrew Cuomo, in his lawsuit against eAppraiseIT, cited emails between Washington Mutual, eAppraiseIT and individual appraisers. In one email to eAppraiseIT, the appraiser writes,

"This is the second Wamu Appraisal quality assurance issue I have received from Wamu in the past 2 months. Both as a result of an appraisal I completed that did not come in to their predetermined value for a 'valued' Wamu client. I was pressured for 2 weeks to change both my value and the conditions of my appraisal report...both of which were violations of USPAP, FANNIE MAE and the Supplemental Standards I am required to observe and am bound by my license to complete."

An inflated home appraisal can do a lot of damage to a homeowner. First, the appraised value of the home is taken into account when determining the loan that the homeowner will receive, the monthly payments due and the APR. This could then mean that the homeowner has paid more for her home than it was worth and result in an inflated mortgage. Homeowners who need to refinance will have problems because other lenders would not accept the inflated home value, so refinancing would be next to impossible.

Homeowners who have been affected by Washington Mutual's inflated appraisals are investigating the possibility of a lawsuit against the company. They could be eligible for proper appraisals, compensation for overpayment and punitive damages if it is proven that Washington Mutual knowingly broke the law.