Knowing that inflated appraisals is a part of the reason that Florida real estate is in such a huge, horrible mess isn’t news to many who are following events in the local real estate market. However, now it appears that the federal government is taking notice.
One example was last month’s filing in a California district court of a $283,500,000 million lawsuit on behalf of the now-defunct WaMu (Washington Mutual Inc.) by the Federal Deposit Insurance Corp. against defendants Lender Processing Services Inc. of Jacksonville, Florida and a California company named CoreLogic Inc.
Florida’s LPS Appraisals Rarely Bothered to Follow Accepted Appraisal Standards (96% Nonconforming)
In the complaint, the Florida appraisal company is being sued for $154,500,000 for “egregious violations” of established appraisal standards in over 220 appraisals that were done in a two year period (2006-2008). In fact, the FDIC alleges that 96% of the appraisals done by Lender Processing Services Inc. failed to follow the accepted practices of Florida appraisers.
USPAP – The Well-Recognized Standards that Appraisers Should Follow
Uniform Standards of Professional Appraisal Practice (USPAP) are the rules and regulations that all licensed appraisers in the United States should follow. In Florida, the Florida Real Estate Appraisal Board (FREAB) not only oversees compliance with real estate appraiser licensing ( see Chapter 475, Part II, Florida Statutes), the FREAB also has the authority to pass rules with which Florida appraisers must abide, including the USPAP which appear as part of Chapter 61J1, Florida Administrative Code (see also Chapters 20, 120, 215, and 455 of the Florida Statutes).
The actual complaint, filed in the United States District Court for the Central District of California, can be read and downloaded here.
As a result of this case and others, we are examining our client files to determine if they have a claim against the appraiser who valued their home for either appraisal negligence or fraud. This could open a new front in the foreclosure mess which seems never ending.
