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News for Real Estate Investors and Landlords — appraisals

HELOC Class Action Lawsuit

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Lawyers filed a class action lawsuit against Chase for illegally freezing Home Equity Lines of Credit in early 2009. The lawsuit alleges that Chase wanted to stop cash outflows during the economic downturn.  It couldn't just "cancel" the HELOCs if homeowners were current in their payments, though.  As a result, the lawsuit says, Chase reappraised the properties using: NOT an appraiser; NOT an appraisal management company; NOT a real estate agent Broker Price Opinion or Competitive Market Analysis; Instead, they used artificial intelligence software called AVMs-Automated Valuation Models Because of built-in weaknesses in the AVM, the "appraisal" can be dramatically...

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FDIC Sues 89 Appraisers for Bad Bank Loans

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The FDIC has sued two appraisal management companies (AMCs) and 89 appraisers for faulty appraisals that led to the collapse of Washington Mutual in September 2008. The lawsuit alleges gross negligence and breach of contract, and seeks slightly over $129 million in damages. The complaint charges the AMCs with hiring inexperienced appraisers who provided substantially inflated real estate values.The whole appraisal process, as described in the lawsuit, was pretty frightening.  The AMCs hired inexperienced low-fee appraisers who could deliver turnaround times of a few days.  When completed, each appraisal was transmitted to Bangalore, India for "administrative review." This consisted of...

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