Mortgage Daily Logo

FDIC Sues AMC

Mortgage News

Alleged faulty appraisals have the Federal Deposit Insurance Corp. looking to the courts to recover more than $150 million in losses on loans from a failed bank. But the defendant, an appraisal management company, claims it was mostly reviewing appraisals completed by other firms.

The appraisals were performed for Washington Mutual Bank by LSI Appraisal LLC between June 2006 and May 2008.

The FDIC, which was named receiver of the bank when it failed in 2008, is zeroing in on just 220 reports.

LSI parent Lender Processing Services Inc. said in a public filing that the lawsuit was filed Monday in U.S. District Court for the Central District of California. The FDIC hopes to recover $154,519,000 as a result of losses suffered from the appraisals.

“The FDIC contends these losses were a direct and proximate result of the defendants’ alleged breach of contract with WaMu and alleged gross negligence of the defendants with respect to the provision of certain services by LPS’s subsidiary LSI Appraisal LLC, an appraisal management company,” the filing stated.

LPS, which first warned of the potential litigation last week, said the FDIC claims that the AMC’s services failed to conform with federal law, state law and regulatory guidelines. It also allegedly violated other industry standards, including provisions of the Uniform Standards of Professional Appraisal Practice.

The mortgage service provider explained that it provided only appraisal reviews on three-quarters of the reports identified by the FDIC. Those appraisals were performed by unrelated companies.

“For all appraisals subject to this complaint, LPS believes there is no basis for a claim that LSI engaged in ‘gross negligence’ or breach of contract related to these appraisal services,” the filing stated. “A review, by definition, and as originally agreed to by LSI and Washington Mutual, is not a product to be used for assigning a value to a property.”

LSI claims that its appraisers meet industry standards and undergo well-documented and rigorous evaluations.

The losses, according to LSI, are the result of bad underwriting, high defaults and a struggling economy and not because of its reports.

“LPS contends that the services LSI provided satisfied the terms and conditions of its contract with WaMu and were not performed with gross negligence,” the filing concluded. “LPS stands firmly behind the integrity of the services it provides to the mortgage industry and intends to vigorously defend itself against these allegations.”

Related Posts

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Mortgage Servicer Portfolios

servicing news | mortgages outstanding statistics | foreclosure news   Servicing Portfolios as of 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 Residential Servicing Portfolios by Servicer Last Updated December 14, 2018...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Fannie Mae Profile

Last Updated December 27, 2018 7:38 PM Central   full list | other directories | bank search | SEC filings | execs | m&a | production   Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move --...

NewDay USA CEO Rob Posner Expects 10% Increase in 2019 Mortgage Loan Volume

Freddie Mac Profile

Government Takes Over Fannie, Freddie Sept. 8, 2008 The government has seized control of Fannie Mae and Freddie Mac. The move -- which is likely to push mortgage rates lower and provide a sense of stability for the more than 10,000 employees at both companies -- is a...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI