FDIC files against CoreLogic
The Federal Deposit Insurance Corporation (FDIC) has filed against CoreLogic for $129 million and demanded a jury trial regarding allegedly faulty appraisals provided to Washington Mutual Bank (WaMu) which the FDIC seized in 2008 prior to facilitating its sale to JP Morgan Chase. The FDIC has also filed suit against CoreLogic competitor Lender Processing Services, Inc. for $154.5 million.
The FDIC, acting as WaMu’s receiver, alleges that they found negligence in 194 appraisals out of 259 they sampled which were performed between 2006 and 2007 in CoreLogic’s eAppraiseIT unit.
The suit alleges “repeated breaches of contractual provisions” specifically regarding competent and legal appraisals which the FDIC claims CoreLogic did not provide, also allegingthat eAppraisalIT had inadequate “quality control” and often “inflated” appraisals.
CoreLogic points out “desk reviews”
CoreLogic has said they have begun their own review of the 194 cases, noting that over 85% of the loans cited in the suit involved “desk reviews” which indicates no physical exterior or interior inspection was performed. As with the LPS lawsuit, the $129 million sought is to cover loans the FDIC says WaMu would not have made without the “inflated appraisals” by CoreLogic’s eAppraiseIT.
In a recent SEC filing, it was noted that CoreLogic “continues to believe the FDIC’s factual allegations, legal theories and damage calculations have many flaws, and the Company intends to defend itself vigorously. Given the early stage of this litigation, the Company cannot yet predict the ultimate outcome of the matter or the potential range of damages, if any.”
All parties named
The suit specifically names CoreLogic Valuation Services, LLC (fka eAppraiseIT), CoreLogic, Inc. (fka The First American Corporation; The First American Financial Corporation; CoreLogic Real Estate Solutions), as the FDIC said that they “controlled and directed the actions” of eAppraiseIT leaving them “directly liable.”