In 2016, Hagens Berman filed a nationwide class-action lawsuit against Bank of America, Countrywide Financial and appraisal firm, LandSafe Inc. on behalf of a class of home buyers accusing the suit's defendants of carrying out a series of phony appraisals in an attempt to secure more loans.
The 52-page suit, filed in the U.S. District Court for the Central District of California, states that from 2003 to 2008 Bank of America and Countrywide conducted a "devious scheme" to circumvent their legal obligations. "The scheme allowed Defendants to eliminate the delay associated with performing and fulfilling the strict requirements of a USPAP (Uniform Standards of Professional Appraisal Practice) appraisal, and rapidly close loans, all to the financial detriment of consumers who were forced to pay for legally-mandated USPAP 'appraisals' that were never performed." During this period, Countrywide became the largest home mortgage lender in the United States, having originated over $400 billion in loans each year, and also rose to become a leader in the securitization of home loans, reaping hefty profits based on quantity - not quality - of the loans it sold to Wall Street investors, according to the complaint.
The lawsuit accuses Bank of America and Countrywide of producing illegitimate appraisal reports, based on predetermined values that favored Countrywide's cause of rapidly closing loans: "Countrywide and LandSafe agreed to knowingly, fraudulently, systematically and uniformly produce phony so-called USPAP “appraisals” on home loans originated by Countrywide which were not performed in accordance with required USPAP standards and/or were performed with indifference to the appraisal’s accuracy for the purpose of facilitating the sale of a home financed by a Countrywide loan."
Countrywide and LandSafe passed off these falsely performed appraisals to borrowers, duping them into believing they complied with the applicable legal and ethical USPAP standards, and then required borrowers to pay between $300 and $600 for these phony documents that only served to feed the defendants' get-rich-quick scheme.
This coordinated effort between Bank of America, Countrywide and LandSafe was in direct violation of the Racketeer Influenced and Corrupt Practices Act, the Real Estate Settlement Procedures Act, and state statutory and common laws, according to attorneys.
CASE TIMELINE
A California federal judge has certified a nationwide class of borrowers accusing Countrywide Financial Corp. of using inflated real estate appraisals to juice its loan origination business during the mid-2000s, turning back arguments from the company and its successor Bank of America that the borrowers won’t be able to back up their racketeering claims with common proof.
