Ooh, this is getting fun. Peter W found this tidbit in the May 10 Lender Processing Services 8K:
The Federal Deposit Insurance Corporation, in its capacity as Receiver for Washington Mutual Bank, filed a complaint on May 9, in the U.S. District Court for the Central District of California to recover alleged losses of approximately $154,519,000. 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, an appraisal management company. In particular, the FDIC claims that the services provided failed to conform with federal and state law, regulatory guidelines and other industry standards, including specifically the provisions of the Uniform Standards of Professional Appraisal Practice. LPS previously described the possibility of this suit in its Form 10-Q filed May 5. In its complaint, the FDIC cites, as the cause of the damages claimed, 220 appraisals performed between June 2006 and May 2008. However, for more than 75% of the appraisals identified by the FDIC, LSI was contracted only to provide reviews of appraisals, not to conduct the initial, full appraisals. For these properties, the full appraisals were provided by other entities, unrelated to LSI. 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.
Let us state the obvious: LPS is not set up to do anything on a one-off basis. If the FDIC’s case pans out with WaMu, you can rest assured that other parties have grounds for similar litigation.
This is good, but I wonder how it affects the now-fizzling 50-state AG “settlement” in yesterday’s NC post.
People may be forgiven for assuming that this too will be settled for a fractional, cost-of-business nuisance fine, and suspecting that it may in fact be a precedent-setting Trojan horse suit designed to preempt a crippling blow to the RE rackets and establish blanket immunity for looters as is now the undeniable pattern of captured regulators.
Did you see this: http://swampland.time.com/2011/05/09/foreclosure-probe-chief-asked-bank-lawyers-for-money/
Forgive me, Yves, for posting links. I read your “plant” article last week & how folks should behave in comments & not post links, but I couldn’t resist this one time…lots of positive stuff in foreclosure land going on today.
Could this finally be the end of LPS? I hope so.
Suing entities that would vaporize the minute they lost in court, with no recovery of funds and no assets to grab, is brilliant….nobody goes to jail, no one pays anything back, but the prosecutors get to say “See, Look, we prosecuted a corporation and put them out of business! We are on the ball!”
A good con requires convincing the mark that justice will be served….by that measure, this multi-year effort has been a fantastic con.
FDIC is not the only party in this 3-D chess game that can sue.
So there’s an upside.
I wonder how this would effect the WAMU bankrupcy. The bondholders have to sumbit a vote to accept the current modified plan by 5/13.
There’s not enough time from 5/10 to 5/13.
Funny, there doesn’t seem to be anything about this on HousingWire. Gee, I wonder why?
wa mu order appraisals from a company call e appraise it. they used them under the agreement that they would only send work to their perferred appraisers,,aka number hitters,,,LSI was hired to review these files,,they hired people who may have never even been in the state,,it was a scam,,the amcs made serious money and the actual appraisers made peanuts,,,,LPS made 4 million plus in the first quarter,,they have some cash but I agree this is a shell game…
why borrowers use large lenders like boa, chase, wells etc is beyond me….
USPAP (Uniform Standards of Professional Appraisal Practice)make it clear that the reviewer assumes the responsibility of the original appraiser, no exception. LSI is a known (in the industry) as as made as instructed AMC (appraisal management “mangler” company) they bench honest appraisers and give preference to making the deal work over USPAP.
Interesting. I wonder why Paul Jackson has not written about this suit? Could it be because LPS owns a part of Housing Wire? That’s sure been the word on the street in the industry for a while now….hmmmmmm…….
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