New York state sues California appraisal firm

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We’ve been waiting for a prosecutor somewhere to do something aggressive, and here it is: ‘New York Atty. Gen. Andrew Cuomo today sued First American Corp., a Santa Ana-based title insurance and mortgage appraisal company, on charges of giving overly high assessments of home values in order to win business from a large mortgage lender.’

More from the Los Angeles Times: ‘The suit filed in New York state court accuses First American of caving in to demands from Washington Mutual Inc., the nation’s largest savings and loan, for higher appraisals on home values so that the S&L could close loans at desired prices.’

WAMU is not named in the suit, but its alleged behavior is described: ‘... Washington Mutual soon began complaining that eAppraiseIt’s appraisals were too low, the lawsuit says, and eventually required the company to pick appraisers from a list pre-approved by Washington Mutual that gave higher appraisals. .... Spokesmen for First American and Washington Mutual were not immediately available for comment.’

Instant reader analysis: RK e-mails, ‘This ... is a nationwide shocker because WAMU is one of the few big mortgage lenders left standing.’

Other links: Wall Street Journal: ‘In effect, Cuomo is stepping into an enforcement role that federal regulators have abdicated,’ says Howard Glaser, a mortgage industry consultant. He added that in just a few months of investigations, ‘the attorney general found damning evidence that was readily available to federal regulators.’ More: Calculated Risk.

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Hat tips: RK via e-mail, CD via comment, Doug via comment