Twin federal lawsuits filed in Phoenix and Seattle accuse the nation's two biggest mortgage lenders of using their industry muscle to twist the independent home-appraisal process into a corrupt moneymaking scheme.
Seattle-based law firm Hagens Berman Sobol Shapiro LLP filed the lawsuits and is seeking class-action status in both cases.
Robert Carey, a Hagens Berman lawyer in Phoenix and former Arizona Chief Assistant Attorney General, said Wells Fargo has rigged the appraisal process by using an affiliated management company to bully appraisers into doing the lender's bidding.
Carey filed the complaint Friday in U.S. District Court on behalf of a Scottsdale couple, Grant and Lanie Gomez.
The Seattle lawsuit, filed Jan. 12, makes similar allegations about Countrywide, now a wholly owned subsidiary of Bank of America.
Countrywide spokeswoman Shirley Norton said the Seattle lawsuit is without merit, and Wells Fargo spokeswoman Marjorie Rice said her employer's process for obtaining home-loan appraisals is legitimate.
"We believe our appraisal process is fair, accurate, consistent with all governing appraisal standards, and focused on obtaining objective assessments of the residential properties involved," Rice said.
Both complaints accuse the lenders of violating the Real Estate Settlement Procedures Act, which protects consumers involved in real estate transactions, and the Racketeering and Corrupt Policies Act, best known by its acronym RICO and usually associated with organized crime.
"You don't have to be a gangster," Carey said. "You can just have a scheme that fleeces people out of millions of dollars."
In each complaint, a co-defendant is listed. The Wells Fargo lawsuit names Valuation Information Technology LLC, also called Rels Valuation, the bank's designated appraisal management company.
Likewise, Countrywide's appraisal management company, LandSafe, is a co-defendant in the Seattle lawsuit.
An appraisal management company arranges with third-party appraisal firms to appraise each property involved in a new or refinanced mortgage loan.
The lawsuits claim those companies drove down the price of appraisals by threatening to blacklist appraisers who didn't agree to the lower fees, but continued to charge the bank's customers a higher rate.
They also accuse the firms of threatening to blacklist appraisers that did not provide whatever appraisal amount the banks were seeking for each home.