Appraisers say WaMu cut corners to increase

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Appraisers say WaMu cut corners to increase its mortgage business
By Susan Kelleher

Seattle Times staff reporter

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ERIKA SCHULTZ / THE SEATTLE TIMES

Graham Albertini appraises a Burien home for a prospective buyer. Albertini previously worked for WaMu and now works for a Mercer Island firm.

ERIKA SCHULTZ / THE SEATTLE TIMES

Graham Albertini said WaMu’s home-lending safeguards began to deterioriate in 2001 as it chased a larger share of the mortgage market. Now he works as a private appraiser.
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Washington Mutual’s mortgage woes come as no surprise to Graham Albertini, a real-estate appraiser who worked at WaMu’s Bellevue office when its mortgage business was going gangbusters.

Over eight years, Albertini said, he watched the bank trade safety for speed in its home-lending operations. The trade-off, he said, eroded fundamental safeguards put in place to protect WaMu from lending more against homes than they were worth.

When Albertini began working for WaMu in 1999, most mortgages were supported by a complete appraisal, which included an on-site property inspection, detailed measurements of the house and a physical drive-by of comparable homes by bank appraisers to determine if the house was worth what the buyer was willing to pay for it.

Every appraisal was given a cursory review, while pricier homes and houses with unusual features or circumstances were given an even closer review by a second certified appraiser. If everything checked out, the loan was sent to the bank’s underwriting department for completion.

“Up until 2001, it was a pretty good system. Every appraisal was looked at by a human being,” said Albertini, who now works for American Home Appraisals on Mercer Island.

But as loan volume increased, so did the pressures — and the incentives — for WaMu appraisers to work faster and bypass safeguards that could have protected the bank against the high-risk mortgages now dragging it down, Albertini and other appraisers say.

“It’s the elimination of oversight in pursuit of profit. … That’s a formula for a breakdown,” said appraiser Richard Hagar, who works with Albertini and regularly trains other colleagues and law-enforcement fraud investigators on appraisal standards.

WaMu did not respond to several requests for comment. It recently announced it would lay off up to 3,000 employees, cut shareholder dividends and shutter its free-standing home-loan operations. In the latest four quarters it has set aside about $6.4 billion to cover loan losses, and financial analysts say the bank could lose up to $16 billion more…..

…/http://seattletimes.nwsource.com/html/businesstechnology/2004349486_wamuappraise150.html

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Any comment Bugs?

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Any comment Bugs?

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Any comment Bugs?

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Any comment Bugs?

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Any comment Bugs?

[Bugs]

110% True.

WAMU had a good system in place. Their performance with appraisals varied a bit depending on locale. Here in San Diego they had a good crew – right up until they laid all of them off back in 2006.

From there it went downhill in the space of just a few months. By the end of 2006 they were taking in trash appraisals without even a second glance.

The ex-WaMu appraiser probably got laid off at that time. WaMu replaced their staff by outsourcing the work to 2 budget appraisal management companies (AMCs) that were notorious for shoddy work. At first, WaMu tried to force these AMCs to contract with former WaMu appraisers and give them priority on those assignments – that only lasted a couple months because those appraisers wouldn’t work for the fees or the hassles that the AMCs wanted to run.

Then WaMu started ranking the AMC appraisers by how “cooperative” they were as far as signing off on deals. Those appraisers who had good cooperation scores were put on WaMu’s preferred list and were ekpt busy. Those that weren’t were put on the back burner and basically starved of work.

Enough complaints came in and enough examples of misconduct were provided during the Ny Attorney General’s investigation into predatory lending that he started investigating WaMu. He came across an email trail; a series of about 50 emails between WaMu and one of the AMCs.

In these emails, the one AMC (E-appraiseIT, based out of Poway) solicited WaMu for an increase in the percentage of WaMus business that they were handling. WaMus executives replied: “Sure, we might be able to do something about giving you more business but that would be dependent on you increasing your cooperation with us in getting more deals through”. The emails show E-appraiseIt execs debating whether to take the bait, and then eventually show that they did.

Supposedly the NY AG (Mario Cuomo) has just as much evidence against the other AMC (Lender Services Inc), as well as evidence against several other lenders. I say that so that nobody gets the idea that WaMu was especially bad in relation to the other lenders – most of them seem to have been doing it to one extent or another.

Simply put, when times were good many of the lenders did whatever they could to gut the various measures of due diligence in favor of automated processes that were a lot less expensive and a lot more superficial. Due diligence is an overhead for them, not a profit center.

[Bugs]

110% True.

WAMU had a good system in place. Their performance with appraisals varied a bit depending on locale. Here in San Diego they had a good crew – right up until they laid all of them off back in 2006.

From there it went downhill in the space of just a few months. By the end of 2006 they were taking in trash appraisals without even a second glance.

The ex-WaMu appraiser probably got laid off at that time. WaMu replaced their staff by outsourcing the work to 2 budget appraisal management companies (AMCs) that were notorious for shoddy work. At first, WaMu tried to force these AMCs to contract with former WaMu appraisers and give them priority on those assignments – that only lasted a couple months because those appraisers wouldn’t work for the fees or the hassles that the AMCs wanted to run.

Then WaMu started ranking the AMC appraisers by how “cooperative” they were as far as signing off on deals. Those appraisers who had good cooperation scores were put on WaMu’s preferred list and were ekpt busy. Those that weren’t were put on the back burner and basically starved of work.

Enough complaints came in and enough examples of misconduct were provided during the Ny Attorney General’s investigation into predatory lending that he started investigating WaMu. He came across an email trail; a series of about 50 emails between WaMu and one of the AMCs.

In these emails, the one AMC (E-appraiseIT, based out of Poway) solicited WaMu for an increase in the percentage of WaMus business that they were handling. WaMus executives replied: “Sure, we might be able to do something about giving you more business but that would be dependent on you increasing your cooperation with us in getting more deals through”. The emails show E-appraiseIt execs debating whether to take the bait, and then eventually show that they did.

Supposedly the NY AG (Mario Cuomo) has just as much evidence against the other AMC (Lender Services Inc), as well as evidence against several other lenders. I say that so that nobody gets the idea that WaMu was especially bad in relation to the other lenders – most of them seem to have been doing it to one extent or another.

Simply put, when times were good many of the lenders did whatever they could to gut the various measures of due diligence in favor of automated processes that were a lot less expensive and a lot more superficial. Due diligence is an overhead for them, not a profit center.

[Bugs]

110% True.

WAMU had a good system in place. Their performance with appraisals varied a bit depending on locale. Here in San Diego they had a good crew – right up until they laid all of them off back in 2006.

From there it went downhill in the space of just a few months. By the end of 2006 they were taking in trash appraisals without even a second glance.

The ex-WaMu appraiser probably got laid off at that time. WaMu replaced their staff by outsourcing the work to 2 budget appraisal management companies (AMCs) that were notorious for shoddy work. At first, WaMu tried to force these AMCs to contract with former WaMu appraisers and give them priority on those assignments – that only lasted a couple months because those appraisers wouldn’t work for the fees or the hassles that the AMCs wanted to run.

Then WaMu started ranking the AMC appraisers by how “cooperative” they were as far as signing off on deals. Those appraisers who had good cooperation scores were put on WaMu’s preferred list and were ekpt busy. Those that weren’t were put on the back burner and basically starved of work.

Enough complaints came in and enough examples of misconduct were provided during the Ny Attorney General’s investigation into predatory lending that he started investigating WaMu. He came across an email trail; a series of about 50 emails between WaMu and one of the AMCs.

In these emails, the one AMC (E-appraiseIT, based out of Poway) solicited WaMu for an increase in the percentage of WaMus business that they were handling. WaMus executives replied: “Sure, we might be able to do something about giving you more business but that would be dependent on you increasing your cooperation with us in getting more deals through”. The emails show E-appraiseIt execs debating whether to take the bait, and then eventually show that they did.

Supposedly the NY AG (Mario Cuomo) has just as much evidence against the other AMC (Lender Services Inc), as well as evidence against several other lenders. I say that so that nobody gets the idea that WaMu was especially bad in relation to the other lenders – most of them seem to have been doing it to one extent or another.

Simply put, when times were good many of the lenders did whatever they could to gut the various measures of due diligence in favor of automated processes that were a lot less expensive and a lot more superficial. Due diligence is an overhead for them, not a profit center.

[Bugs]

110% True.

WAMU had a good system in place. Their performance with appraisals varied a bit depending on locale. Here in San Diego they had a good crew – right up until they laid all of them off back in 2006.

From there it went downhill in the space of just a few months. By the end of 2006 they were taking in trash appraisals without even a second glance.

The ex-WaMu appraiser probably got laid off at that time. WaMu replaced their staff by outsourcing the work to 2 budget appraisal management companies (AMCs) that were notorious for shoddy work. At first, WaMu tried to force these AMCs to contract with former WaMu appraisers and give them priority on those assignments – that only lasted a couple months because those appraisers wouldn’t work for the fees or the hassles that the AMCs wanted to run.

Then WaMu started ranking the AMC appraisers by how “cooperative” they were as far as signing off on deals. Those appraisers who had good cooperation scores were put on WaMu’s preferred list and were ekpt busy. Those that weren’t were put on the back burner and basically starved of work.

Enough complaints came in and enough examples of misconduct were provided during the Ny Attorney General’s investigation into predatory lending that he started investigating WaMu. He came across an email trail; a series of about 50 emails between WaMu and one of the AMCs.

In these emails, the one AMC (E-appraiseIT, based out of Poway) solicited WaMu for an increase in the percentage of WaMus business that they were handling. WaMus executives replied: “Sure, we might be able to do something about giving you more business but that would be dependent on you increasing your cooperation with us in getting more deals through”. The emails show E-appraiseIt execs debating whether to take the bait, and then eventually show that they did.

Supposedly the NY AG (Mario Cuomo) has just as much evidence against the other AMC (Lender Services Inc), as well as evidence against several other lenders. I say that so that nobody gets the idea that WaMu was especially bad in relation to the other lenders – most of them seem to have been doing it to one extent or another.

Simply put, when times were good many of the lenders did whatever they could to gut the various measures of due diligence in favor of automated processes that were a lot less expensive and a lot more superficial. Due diligence is an overhead for them, not a profit center.

[Bugs]

110% True.

WAMU had a good system in place. Their performance with appraisals varied a bit depending on locale. Here in San Diego they had a good crew – right up until they laid all of them off back in 2006.

From there it went downhill in the space of just a few months. By the end of 2006 they were taking in trash appraisals without even a second glance.

The ex-WaMu appraiser probably got laid off at that time. WaMu replaced their staff by outsourcing the work to 2 budget appraisal management companies (AMCs) that were notorious for shoddy work. At first, WaMu tried to force these AMCs to contract with former WaMu appraisers and give them priority on those assignments – that only lasted a couple months because those appraisers wouldn’t work for the fees or the hassles that the AMCs wanted to run.

Then WaMu started ranking the AMC appraisers by how “cooperative” they were as far as signing off on deals. Those appraisers who had good cooperation scores were put on WaMu’s preferred list and were ekpt busy. Those that weren’t were put on the back burner and basically starved of work.

Enough complaints came in and enough examples of misconduct were provided during the Ny Attorney General’s investigation into predatory lending that he started investigating WaMu. He came across an email trail; a series of about 50 emails between WaMu and one of the AMCs.

In these emails, the one AMC (E-appraiseIT, based out of Poway) solicited WaMu for an increase in the percentage of WaMus business that they were handling. WaMus executives replied: “Sure, we might be able to do something about giving you more business but that would be dependent on you increasing your cooperation with us in getting more deals through”. The emails show E-appraiseIt execs debating whether to take the bait, and then eventually show that they did.

Supposedly the NY AG (Mario Cuomo) has just as much evidence against the other AMC (Lender Services Inc), as well as evidence against several other lenders. I say that so that nobody gets the idea that WaMu was especially bad in relation to the other lenders – most of them seem to have been doing it to one extent or another.

Simply put, when times were good many of the lenders did whatever they could to gut the various measures of due diligence in favor of automated processes that were a lot less expensive and a lot more superficial. Due diligence is an overhead for them, not a profit center.

[farbet]

Bugs, your insight and views are greatly appreciated

[farbet]

Bugs, your insight and views are greatly appreciated

[farbet]

Bugs, your insight and views are greatly appreciated

[farbet]

Bugs, your insight and views are greatly appreciated

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