The Privilege of Pressure in the Real Estate World

Steve Berman — Tue, 28 Apr 2009 22:02:00 GMT

By Steve Berman

Billie Jean King, a pioneer in women’s tennis once said ‘pressure is a privilege.’ Although she was speaking to her first match in the U.S. Open, the idea is transferable across many industries, including our real estate market.

Those in the real estate world are certainly feeling the pressure and I bet most don't consider it a privilege. Take the recent tragic news from Virginia, where the CFO of Freddie Mac decided to take matters into his own hands. It's a somber and tragic reminder of how burdensome our current financial crisis has become.

But those at the top aren't the only ones feeling the weight, the pressure trickles down to lenders, appraisers, real estate agents and homeowners. For the past year and a half, we've been hearing from these people - our friends and neighbors. Many forced to make gut-wrenching decisions about their homes and livelihoods while under unimaginable pressures.

The home appraisal industry is one where we've seen a lot of ill behavior lately. Big lending companies like Countrywide, Wells Fargo and Bank of America use market share and power to strong-arm appraisers into inflating home values. Then if these independent appraisers refuse, many find themselves on a blacklist and lose a significant portion of their income.

Homeowners have suffered from this scheme as well. If the appraiser inflates the value of the home per the request of the lending arm, the unsuspecting homeowner finds themselves attached to a 30-year loan and paying a mortgage on inflated numbers.

Has anyone's homeownership dream ever included paying inflated fees or trapping themselves into a mortgage they can't afford?

Of course not, but the motivation of the lending giants has nothing to do with helping to fulfill a dream. We think their world is all about profits, profits, profits.

There are many pressures at the top of this world - satisfying board members, shareholders and CEOs by driving in profits and at any cost. We've all seen the effects of this pressure - whether it's a large financial institution filing bankruptcy, significant layoffs, or suspending 401(k) matches, the pressure of sustaining inflated profits has finally collapsed in on itself and now many are left out to dry.

Pressure is a privilege and frankly the more responsibility we have, the more problems we have to deal with - that's no secret. What is so distasteful is how we got ourselves into this mess in the first place.

Kerry Killinger at WaMu knew the loans customers received weren't good, as did Angelo Mozilo at Countrywide - these are former CEOs of major companies, responsible for billions of dollars in profits. I hope they knew right from wrong. But from their actions, I can't be sure. It seems like these folks simply chose to ignore customers for the sake of their mantra "profits, profits, profits."

Sure, the current economic crisis erupted for many reasons. However, the few at the top had the power to guide the market. Unfortunately, they chose to place self-interests ahead of the interests of millions and here we are - feeling trapped beneath the pressure of a failing economy, guising our fear with hope, hope that soon this will all come to an end.

In the meantime, private litigation is a route for homeowners and appraisers seeking recovery and assistance. Our firm has several active cases and investigations, listed below, and we invite you to review and contact us if you have questions or want to join a case.

Homeowner Cases:

Countrywide - claims homeowners unknowingly pay inflated fees for appraisal work through Countrywide and appraisal partner Landsafe.
Wells Fargo - claims homeowners unknowingly pay inflated fees for appraisal work through Wells Fargo and appraisal company Rels Valuation.

Appraiser Cases:

Countrywide - claims the company forces appraisers to inflate appraisal values, if they refuse appraisers find themselves on a blacklist, denied future work. This suit includes work appraisers have done for Landsafe.
Wells Fargo - claims the company forces appraisers to inflate home values, if they refuse they find themselves denied future work and on a blacklist. This suit includes work appraisers have done for Rels Valuation.

Active Investigations:

Bank of America - We're investigating claims Bank of America conspired with Lender Processing Services to overcharge homeowners for appraisals. The scheme, if proven true, places big profits in the companies' pockets and increases fees to homeowners.
Countrywide Predatory Lending - We're investigating several claims against Countrywide and how the company steered customers into bad loans or penalty fees.
KB Home and Countrywide - We're investigating claims that KB Home had agreements with Countrywide Mortgage and its appraiser, Landsafe, to inflate the appraised value of KB homes to meet contract prices. We believe some homeowners may have paid as much as $50,000 above the actual value of their home.

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The Privilege of Pressure in the Real Estate World