Court Rules NY Can Pursue Suit Alleging Inflated Appraisals
New York's top court on Tuesday ruled that the state attorney general may pursue allegations that First American Corp. and its former subsidiary eAppraiseIT inflated property appraisals under pressure from client Washington Mutual. However, the court ruled only on the issue of jurisdiction and not the merits of the attorney general's claims. Then-Attorney General Andrew Cuomo brought the 2007 civil suit alleging the practice contributed to the national subprime mortgage crisis. The Court of Appeals concluded federal law and regulations do not pre-empt the state claims alleging fraud and violations of real estate appraisal rules. The 1989 Financial Institutions Reform, Recovery and Enforcement Act, which followed the federal savings and loan crisis, “sanctions the establishment and use of state agencies dedicated to certifying and licensing appraisers and delineates requirements for using these appraisers in federally related transactions,” Judge Carmen Beauchamp Ciparick wrote.
