Before 2008, home values had exploded. For example, a home in Tampa’s Seminole Heights neighborhood appraised for $286,000 in 2006. By the time it was auctioned off in 2012, the bank received just $60,000 for the home.
Llano Financing Group, based in Texas, filed eight separate lawsuits targeting appraisers and their companies for damages associated with foreclosure losses.
Three of them seek damages totaling nearly $1 million.
Llano argues appraisers negligently overvalued an area home in 2005 or 2006. In the three lawsuits analyzed against Jodi Brown and George Vecchio of the Appraiser Group of Florida, Sharon Griffith and Griffith Real Estate Appraisal Services and Melissa Lester and Metro-West Appraisal Company, owners who had purchased those homes defaulted.
The lender was forced to foreclose on the properties and resell the homes. Those sales all came in 2012 and reportedly fell hundreds of thousands of dollars short of the borrowers’ outstanding loan balance.
The lawsuit alleges appraisers compared the properties to dissimilar properties, failed to abide by normal appraisal practices and intentionally made false statements to the lenders in order to issue loans.
Lenders rely on appraisals when determining whether to issue a loan. If an appraisal is more than what a home is selling for, it’s typically a safe bet that the lender will be able to recoup its investment if a borrower defaults.
In many cases associated with the real estate crash, home values had devalued intensely post 2008.
Appraisers are likely to argue they did nothing wrong because the appraisals were consistent and normal at the time among the entire industry. There’s also a reasonable argument that lenders were perfectly content to accepting the high appraisal values. And, as the predatory lending allegations go, they may have even demanded the high appraisals in order to command higher profits.
On top of the arguments appraisers could reasonably make, Llano is not even the original lender. Llano claims it acquired rights to sue the appraisers from Impac Funding who had acquired the loans from original lenders.
It is not uncommon, however, for original lenders and even secondary lenders to sell off loans to other companies.
