Wachovia Corp. is facing a lawsuit claiming it underpays its in-house appraisers, whom the company has repeatedly called the bedrock of its underwriting of option adjustable-rate mortgages.
The lawsuit, filed March 18 in U.S. District Court for the Middle District of Florida by an Orlando appraiser who joined Wachovia after it bought Golden West Financial Corp. in October 2006, claims that the Charlotte company did not properly compensate appraisers for overtime work.
The plaintiff is seeking class-action status, which would open the suit to any of the $783 billion-asset company's 1,000 appraisers.
Annette Peyovich, the appraiser who sued, also claimed that a Wachovia manager had "unlawfully reduced" her reported overtime hours and that she had been "chastised, called inefficient, and admonished for reporting her actual hours" and punished for complaining about the process to a supervisor.
The lawsuit is seeking unspecified damages and attorney's fees.
A Wachovia spokeswoman said the company does not comment on pending litigation.
A call to Nathan McCoy, the lawyer who represents Ms. Peyovich, was not immediately returned.
Charles Craver, a law professor at George Washington University, said in an interview Monday that such lawsuits, under the Fair Labor Standards Act, have become more common in the past decade, with Wal-Mart Stores Inc. among the highest-profile defendants.
"It seems like a boilerplate case, and a lot of companies have been losing them," Prof. Craver said.
The lawsuit, which was first reported Friday in the Charlotte Business Journal, alleges that Wachovia classified its appraisers as nonexempt employees after buying Golden West.
Prof. Craver said this classification typically requires an employer to pay overtime. He said the suit's more serious charge is that Wachovia managers may have altered the overtime reported, meaning the company could be required to pay double the wages owed.
Wachovia has repeatedly promoted its arsenal of in-house appraisers as distinguishing its option adjustable-rate mortgage portfolio from those of the industry's other top originators for purposes of evaluating the terms of a loan and deciding how to dispose of one in foreclosure.
Donald Truslow, Wachovia's chief risk officer, said during a March 12 conference call hosted by Deutsche Bank AG that employing its own appraisers helps the company keep "a good view on where stuff will move," giving it a "competitive advantage" in selling distressed properties.
Mr. Truslow said in February during a company-sponsored call that Wachovia rewards appraisers according to the "accuracy and performance" of their appraisals rather than by "how many deals get closed."
Gerard Cassidy, an analyst at Royal Bank of Canada's RBC Capital Markets, said in an interview Monday that the lawsuit would be worth watching because of the importance Wachovia has given these employees in convincing Wall Street of the high quality of its option adjustable-rate mortgage portfolio.
"Many times when something is this small, it goes away," Mr. Cassidy said. "If a majority of the appraisers participate in the lawsuit, there could be a major problem, … but I would be very surprised if there was a systemic crack in the Golden West appraisal process."
