Ohio has sued two lenders, six mortgage brokerages, a broker, and an appraisal firm for improperly pressuring appraisers to inflate home values.
The companies set specific estimated values on properties and communicated a desired price to appraisers, according to the lawsuits Attorney General Marc Dann filed Thursday. In Ohio, the state with the third-highest number of foreclosures, it is illegal to influence an appraiser.
April foreclosure filings there jumped 135% from a year earlier, pushing the state's rate to almost two times the national average, according to RealtyTrac Inc.
The suits claim that brokers and lenders asked for specific home values on properties that the appraisers had not yet seen, in one instance saying, "If you foresee a problem with the value, contact me immediately" and in another case, using the words: "Need aggressive appraiser!"
The brokerages being sued are Ace Mortgage Funding LLC in Cincinnati; American Home Brokerage Corp. of Garden Grove, Calif.; Apex Mortgage Services LLC in Columbus; First Ohio Banc and Lending Inc. of Independence; Island Financial LLC of Twinsburg; and Premiere Service Mortgage Corp. of West Chester. Robert C. Roach, the president of Valley Mortgage Group of Austintown, was also named as a defendant.
The lenders are Sage Credit Co. LLC of Irvine, Calif., and Wall Street Mortgage Bankers Ltd. of East Rockaway, N.Y. All-Line Appraisals of Phoenix was also sued.
"There's no reason to have the homeowner pay $400 for an appraisal if the home doesn't have the value he thinks it does," said Kirk Doskocil, the president of the First Ohio Banc and Lending. "So you ask the appraiser, 'Can you get this value?' If you can, we'll order the appraisal. If not, we can tell the homeowner it's not worth as much as they think."
Vu Ho, a managing director of American Home Brokerage, said it does not do business in Ohio.
The suits seek at least $250,000 of civil fines.