Sunday, May 20, 2007

Am I the Only One Who Hears the Screams?

by Tanta on 5/20/2007 08:22:00 AM

Bloomberg reports (thanks, risk capital!) on subpoenas arriving at the office of a large New York appraisal firm:

May 18 (Bloomberg) -- New York State is investigating Manhattan real estate practices, seeking information about whether brokers pressured appraisers to inflate property values as prices doubled in the last five years.

Attorney General Andrew Cuomo issued a subpoena to Manhattan appraiser Mitchell, Maxwell & Jackson Inc., the company said. Manhattan Mortgage Co., a broker, also received a subpoena, Chief Executive Officer Melissa Cohn said. . . .

Y. David Scharf, an attorney at New York law firm Morrison Cohen LLP, who is representing Mitchell, Maxwell & Jackson, said his client has been told it's not a target of the investigation.

``The information that is being requested is whether or not pressure has been brought to bear on appraisers to change their appraisals,'' Scharf said. The firm is ``continuing to gather information'' in response to the subpoena, he said.

``We did not change appraisals in any circumstances,'' he said.
Oh, bummer. Those appraisers who didn't cooperate when we needed a better value are now cooperating with the Attorney General. I have exactly zero inside dope about this, but personally I'd be shocked that any appraisal firm anywhere at any time couldn't cough up at least a few e-mails and billing records that provide evidence of pressure to inflate the value. I have somewhat less confidence in the number of firms who can back up the claim "we did not change appraisals in any circumstances," but that's not the point, is it? The point is that he who gets on the witness list gets to make certain claims that he who is on the suspect list might live to regret having made. This ought to get interesting.

In other news, Steve Jakubowski of the Bankruptcy Litigation Blog kindly directed my attention to this follow-up to my unsubtle request back in April for a look at the complaint in the matter of Bankers Life Insurance Co. v. Credit Suisse First Boston Corp., et. al. It's a doozy. Steve is a bit skeptical of Bankers Life's legal grounds--and he's a Real Lawyer™. I did a fair amount of eye-rolling over the nitties and gritties of the alleged wrongdoing, although I am a mere Mortgage Punk™. (Note that the suit involves a purchase in 2004 of a couple subordinated tranches of a security backed by loans originated in 2001. Until the 2005-2006 vintage came around, 2001 was shaping up to be the Worst. Vintage. Ever. Also, Bankers paid 104.75 for one of them.) Steve promises to keep us all updated on the matter.

Until then, we are left with the strangled cries of lawyers in love.

UPDATE: Oh for Peat's sake. I come up with an excuse to provide you with a bonus rock video, and then forget to include it in the post. You can thank me later.