From Crain’s New York Business:
Mortgage appraiser ensnared in Cuomo probe
Vanderbilt Appraisal Co. became the third Manhattan-based firm to be subpoenaed by New York state Attorney General Andrew Cuomo in his widening probe of possible fraud in the huge subprime mortgage market.
The firm’s executives are reviewing the subpoena, according to a spokesman.
In the face of rising default rates among new homeowners throughout the state, Mr. Cuomo launched a probe in March, saying his office would focus on lending practices in the subprime market. In particular he is focusing on whether appraisers had been inflating property values, especially in transactions involving borrowers with poor credit histories.
Last month, Mr. Cuomo subpoenaed records from two area companies: Manhattan-based appraiser Mitchell Maxwell & Jackson Inc., and real estate broker Manhattan Mortgage Co. for their records.
Vanderbilt now joins that list. The company values properties throughout New York, New Jersey, Connecticut and South Florida, and is owned by Terra Holdings — which also owns residential real estate brokerage Brown Harris Stevens and Halstead Property.
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Nationally, the subprime market entered crisis-mode in March, when several subprime lenders began posting huge losses, and several went bust as the result of soaring loan defaults.Nearly 25% of homes purchases in New York City were financed with subprime loans, compared to the national average of 17%, according to a 2006 study by NYU’s Furman Center for Real Estate and Urban Policy. In some neighborhoods in Brooklyn and the Bronx, the percentage of purchases made with subprime loans exceeded 50%.
Foreclosure rates in New York, and around the country, are at their highest level since 2002, according to the Mortgage Bankers Association.