This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Cuomo Charges Crush WaMu

Updated from 3:45 p.m.

Washington Mutual (WM) plunged 7% after New York's attorney general accused the lender of engaging in a scheme to inflate house appraisals.

Attorney General Andrew Cuomo sued First American's (FAF) real estate appraisal subsidiary, eAppraiseIT. First American is a big title insurer.

A suit filed in New York State Supreme Court by Cuomo's office says First American "caved to pressure" from Seattle-based WaMu to use a list of appraisers who inflated the values of thousands of homes. Cuomo also alleges that executives at eAppraiseIT "knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu," his office said in a release.

WaMu said it would investigate and suspended its business with the First American unit.

"We have absolutely no incentive to have appraisers inflate home values," WaMu said. "In fact, inflated appraisals are contrary to our interests. We use third-party appraisal companies to make sure that appraisals are objective and accurate."

"The complaint filed today by the New York Attorney General against First American and our eAppraiseIT subsidiary has no foundation in fact or law," First American said in a statement. "The Attorney General's allegations, largely based on a handful of e-mails that have been taken out of context, or mischaracterized, and an incomplete review of the facts, belie our record of compliance with applicable law.

"The program called into question today by the Attorney General has been vetted and approved by the federal regulator responsible for oversight of such programs," First American continued. "We welcome the opportunity to now present all the facts before an impartial third party."

Shares of WaMu tumbled $2 to $25.88.

From April 2006 through October 2007, eAppraiseIT provided approximately 262,000 appraisals for Wamu, Cuomo's office said.

The news comes as housing-related stocks suffer another massive selloff as investors worry about financial firms' potential losses from rising mortgage defaults.

On Thursday, big lender Countrywide Financial (CFC) fell 7%, and mortgage insurers PMI Group (PMI), MGIC Investment (MTG) and Radian Group (RDN) tumbled between 9% and 14%.

Cuomo is seeking to end the relationship between Wamu and First American, as well as to get penalties and disgorgements from First American and eAppraiseIT.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,254.47 +97.62 0.57%
S&P 500 2,009.53 +7.96 0.40%
NASDAQ 4,589.5430 +27.3540 0.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs