I don’t think it should come as a genuine surprise to most people familiar with the field, but yesterday a New York appellate court affirmed the trial court’s decision denying First American Corp. and First American eAppraiseIt’s (now part of CoreLogic) motion to dismiss in the action filed by New York Attorney General Cuomo against the companies in 2007.
eAppraiseIt’s primary argument in the motion was that New York’s Attorney General should be preempted by federal banking laws and regulations from pursuing state law claims against the defendants for their alleged appraisal inflation scheme with Washington Mutual. The denial of that motion and confirmation by the appellate court should not be a surprise legally because, to make a long story very short, the specific case law regarding preemption in the appraisal context persuasively only supports a
preemption argument when the appraisal work is performed by the federally regulated lender itself or one of its affiliates — this point, depending on which side of the fence you sit, might be a decent argument for or against the existence of some lender-owned AMCs. If state laws can’t be applied to their conduct, some would argue that they either need to be more carefully regulated at the federal level or that broader power needs to be granted to the states in order to do so.
Full copies of the original complaint filed in 2007 and the Appellate Division’s June 8, 2010 opinion can be found here.