Washington Mutual, the country’s largest savings and loan, is being targeted by the New York State Attorney General’s office for allegedly inflating the appraisals of houses for which it wrote mortgages. Fraudulent appraisals have left thousands of homeowners in that state with mortgages they can’t afford, and such schemes have been blamed for the turmoil in the current housing market. Yesterday, Andrew Cuomo, the New York Attorney General, said he was expanding a probe of mortgage fraud to focus on companies that packaged home loans and that were later resold to investors.
Washington Mutual and other lenders often write mortgages and then sell them as a group to investors. Last week, Cuomo accused Washington Mutual of pressuring an appraisal company to overvalue thousands of homes. Those mortgages were then sold to investors, who Cuomo says were misled about the value of the properties.
