(Housing Wire) The Securities and Exchange Commission has opened an investigation into appraisal practices at , according to a report Friday in the .
Citing unnamed sources, the Journal says the probe is in its infancy but will include “whether WaMu accurately disclosed to investors of mortgage-backed securities how its loans were appraised as well as whether the company properly accounted for its loans in financial disclosures to investors of the company.”
WaMu issed a statement saying it is cooperating with the investigation and that it has “confidence that there has been no systematic effort by WaMu to inflate home appraisals,” according to the story.
Appraisal practices at Seattle-based entered the spotlight on November 2, when New York announced a lawsuit against First American over appraisal fraud that included WaMu. Cuomo’s case did not name the bank as a defendant, due to Federal banking rules.
In the wake of the suit, analysts have estimated that ’s repurchase risk could require an additional $412 million to $2.1 billion in loss reserves, although WaMu has said its appraisal contracts stipulate third-party liability should appraisal fraud be found.