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Michigan appraiser not liable for grossly overstated valuation
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Wednesday, April 30, 2014
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An appraiser and his appraisal company were not liable for grossly overstating the market value of a residence that went into default after purchase, a federal court in Michigan has ruled.
The case is Lehman Bros. Holdings Inc. v. O’Leary (No. 12-CV-14344).
The plaintiff, Lehman Brothers Bank, loaned $512,000 to Jose Hernandez for the 2006 purchase of a home in Shelby Township, Mich. The defendant, Stephen O’ Leary, provided the appraisal in connection with the purchase.
In the appraisal report, O’ Leary found the residence to have a market value of $651,000.
The borrower defaulted on the Lehman loan soon after, and a new appraiser was hired to conduct a review appraisal of the property. The new appraiser found that on June 25, 2006, the loan origination date, the Shelby Township residence had a value of $450,000 — over $200,000 less than O’Leary’s valuation.
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