StanCorp Lawsuit

[djd09]

Mortgage investor claims Cushman & Wakefield inflated appraisals on 25 loans​

25 loans defaulted. Now a federal lawsuit alleges the appraisals were way off

A mortgage investor claims Cushman & Wakefield delivered greatly inflated appraisals on 25 loans, and the fallout is now playing out in federal court.

StanCorp Mortgage Investors, LLC filed suit on January 23, 2026, in the United States District Court for the District of Maryland, accusing the self-described global real estate services leader and one of its appraisers, David Masters, of providing valuations so far off the mark that they masked the true risk of lending on multi-family properties and at least one commercial building across Maryland and Virginia.

The allegations paint a troubling picture for anyone in the mortgage business who relies on third-party appraisals to make lending decisions.

Mortgage investor claims Cushman & Wakefield inflated appraisals on 25 loans

25 loans defaulted. Now a federal lawsuit alleges the appraisals were way off

www.mpamag.com

verification is a real thing...

 

[Fernando]

Commercial properties have falling dramatically since Covid.
Been wondering when commercial appraisers will get the blame for "bad" appraisals.

 

[djd09]

Commercial properties have falling dramatically since Covid.
Been wondering when commercial appraisers will get the blame for "bad" appraisals.

it looks like maybe he fudged the rent...based on the borrowers docs which resulted in a misleading report

 

[George Hatch]

The purpose of performing rent surveys is to figure out how the subject's reported rents and vacancies relate to the market rents. What the hypothetical buyer could reasonably expect to generate.

A "fudged the rents" scenario would amount to saying something about those rents and/or occupancy which are known to be untrue. A lie. No different than deliberately mischaracterizing GLA or condition in an appraisal.

 

[djd09]

just like massaging the cap rate...

 

[George Hatch]

Exactly so.

When I review appraisals the first thing I do is check out the facts being asserted about the subject and about the sales that are being characterized as being the most similar. If the facts check out and if those really are the most comparable sale then the value conclusion just about cannot be too far out of line.

I don't spend a lot of effort to fret adjustment factors unless they're being applied inconsistently. Most of the appraising comes in comp selection. Not in adjusting at $100/sf instead of $120/sf for the GLA.

 

[djd09]

relying on unverified third party rental data is nothing more then an unlicensed home inspector can supply...

 

[chad hampton]

One of my close friends is an MAI. He’s on the appraisal team at a large institutional investment firm, he handles high-end commercial properties throughout the country. He said if you think residential appraising is shady, you ain’t seen nothing until you look into commercial. He tells me all the time that it’s a daily occurrence for someone on the loan team to call him complaining that this appraisal should be at least $20-50 million higher than what it is and to go back to the appraiser and see if they can do anything. He’s obligated to do so. The appraisers complain a little bit, he tells them he understands, but they end up finding a way.

So I have no doubt that any institution can go look at their commercial properties and find inflated values. it’s always young investment bankers in New York City that know nothing about value that push it higher.

And they only deal with the elite of the elite commercial firms around the country.

 

[Gobears81]

One of my close friends is an MAI. He’s on the appraisal team at a large institutional investment firm, he handles high-end commercial properties throughout the country. He said if you think residential appraising is shady, you ain’t seen nothing until you look into commercial. He tells me all the time that it’s a daily occurrence for someone on the loan team to call him complaining that this appraisal should be at least $20-50 million higher than what it is and to go back to the appraiser and see if they can do anything. He’s obligated to do so. The appraisers complain a little bit, he tells them he understands, but they end up finding a way.

So I have no doubt that any institution can go look at their commercial properties and find inflated values. it’s always young investment bankers in New York City that know nothing about value that push it higher.

And they only deal with the elite of the elite commercial firms around the country.

I've noticed more aggressive lenders/ value pressure in the past year or two vs any time post-2008. Maybe it is related to the decline in refinancing activity, but I suspect that it reflects where we are in the real estate cycle - i.e. appraisals are regarded as slow, costly, and unnecessary when conditions are strong. Also, my market was a laggard for a long time, but continues to perform well, relative to the rest of the country. That said, I'm not so sure that strong values will continue around here, as while rents have increased with most operating expenses, real estate taxes are the elephant in the room in Illinois and the average assessed value as a percentage of the market value continues to increase. At some point, the market might see that these numbers just aren't holding up. I've always thought that the toughest time to value a property is when the market is starting to turn a direction, but the sales do not yet support this..

Appraisals being performed for banks are an increasingly small portion of my business. Part of that is the evaluations being prepared on lower-dollar properties, and the other part is that I'm probably not aggressive enough for many of them. That's OK, as non-banking clients do not seem to be as tough on fees/ turnaround times.

 

[djd09]

why didn't they just file a complaint with the state board...