Two Phoenix homeowners filed a class action lawsuit against Wells Fargo and its appraisal subsidiary, Rels Valuation, alleging that the mortgage giant rigged the appraisal process by requiring homeowners to use its subsidiary for appraisals in a scheme to increase profits. Filed in the U.S. District Court in Phoenix under the Racketeer Influenced and Corrupt Organizations Act, the Real Estate Settlement Procedures Act and state law, the suit seeks to represent Arizona homeowners who purchased or refinanced their home through Wells Fargo and Rels Valuation. According to the suit, hundreds of thousands of homeowners may have fallen prey to the alleged scheme.

The suit claims Rels Valuation subcontracts appraisal work to independent appraisers at below market rates while charging homeowners more than double the actual cost of the appraisal without disclosing that the bulk of the fee is simply a markup. The suit also contends that independent appraisers who do not accept Wells Fargo’s fee structure or appraisal guidelines risked being blacklisted.

The suit alleges that Wells Fargo and Rels Valuation attained more than $100 million dollars in unearned fees through the fee scheme. "Homeowners are feeling the crunch of the housing market nationwide and inflated charging schemes put homeowners at a huge disadvantage with the sole intention of inflating profits for the banks and lenders," said Rob Carey, partner at Hagens Berman Sobol Shapiro. "Not only is it illegal, but it's unethical to prey on customers through the foggy channels and requirements within the home loan process."

Wells Fargo has denied any wrongdoing.