## Facts

- William and Juanita Bishop bought a West Virginia home for $60,000 and later refinanced it three times with Quicken Loans, Inc.
- For the first refinance, Quicken obtained an appraisal valuing the home at $112,500.
- For the second refinance, Quicken used an appraiser affiliated through a sister corporation, which valued the home at $153,000; Quicken approved the refinance.
- For the third refinance, the same affiliated appraiser again valued the home at $153,000; Quicken approved the loan.
- When the Bishops later sought a fourth refinance, a different appraisal valued the home at about $137,000, and Quicken denied the application based on that valuation.
- The Bishops alleged they did not receive or see the appraisal reports during the earlier transactions and did not know the appraised values at the time.
- The Bishops claimed Quicken’s use of an affiliated appraiser resulted in inflated valuations that enabled loans exceeding the home’s actual value.

## Issues

1. Whether evidence tied to allegedly inflated, affiliated appraisals created a triable issue that the third refinance was procedurally and/or substantively unconscionable under West Virginia law.
2. Whether a lender may face liability under West Virginia residential mortgage-lending statutes for knowingly extending loans in excess of the property’s actual fair market value, including where valuation was based on an affiliated appraisal.
3. Whether the borrowers produced sufficient evidence of common-law fraud based on alleged appraisal inflation, nondisclosure of the appraisal relationship and/or value, and inducement into the refinancing transaction.

## Decision

- The court ruled on Quicken’s motion for summary judgment.
- The court granted summary judgment in part and denied it in part.
- The court allowed at least some borrower claims—focused on alleged appraisal inflation, affiliated appraisal arrangements, and resulting loan terms—to proceed beyond summary judgment.

## Legal Principles

- Under West Virginia law, unconscionability may be shown through procedural unfairness (including informational imbalance and circumstances of loan origination) and/or substantively unfair terms.
- Evidence that collateral was overvalued through unfair appraisal practices may support an unconscionability claim, at least to the extent it creates a factual dispute for the jury regarding one-sided loan terms and borrower harm.
- West Virginia mortgage-lending statutes restricting loan amounts relative to fair market value may support an “illegal loan” theory where a lender knowingly makes loans exceeding the property’s actual value, including by relying on inflated valuations.
- Fraud claims in the refinancing context may proceed where the record supports a factual dispute over intentional appraisal inflation, material nondisclosure (including conflicts or relationships affecting valuation), borrower reliance, and resulting injury.

## Conclusion

The court’s summary-judgment ruling treated allegations and evidence of inflated appraisals tied to an affiliated appraiser as capable of supporting unconscionability, statutory unlawful-loan, and fraud theories under West Virginia law, permitting at least some claims to continue to trial.


Bishop v. Quicken Loans, Inc., No. 2:09-1076, 2011 WL 1321360 (S.D.W. Va. Apr. 4, 2011)