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Think this may happen in Idaho?

http://www.jsonline.com/business/84664037.html

M&I Bank has abruptly ended an unusual and aggressive move to recoup some of its massive Arizona loan losses, saying that seven lawsuits filed against Arizona real estate appraisers last month are being dropped.

The bank would not say why it was dropping the suits. But one appraiser whose company was among those sued said he was told by his insurance company that the statute of limitations - which in Arizona gives plaintiffs just two years to file claims alleging negligent misrepresentation - may have come into play.

"We have resolved our differences with most of these appraisers in Arizona and these suits will not be going forward," Patty Cadorin, an M&I senior vice president, said in an e-mail statement to the Journal Sentinel. "We are also working on resolving the remainder."

Asked whether the statute of limitations played a role, she said via e-mail that "due to the fact that this is litigation, we will have no further comment beyond the statement."

M&I has been awash with losses in Arizona since the housing bubble burst there.

Attracted by the potential for rapid growth, M&I made a bold push in the Arizona market a decade ago, going from 14 branches in the state to 28 by 2003.

But by 2008, M&I earnings were plummeting, and executives were admitting they failed to react quickly enough to the slowdown in the housing market. Today the company blames many of its financial woes on the Arizona incursion.

The company has posted losses in its last five consecutive quarters, and lost $858.8 million for all of 2009.

At the end of 2008, M&I's Arizona portfolio held $642 million in bad loans - loans that were not accruing interest - representing 42% of its non-performing loans. At the end of last year the number had been trimmed to $430 million, or 21% of its bad loans.

In January, the company filed seven lawsuits against Arizona real estate appraisal companies and individual appraisers.

The lawsuits, filed in U.S. District Court in Phoenix, were atypical because, lawyers say, lenders normally take a scattershot approach of suing several parties, including the buyer, appraiser and mortgage broker, when they suspect wrongdoing in a real estate loan.

The litigation challenged appraisals done as late as 2007, but the lawsuits noted that recent reviews and investigation reveal the market value listed in the appraisals was inflated.

The strongly worded lawsuits charged the appraisers showed a "reckless disregard for the truth" in estimating the value of properties that were used as collateral for bank loans. M&I sought $6 million in damages - a fraction of the hundreds of millions of dollars in bad loans that M&I wrote in that state.

"Perhaps, M&I feels they need to file an action to satisfy its shareholders," said Dan Bach, a former federal prosecutor now in private practice in Madison.

Later, after the bank said it would no longer pursue the claims, Bach, an M&I shareholder, said "It's unfortunate that if there were an opportunity to recoup some of their losses that they're not able to do so."

Bach and other attorneys said there was not enough information available to definitively say why M&I was changing course so quickly, though the statute of limitations was a possibility.

"Two years can creep up on you pretty fast," Bach said.

Jay Josephs, owner of Josephs Appraisal Group - a large Phoenix appraisal company sued by M&I - said his company was told by his insurance carrier that the M&I suits would have trouble making it through court because of the statute of limitations.

"Having this go away is a very big deal," said Josephs, whose firm was being sued for $744,700. Josephs said the appraisals performed by his company for M&I were all proper and would have withstood a court challenge.

Rachel Dollar, a California lawyer specializing in mortgage fraud representing M&I on the suits, shed little light on the decision to drop the cases.

Responding specifically to the suggestion that the statute of limitations came into play, she e-mailed a statement that said:

"Statute of limitations analysis is legally and factually complex. . . . In many cases, claims do not accrue and thus the limitations period does not begin to run until years after the conduct underlying the claims has occurred. Attorneys review potential statute of limitations issues prior to filing lawsuits."