U.S. judge: No class status on bogus home appraisals

NEW YORK (Reuters) - A U.S. judge on Tuesday rejected a request for class-action status by First American Corp shareholders who said the title insurer's stock fell amid accusations the company colluded with Washington Mutual Inc WAMUQ.PK to fraudulently inflate home values.

U.S. District Judge Lewis Kaplan said there was not enough evidence to show that the alleged collusion by First American and its eAppraiseIT unit significantly changed the "total mix" of information about the company, and might have dissuaded reasonable investors from buying the stock.

Washington Mutual is not a defendant. The case was brought by a Pennsylvania pension fund, Berks County Employees' Retirement Fund, on behalf of shareholders who invested in First American between April 2006 and November 2007, when New York Attorney General Andrew Cuomo sued First American.

Cuomo accused First American and eAppraiseIT of caving to pressure from Washington Mutual to use appraisers who provided inflated appraisals, allowing it to extend larger loans.

It was one of the first lawsuits by a U.S. regulator over the nation's housing crisis. A New York state appeals court in June 2010 said Cuomo could proceed with the lawsuit.

A lawyer for the pension fund did not immediately return a call seeking comment.

First American on June 1 said it split into two companies: First American Financial Corp (FAF.N) and CoreLogic Inc (CLGX.N). The eAppraiseIT business became part of CoreLogic.

U.S. regulators seized Washington Mutual in September 2008. JPMorgan Chase & Co (JPM.N) acquired its banking operations, and the Washington Mutual holding company filed for bankruptcy protection.

First American shares closed Tuesday up 25 cents at $14.83, and CoreLogic fell 5 cents to $17.27, both on the New York Stock Exchange. Kaplan issued his opinion after U.S. markets closed.

The case is Berks County Employees' Retirement Fund v. First American Corp et al, U.S. District Court, Southern District of New York, No. 08-05654.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)