Homeowners sue KB Home and Countrywide over appraisals
- Original Reuters article: Homeowners sue KB Home and Countrywide over appraisals
LOS ANGELES (Reuters) - Two California couples sued home builder KB Home and its joint venture with Countrywide Financial Corp for purportedly falsifying property appraisals to prop up home prices after the state real estate market began to collapse in 2005.
The plaintiffs, Deborah and Lonnie Bolden and David and Dolores Contreras, said in a lawsuit filed on Wednesday that they were tricked into overpaying for their homes in early 2006 by appraisals that overstated their value.
The appraisals done by appraisers for Countrywide KB Home Loan, a joint venture of KB Home and Countrywide, inflated the homes' values by 10 percent to 15 percent, the lawsuit said.
The scam came to light last fall after the couples learned that KB Home had cut prices on identical homes purchased by neighbors who had secured independent financing and had discovered the homes' true value from independent appraisers, the couples' lawyer Peter Fredman said.
The claims in the proposed class action, filed in Los Angeles Superior Court, mirror those made by a former executive who sued Countrywide KB Home Loan for allegedly firing him last year after he complained about its lending practices.
In his lawsuit, filed in U.S. District Court in Houston, former Countrywide KB Home Loan vice president Mark Zachary said the lender approved unqualified borrowers for loans so that KB Home could keep building.
Zachary said he questioned the lender's practice of using an appraiser who was "strongly encouraged" to inflate appraised values by up to 6 percent.
Countrywide has denied Zachary's claims and has said it would vigorously defend the case.
A KB Home spokeswoman said the company was investigating the Los Angeles lawsuit's claims but believed that they would be proved to be "without merit." A Countrywide spokeswoman had no immediate comment.
Fredman said Debbie Bolden learned from searches of the county assessor's records that her appraisal and others had been calculated using inflated sales prices for comparable homes, omitting sales of identical homes in the same development and including non-comparable, out-of-area sales.
(Reporting by Gina Keating and Carol Bishopric)
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