Class Action Lawsuit Filed Against KB Home Alleges Inflated Appraisals
While this lawsuit is newsworthy, the allegations against residential developer KB Homes are echoes of previous lawsuits.
Most recently, this lawsuit filed in Federal Court in Phoenix claims the builder conspired with Countrywide Financial to inflate appraisals for home sales in Arizona and Nevada. The lawsuit estimates the average appraisal was inflated by $20,000 for over 14,000 homes built by KB in Nevada and Arizona.
More homeowners are expected to join the lawsuit filed on behalf of all who purchased KB homes in Arizona and Nevada since 2006 and used Countrywide as the lender.
Historically, KB (formerly known as Kaufman Broad) owned its own mortgage company, KB Home Mortgage Company. In 2005 the US Department of Housing and Urban Development (HUD) fined KB $3.2 million for poor mortgage underwriting practices. By that time, KB had sold its mortgage company to Countrywide Financial.
About a month later (August 2005) the US Federal Trade Commission (FTC) fined KB $2 million for violation of a 1979 FTC agreement related to arbitration clauses in its contracts.
In 2008 this blog posted “KB Home and Countrywide Sued Over “Inflated” Appraisals” related to similar and identical issues involving California homeowners.
California Attorney General Edmund G. Brown Jr. filed a lawsuit against Countrywide in June of 2008 (amended in July 2008) alleging shocking loan practices. Brown stated "In one case the company approved an adjustable rate mortgage to an 85-year-old disabled veteran with such a low credit score and high debt that he defaulted in less than six months."
R.I.P. Countrywide: In January, 2008 Bank of America bought Countrywide for $4 billion in stock. In April, 2009 Bank of America announced the end of the Countrywide name. It will now simply be called Bank of America Home Loans.