Filed in Los Angeles Superior court on Wednesday, the complaint also names KB Home Mortgage Co., Countrywide KB Home Loans., Countrywide Home Loans Inc., and two real estate appraisers and the suit claims that the company schemed with these appraisers to falsify the appraisals of the homes to work in favor of the mortgage company.
KB homes feels that the allegations have no merit and are conducting their own investigations into the situation. The plaintiffs, David and Dolores Conteras and Deborah and Lonnie Bolden, who all reside in Live Oak that is located in Northern California, are looking for punitive and compensatory damages as well as unspecified restitution. They also want a class-action suit that covers all KB Home customers in the state of California who acquired financing through Countrywide Financial Corp. and closed their purchases between the months of August 1, 2005 and July 31, 2006.
The couples are claiming in the lawsuit that misleading or false data was presented to prospective home buyers regarding the data on the homes previously sold. This was allegedly done by the lender in order to back up the higher asking prices on the new purchases. The customers of KB Home were presented with sales data that was comparable to homes that were not similar to the ones they were purchasing. The properties were also not anywhere near the property being sold by KB, or the data was from sales that had not closed yet.When the plaintiffs had independent appraisers evaluate the home sales for comparable homes, there was a 10% to 15% difference that showed the comparable homes had lower prices than prices the plaintiffs paid to KB Home for their homes. According to the lawsuit, this means that those who had similar deals through KB Home lost up to 15% of what was paid for the home before ever moving into them.This makes it likely that there were other KB Home customers affected by these unfair business practices, according to the complaint.
Basically, the complaint states that the alleged fraudulent appraisals resulted in inflated closing prices, which also has an impact on valuations and subsequent appraisals. This allows KB home to keep on acquiring inflated prices, placing them beyond where they would have been financially had they never embarked on such price manipulation.
Unlike other companies that build and sell homes that are furnished, KB Homes builds based on orders placed in advance, and the buyers do not finalize the deal until construction is completed. If an appraisal after construction shows that the property value has dropped below the price stated in the contract, the buyer doesn't have to take the deal.
Both the Boldens and the Conteras famiiy purchased their homes at KB's Oak Knoll development in 2005.
Their complaint also states that other area homeowners paid lower prices because their financing was obtained elsewhere and not through Countrywide KB Home Loans. The complaint also states that the appraisal was obtained from an outside agency that had no affiliation with Countrywide Financial Corp.
The Boldens claim that they have paid almost $70,000 more than some of their neighbors residing in similar homes purchased around the same period of time.
As for other customer complaints, there have been several complaints regarding the lending practices of Countrywide Financial Corp., especially since defaults on home loans have increased and the housing market has declined.