SEATTLE, June 17 /PRNewswire/ -- Two California homeowners filed a class-action lawsuit against KB Home , Countrywide Financial and LandSafe Appraisal Services, expanding cases previously filed in Arizona and Nevada claiming the companies conspired to systematically, artificially and illegally rig home appraisals and sale values in KB developments throughout the state.
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The lawsuit lists identical claims to the suit filed in Arizona last month. Homeowners claim KB Home and the other defendants inflated home prices by as much as $300 million in California alone.
Between 2006 and 2008, KB built more than 15,000 homes in California at an average selling price of $425,000 the complaint cites. Attorneys conservatively estimate that each home had an inflated appraised value of $20,000, the suit states.
"KB and Countrywide created an opportunity where the companies could control every aspect of a buyer's real estate transaction," said Steve Berman, lead attorney and managing partner at HBSS. "The defendants essentially created a black hole in the process, where they could rig and falsify appraisals and home sale values and customers had absolutely no idea."
According to the 75-page complaint, Countrywide funneled all its KB customers' home appraisals to one person at LandSafe, an appraisal subsidiary of Countrywide who, in turn, would deliver an appraisal value at whatever KB and Countrywide ordered. These individuals were under direct instruction to value homes at or above the contract price, even if it meant violating regulatory guidelines and requirements.
In two KB Home developments cited in the complaint, sampled appraisals were inflated by $48,000 and $52,000 per property. KB's major markets in California include communities in Fresno, Los Angeles and Ventura, Orange County, Riverside, Sacramento, San Bernardino, San Diego, San Jose and Oakland and Stockton.
The suit details a litany of tactics LandSafe appraisers used to deliver the predetermined value, including blatantly falsifying sale prices for comparable properties; using comparable properties that were as much as 10 miles away, and citing comparable properties that were in other planned communities.
"Countrywide approved loans for amounts in excess of homes' true values and pushed homeowners into loans they didn't qualify for, ultimately dooming them to financial failure," said Berman. "Homeowners now find themselves unable to make payments or unable to sell the home at a value that allows them to pay off the loan - these are alarming practices and damaging not only to customers but to the entire home loan industry."
The lawsuit includes allegations of a second scheme with Countrywide and its subsidiary appraisal arm, LandSafe. The suit alleges LandSafe outsourced appraisal work on individual appraisers willing to 'play ball,' and forced appraisers to accept payment below market value. LandSafe then charged plaintiffs upwards of $400 for services, when the company completed no work of its own.
According to the complaint, KB Home ran into similar appraisal problems in 2005 when it settled with HUD for $3.2 million to resolve an investigation into the company's underwriting violations. This includes approving loans to borrowers not eligible, approving loans based on overstated or incorrect income, failing to include all of a borrower's debts, failing to properly verify sources of funds and failure to meet HUD requirements.
The HBSS lawsuit claims violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and violation of California unfair competition law.
The lawsuit represents anyone in California who purchased a home from KB Home and financed through Countrywide. To join this case, homeowners can contact attorneys by visiting http://www.hbsslaw.com/kbhomes, e-mailing kbhomes@hbsslaw.com or calling (206) 623-7292.
About Hagens Berman Sobol Shapiro
Hagens Berman Sobol Shapiro is based in Seattle with offices in Chicago, Boston, Los Angeles, Phoenix, San Francisco and New York. Since the firm's founding in 1993, it has developed a nationally recognized practice in class action and complex litigation. Among recent successes, HBSS has negotiated a pending $300 million settlement as lead counsel in the DRAM memory antitrust litigation; a $340 million recovery on behalf of Enron employees which is awaiting distribution; a $150 million settlement involving charges of illegally inflated charges for the drug Lupron, and served as co-counsel on the Visa/Mastercard litigation which resulted in a $3 billion settlement, the largest anti-trust settlement to date. HBSS also served as counsel in a $850 million settlement in the Washington Public Power Supply litigation and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. For a complete listing of HBSS cases, visit http://www.hbsslaw.com/.
CONTACTS: Steve Berman (206) 623-7292 Mark Firmani (206) 443-9357 Hagens Berman Sobol Shapiro Firmani + Associates, Inc. Steve@hbsslaw.com Mark@firmani.com
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Hagens Berman Sobol Shapiro
CONTACT: Steve Berman of Hagens Berman Sobol Shapiro, +1-206-623-7292,
Steve@hbsslaw.com; or Mark Firmani of Firmani + Associates, Inc.,
+1-206-443-9357, Mark@firmani.com
Web Site: http://www.hbsslaw.com/
