Doors Floors and More

Cited: Reality Times

A class-action suit that was filed by a Texas homeowner in Los Angeles recently that alleges three companies conspired to rig housing prices in Texas and Colorado that cost home buyers millions of dollars and provided dangerous loans to homeowners. The lawsuit charges that a national price inflation scheme was developed by KB Home, Countrywide Financial and LandSafe Appraisal Services to defraud consumers.

The suit, filed yesterday in U.S. District Court in Los Angeles, claims the three companies employed a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners.

The suit claims KB Home targeted homeowners throughout Texas and Colorado with the scheme. The complaint states between 2006 and 2008 more than 19,000 homes were delivered to the area. At an average price of $167,533 a home, and conservatively assuming an average inflated appraisal of $20,000 per home, that amounts to almost $300 million in inflated contract prices, the suit states.

The homebuilder has a significant presence in Texas with 17 communities in the Austin area, 10 communities in the Dallas area, 16 communities around San Antonio and 24 communities in Houston, the suit states.

This is the fourth lawsuit Hagens Berman Sobol Shapiro (HBSS) has filed against KB Home, Countrywide and LandSafe alleging a national inflation scheme to defraud consumers. The other lawsuits represent homeowners in California, Arizona, Nevada, Florida, North Carolina and South Carolina.

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“The lawsuit representing Texas and Colorado homeowners mirrors the others suits we’ve filed across the country,” said Steve Berman, managing partner at Hagens Berman Sobol Shapiro. “These three created a systemic and tightly controlled process to inflate home values and home sales with no regard for the homeowners or the dangerous loans the companies pushed on unsuspecting purchasers.” According to the complaint, Countrywide funneled all its KB customers’ home appraisals to a single person at LandSafe, an appraisal subsidiary of Countrywide, who in turn would deliver an appraisal value at whatever KB and Countrywide ordered.

The named plaintiff, Alice Stacy, purchased her home in 2006, and initially signed a purchase agreement for $150,484. An initial appraisal submitted to Countrywide-KB mistakenly put the home’s value at $142,000 - this included a $14,000 sales incentive and rolled in the closing costs of the home that totaled $5,516, the suit states.

The appraiser mistakenly thought KB wanted to sell the home at $142,000, a number too low to support the loans KB and Countrywide decided to foist on Stacy. It was also too low to support the sales pitch KB delivered to Stacy, claiming the home’s value was $150,500.

The plaintiff obtained a report of the lower appraisal, contacted KB and demanded a lower contract price, and the company told her the appraisal was a mistake. KB insisted the house was in fact worth $150,500 and they would fix it, the suit states.

A few days later, the same appraiser submitted a revised appraisal showing an increased value on the home, exactly the level that KB promised Stacy.

“With this case, Alice called KB out and pretty much caught them red handed inflating values after the appraiser mistakenly issued the lower report,” said Berman. “The correction and inflation of the value speaks volumes to the practices we’ve alleged in all our complaint, that KB’s demanding specific home values and LandSafe is delivering without question.” The lawsuit lists several claims against the defendants including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), violation of California unfair competition law and unjust enrichment.

This information could help you if you or someone who used Countrywide or LandSafe to finance a home through KB home in Texas or Colorado. Homeowners that in this scenario are urged to contact the attorneys by visiting www.hbsslaw.com/kbhomes, by e-mailing or calling 206-623-7292 as soon as possible.

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My Take: Wow, I guess people will do just about anything to make more money. Is not fraud a criminal act? How come a lawsuit is the only legal action being taken? It seems someone should be contacting Monmouth County criminal attorneys! I am sure that at least a Monmouth County criminal defense lawyer should be needed by at least one of those three companies. At least they will not be contacting a New Jersey child molestation law firm.

It is only logical that somebody planned this little scheme in that portion should go to jail for fraud at least. It is not like getting Freehold reckless driving attorneys for traffic violations. To me, this is a lot more serious. Do not get me wrong, if you drink and drive you are going to need Red Bank NJ DUI attorney, but when you mess with somebody’s home and livelihood that is a different story.

The average person works too hard to be able to afford a home to have to worry about whether the builder, financer and/or appraiser are trying to screw them over. In fact, it is difficult for me to believe that Bank of America is even involved. However, the financing company is a branch of Bank of America. I have a feeling that Bank of America is going to be doing some housecleaning of their own.

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