A lawsuit has been filed and seeks class action status against the mortgage lender and builder for allegedly conspiring with appraisers to boost housing prices as the market crashed. The lawsuit was filed in Los Angeles Superior Court and claims KB Home and Countrywide Financial Corp. compared sales prices for homes in other developments rather than neighboring houses.
The lawsuit seeks restitution as well as compensatory and punitive damages on behalf of California KB Home customers who purchased homes through Countrywide financing from August 2005 to July 2006. KB Homes presented prospective home buyers with comparable sales data from homes that were dissimilar, or from sales that had not yet closed. When independent appraisers evaluated comparable home sales, the values were between 10 percent and 15 percent lower than the price paid for KB homes.
According to the lawsuit, "inflated closed sale prices resulting from the fraudulent appraisals infected subsequent appraisals and valuations, allowing KB Home to continue to obfuscate falling values and obtain prices inflated well beyond where they would have been in the absence of this unlawful price manipulation."