Just a few weeks after Countrywide is hit with a lawsuit by a former employee claiming pressure to overlook questionable lending practices, the lender and KBHome have been served by another lawsuit -- but this time it's by a couple of homebuyers. From today's Wall Street Journal:
Two couples in California are suing home builder KB Home and its joint venture with mortgage lender Countrywide Financial, alleging that the companies and two appraisers inflated home values to conceal the declining market.
Homeowners Deborah and Lonnie Bolden and David and Dolores Contreras charge that the Los Angeles builder sold them houses at prices that were allegedly higher than comparable properties, according to a lawsuit filed this week in Los Angeles Superior Court.
The lawsuit alleges that the appraisal reports cited pending sales as comparable sales, even when the sales were no longer pending because the buyers had walked away from the deals. The lawsuit also alleges that appraisals used "dissimilar properties" in other developments as comparable sales instead of "neighboring, identical comparable sales" -- which would have resulted in a lower value...
The homeowners are also suing two appraisers that valued the KB houses, according to the lawsuit. "When independent appraisers looked at public records of recently closed sales of truly comparable properties, they appraised values of 10%-15% below the contract price," according to the lawsuit.
The homeowners are seeking restitution and punitive damages. The lawsuit also seeks class-action status for KB Home buyers who purchased homes in California and obtained a mortgage through the builder's venture with Countrywide between Aug. 1, 2005, and July 31, 2006.
This is the latest lawsuit involving the KB-Countrywide venture. A former Countrywide employee who worked as a regional vice president in the venture's Houston office charges he was fired after raising concerns about questionable lending practices, according to the lawsuit filed recently in U.S. District Court in Houston.
The former employee alleges that loan officers were helping borrowers submit loan applications with false income amounts, according to the lawsuit.
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