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KB Home, Countrywide sued for inflating prices

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moh malekpour

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May 25, 2002
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Certified Residential Appraiser
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California
http://www.msnbc.msn.com/id/23059914/

LOS ANGELES - Two California couples are suing KB Home and mortgage lender Countrywide Financial Corp., claiming the companies schemed with real estate appraisers to inflate prices paid for homes as the housing market began to tank.

The complaint, filed Wednesday in Los Angeles Superior Court, also names as a defendants KB Home Mortgage Co., Countrywide Home Loans Inc., Countrywide KB Home Loans — a joint venture of Countrywide and the builder — and two real estate appraisers.

In the lawsuit, the couples claim prospective homebuyers were presented with false or misleading data on previously sold homes in order to justify higher asking prices on new purchases.

KB customers were presented with comparable sales data from homes that were dissimilar, nowhere near the KB property being sold, or from sales that had not yet closed, according to the lawsuit.

When independent appraisers evaluated comparable home sales, the values were between 10 percent and 15 percent lower than the price the plaintiffs paid for their KB homes, the lawsuit claims.

"People like Debbie Bolden lost up to 15 percent before they ever opened their front doors," plaintiffs' attorney Peter Fredman said in a statement. "We believe that these practices propped up falling prices into the summer of 2006 at least."

The complaint suggests the alleged scheme likely affected other KB customers.

"Inflated closed-sale prices resulting from the fraudulent appraisals, in turn, 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," according to the lawsuit.
 
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KYLECODY

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Apr 26, 2003
Professional Status
Certified Residential Appraiser
State
Arizona
and the worm keeps turning. Either that or this couple "had" to have the extra $50k in upgrades that they knew would make their house the most valuable. When the market tanks they then realize they werent that smart...

Push appraisers to "stretch" and hit a contract price and then they(h.o.s) always seem to push harder when it blows up in their face down the line. Human nature is splendid.
 
Joined
Jan 13, 2002
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Retired Appraiser
State
Florida
Almost everybody involved shares the blame...

BUT, builders and AMCs ONLY use the appraisers that will make sure the deals close no matter what the real truth is while making sure they do NOT use appraisers that might cause any 'red flags' or might not hit the contract price.

I hate lawsuits! But, if that's what it takes to clean out the viper pits, then let's roll!!!
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Almost everybody involved shares the blame...

BUT, builders and AMCs ONLY use the appraisers that will make sure the deals close no matter what the real truth is while making sure they do NOT use appraisers that might cause any 'red flags' or might not hit the contract price.

I hate lawsuits! But, if that's what it takes to clean out the viper pits, then let's roll!!!


There is a lot out there for the dung beatles to roll around shove down the holes now.

I think we are just seeing the tip of it. Lo all those appraisers who worked for them good or bad, they are going to get caught up in the dung, when it all hits the wall, no doubt some will stick. If you roll with the dung beatles you will soon start to smell like one even if you not a dung beatle.
 

Terrel L. Shields

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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
AMCs ONLY use the appraisers that will make sure the deals close
The question was why when it was so obvious, did the regulators not step in and use the bully pulpit? They knew the prices were inflating rapidly. They knew a bubble was being created...and it popped.
 
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