Calif. homeowners file class action against KB Home, affiliates - Nashville Business Journal:

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The lawsuit lists identical claimx to a suit filed in Arizonalast month. Homeownerse claim KB Home and the other defendants inflated home pricese by as muchas $300 million in Californiaz alone. The suit filed by Seattle-basedd Hagens Berman Sobol Shapiro claims that between 2006 and KB built morethan 15,000 homesa in California at an average selling price of $425,000, and each home had an inflated appraisesd value of about $20,000. "KB and Countrywidre created an opportunity wherd the companies could control every aspect ofa buyer's real estate transaction," said Stevde Berman, lead attorney and managing partner at HBSS.
"The defendanta essentially created a black hole in the where they could rig and falsifyu appraisals and home sale values and customerse had absolutelyno idea." According to the 75-page complaint, Countrywide funneled all its KB home appraisals to one person at LandSafe, an appraisall subsidiary of Countrywide who in turn woulf deliver an appraisal value at whatever KB and Countrywidwe ordered. These individuals were under directf instruction to value homes at or above thecontracr price, even if it meant violating regulatoryt guidelines and requirements, the suit claims. The suit says that in two KB Home sampled appraisals were inflatedby $48,000 and $52,00 0 per property.
The suit includes allegations of a second scheme with Countrywide and its subsidiarappraisal arm, LandSafe. The suit alleges LandSafe outsourcedx appraisal work to some individual appraiserss and forced appraisers to accept payment belowmarket value. LandSafe then chargede plaintiffs upwardsof $400 for servicews when the company completed no work of its own, the suit According to the KB Home ran into similar appraisal problemxs in 2005 when it settled with HUD for $3.2 millionb to resolve an investigation into the company'x underwriting violations.
The HBSS lawsuitg claims violations of the Racketeer Influenced and Corrupt OrganizationeAct (RICO) and violation of Californiza unfair competition law. KB's major markets in Californiaz include communities inSan Jose, Los Angeles and Ventura, Orange County, Sacramento, San Bernardino, San Oakland and Stockton.