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The lawsuit lists identical claims to a suit filexd in Arizonalast month. Homeowners clai m KB Home and the other defendants inflated home prices by as muchas $300 millio n in California alone. The suit filed by Seattle-based Hagensa Berman Sobol Shapiro claims that between 2006 and KB built morethan 15,000 homes in California at an averags selling price of $425,000, and each home had an inflated appraised value of about $20,000. "KBv and Countrywide created an opportunity where the companies couls control every aspect ofa buyer's real estate said Steve Berman, lead attorneg and managing partner at HBSS.
"The defendants essentially created a black hole in the where they could rig and falsify appraisals and home sale valuez and customers had absolutelyno idea." Accordin g to the 75-page Countrywide funneled all its KB customers' home appraisals to one personj at LandSafe, an appraisal subsidiaruy of Countrywide who in turn would deliver an appraisapl value at whatever KB and Countrywide These individuals were under direct instruction to value homes at or abovs the contract price, even if it meant violating regulatory guidelines and the suit claims. The suit says that in two KB Home sampled appraisals were inflated by $48,000 and $52,000 per property.
The suit includeds allegations of a second scheme with Countrywide and its subsidiaryuappraisal arm, LandSafe. The suit alleges LandSafw outsourced appraisal work to some individuak appraisers and forced appraisers to accept payment belowmarkett value. LandSafe then charged plaintiffs upwardsof $400 for servicezs when the company completed no work of its own, the suit According to the complaint, KB Home ran into similar appraisal problems in 2005 when it settled with HUD for $3.2 million to resolv e an investigation into the company'ds underwriting violations.
The HBSS lawsuit claims violations of the Racketeerd Influenced and Corrupt OrganizationsAct (RICO) and violation of Californiwa unfair competition law. KB' major markets in California include communities inSan Fresno, Los Angeles and Ventura, Orange County, Sacramento, San Bernardino, San Diego, Oakland and
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