An honest look at family finances
There is a class action lawsuit against KB Homes for artificially inflating home prices. The allegations state that since 2006 KB Homes along with Countrywide and LandSafe have been giving false appraisals in order to increase the apparent value of the home. They say this happened in Arizona and Nevada and home values were inflated by as much as $82,000 per home.
I bought an Arizona KB house in 2004 and Countrywide and LandSafe were the companies that KB Homes referred us to. We got our mortgage through the builder, the builder uses Countrywide. I didn’t think anything about it. Countrywide sent out an appraiser. Again, didn’t think anything about it. According to this article this started after the market downturn, so this didn’t happen to us, but it sure could have. Timing is the only thing that saved us.
When I first heard about the lawsuit I didn’t understand how this could even happen. I mean, don’t people shop around? I know when we bought our house we knew what houses in our price range were like. I had an idea of the size of the home and neighborhood to expect. But I can see that in 2006, when house prices were falling faster than anyone could keep up, it would be harder to say exactly what any given house was worth. You would be more reliant on the appraiser to assess the value.
The lawsuit alleges that KB Homes would refer buyers to Countrywide for their mortgage and in turn, Countrywide would refer them to one particular person and LandSafe. This person would assess the house and whatever value KB Homes and Countrywide would request.
The victims of this fraud don’t end at the people who bought the inflated homes. One of the main sources of information an appraiser uses is comparable home sales. If one house sells at an inflated value, then the houses around it will also have an inflated value. So people who bought houses in and around KB communities may also have paid higher prices due to this scheme. Unfortunately, there isn’t any recourse for those buyers.
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