LOS ANGELES (CN) – KB Home conspired to inflate real estate prices in California through phony appraisals, a class-action antitrust complaint claims in Superior Court. Plaintiffs claim KB Home perpetrated the frauds “as the California real estate market began to collapse in 2005-2006.”
“Starting in the fall of 2005, the value of newly built KB Home residence(s) collapsed relative to the pre-construction contract prices obtained in the spring and summer of 2005,” the complaint states. “Where buyers became aware of the falling property values, they abandoned the transactions before the close of escrow, or extracted large price concession. In order to conceal the declining values and close pending sales, KB Home and its in-house mortgage lending operation conspired with affiliated appraisers to generate fraudulent ‘at value’ appraisal reports.”
These are some of the systematic frauds KB Home perpetrated, the complaint states:
“False comparable sales data: statements that comparable houses had recently sold for one price when they had in fact recently sold for another much lower price.
“The selection of distant, dissimilar properties as comparable sales instead of numerous available neighboring, identical comparable sales, because the latter could not support at-value appraisal reports.
“The use of pending, as opposed to closed, transactions as comparable sales, including when no sale was actually pending because the ostensible buyer had already abandoned the transaction.”
Plaintiffs, represented by Peter Fredman with Brayton Purcell, demand punitive damages for unjust enrichment, deceit, negligence, unfair competition and violation of consumer laws.
Here are the defendants: KB Home; KB Home Sales – Northern California, Inc.; KB Home Sales – Southern California Inc.; Countrywide Home Loans, Inc.; KB Home Mortgage Company; Countrywide Mortgage Ventures, LLC; Biran Vanoli dba Vanoli & Associates; and Jane L. Brown dba Brown & Associates.