KB Home and Countrywide Financial Corp. have been named as defendants in a Class Action suit filed on October 30th, 2009 in the US Dist. Court for the Middle District of Florida - Orlando Division. The attached suit details alleged predatory practices in an attempt to dominate mortgage lending and corrupt the loan underwriting and approval process. Specifically, two schemes were identified.
Scheme 1 – Inflated Appraisals
According to the complaint, “Defendants KB Home, Countrywide and LandSafe, along with their network of staff and fee appraisers, formed and operated a criminal enterprise (the “KB-Countrywide Criminal Enterprise”) which through the “Inflated Appraisal Scheme” inflated the sale amounts of KB Home properties and loan amounts of Countrywide loans by corrupting the appraisals of KB home properties such that the appraisals would always indicate a value at or above the contracted sales price for the properties or were otherwise inflated.”
Scheme 2 – Inflated Appraisal Fee
According to the complaint, “Scheme 2 in this action arises from a scheme (the “Inflated Appraisal Fee Scheme”) between Countrywide and LandSafe to profit from:
(1) imposing marked-up appraisal fees on Countrywide borrowers; and (2) controlling the appraisal process and results.”
Scheme 2 works as follows:
According to the complaint, “Scheme 2 works because of:
1) Countrywide’s insistence that LandSafe be the appraisal firm that conducts the appraisal on the loan;
2) The secret agreement between Countrywide and Landsafe to mark up the actual cost of the appraisal and to have the actual appraisal done by a third party at a fraction of the cost listed on HUD-1 and final settlement statement; and
3) Concealment from consumers of the appraiser’s invoice to LandSafe. If Countrywide did not insist on LandSafe’s exclusivity, an independent appraiser would charge Countrywide the actual cost of the appraisal and Countrywide, through its subsidiary LandSafe, would be unable to skim off each appraisal hundreds of dollars for no services rendered.”
Click here to download and read the complete complaint: Download KBCountryWideComplaint
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