Homes Values Rrigged, Lawsuit Says

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As home prices soared higher earlier this decade, the buying frenzy was fueled in part by what real estate industry experts now claim were exaggerated — or outright fraudulent — appraisals, the Los Angeles Times rerpots.


A lawsuit filed by two couples this week adds a new twist: It claims that Los Angeles builder KB Home and a unit of lender Countrywide Financial Corp. pumped up appraisals in their Sacramento-area development to sell homes at higher prices.


One couple, Deborah and Lonnie Bolden, says they paid $70,000 more for their home than neighbors who used different appraisers.


Their lawsuit, filed Wednesday in Los Angeles County Superior Court, alleges that KB Home and Countrywide “conspired with affiliated appraisers to generate fraudulent” appraisal reports.


This was done, the suit contends, by comparing sales prices for homes in other KB Home developments a few miles away in the appraisal, rather than neighboring houses.


KB Home issued a statement Thursday saying “we believe that our full and complete investigation will show these allegations to be without merit.” A Countrywide spokesman declined to comment.


The Boldens in 2006 paid $475,000 for their five-bedroom, 2,987-square-foot house in a KB development in Live Oak, north of Sacramento.


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