The KB Home development where I purchased is currently 30% in default. I beleive this is one of the highest default rates in our small county in Florida (Vero Beach).in comparison the county foreclosure rate is around 2% currently. Values have decreased 50-60% in the subdivision. According to local data values are currently down about 17% in our county overall. This KB development (Carriage Lakes) far surpases anything in the community for troubled properties as far as I can determine.
The development was sold to 65% non-owner occupants (mostly speculators) and not only was it not disclosed to legitimate buyers like myself (or lenders), but we were required to sign an agreement that homes were to be occupied by buyers. I feel this was very deceptive.
KB/Countrywide wrote appx. 63% of the loans on these non-owner occupied homes, so had to know they were not to be occupied. I have checked with county records & most have the mortgage riders showing they were non-owner occupied. They were selling 2,3, & 4 homes to the same buyers. What did KB think these buyers were doing? 20% were "flipped" in a few months while the builder was still present & another 20% were for re-sale right away. Why were buyers like myself required to sign an owner occupied agreement & told at the time it was their standard contract? Was it to mislead me into thinking this developement was owner occupied when in fact it was not? KB has denied to me that they had everyone sign this agreement, yet I have a quote in the WSJ where KB Home states they had buyers sign the agreement to stop speculation. Which is it?
The non-owners have not maintained their properties & have flooded the market with resales before the builder even left. Now 30% of the homes in the subdivision are in default & the numbers are climbing.
I paid $309,000 for my house. The house next door sold for $320,000. It is currently re-listed for $145,000. This is typical of the other homes sold or for sale in this sub. Nothing but short sales or forclosures are being sold for the past year in the subdivision.
KB also left the developent without the required landscaping, & many of the the homes I am aware of have leaking roofs & walls or plumbing problems. There are pot holes in the roads (2 years old), and we have found the road has 1 inch of pavement, not the level required by code. The homeowners have constant battles with tenants, non-payment of fees, lack of maintneance & abuse of the community thanks to the non-onwer occupied presence. Plus many are now just walking away & abadoning their properties.
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KB had the largest HUD fine & settlement in history for mortgage violations in 2005. There were 13 violations involving a number of poor underwrting practices, involving approving loans to borrowers who were not eligible, overstated or incorrect income statements, failure to include all borrowers' debts, etc (from HUD news release No. 05-093). This is not a HUD development, so one must wonder if they did the same with conventional loans? Is this an on-going pattern of KB Home? Could this fall under Rico? I do not know.
KB currently is being sued by a former VP who states he was fired for not going along with mortgage & appraisal fraud. (Mark Zachary in Houston TX)
There is a class action forming in CA against KB Home for the same as above (mortgage & appraisal fraud)
We have contacted the FBI regarding the statistics in this sub & they will neither confirm nor deny an investigation is on-going.
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