GALVESTON - Two Colorado attorneys claim Bank of America Corp. and one of its subsidiary appraisal companies falsified the value of property they purchased in Galveston nearly five years ago, recent court documents say.
Mark and Michelle Herbert of Golden, Colo., argue in a suit filed Jan. 15 in Galveston County District Court that BOA and Landsafe Services LLC fabricated a positive appraisal report on property known as Pointe West that would eventually hamper the plaintiff's efforts to sell.
The Herberts say the defendants fraudulently established the property's worth at $310,000, which was more than the real figure.
"The plaintiffs are informed and therefore believe that BOA and Landsafe acted in concert and collusion to falsely establish an appraised value of $310,000 for the property in the preparation of the appraisal report to be used for the financing of the property," the original petition says.
"The true value of the property at the time of the appraisal report and at the time it was sold to the plaintiffs, was substantially less than the price represented in the appraisal report."
According to the suit, the plaintiffs considered purchasing a home in Pointe West in August 2005 and were offered the property in question by Centex Homes with a listing sales price of $310,000.
Shortly afterwards, the Herberts turned to BOA for financing. The bank required an appraisal prior to financing and thus introduced the plaintiffs to co-defendant Landsafe, the suit says.
Landsafe appraised the property at a value of $312,000 a month later, and the bank agreed to finance the property at the purchase price of $310,000.
"The appraisal report appeared to be appropriate on its face, and the plaintiffs relied upon the veracity of the appraisal report as to the true value of the property and, therefore, purchased the property from Centex," the suit says.
The Herberts were required to make a cash deposit with Centex, which is not a defendant, of 10 percent of the sales price, or $31,000, and financed the balance of the purchase of the property - $279,000 - with BOA, it adds.
In October 2005, the plaintiffs closed on the property and executed a warranty deed and a promissory note, which they have reportedly paid $60,000 to date.
Six months later, they put the property up for sale with no buyers. It would remain on the market without a successful sale until March 2008 when the Herberts started to question their inability to sell the property, the suit says.
The plaintiffs say they were later informed that the property and virtually the entire Pointe West development were unmarketable "because the property was not, and never was, appropriately valued at the price stated in the appraisal report."
"Indeed, many of the properties the same as the property, as well as the property, were unable to be sold at a price of about $100,000, and even the Galveston County Tax Appraiser continued to reduce the appraised value of the property to around $75,000," the suit states.
"This was true to any market- or economic-downturn in Galveston County, Texas, or the consequences of Hurricane Ike."
The suit concludes that the plaintiffs demanded BOA resolve the issue. The bank, though slow in its response, "suggested a resolution would be worked out," it says.
"Accordingly, the plaintiffs in good faith and in an effort to avoid litigation, continued to work with BOA... toward a resolution," the case states.
"It was not until on or about Sept. 23, 2009, that the plaintiffs were finally advised that BOA would not resolve the plaintiffs' claims amicably or voluntarily."
Consequently, the Herberts seek undisclosed monetary damages and a jury trial.
The plaintiffs are representing themselves.
Galveston County 122nd District Court Judge John Ellisor is presiding over the case.
Case No. 10cv0242