A close eye is being kept on the Fortune 500 company Kaufman & Broad, better known as KB Homes, by some very unhappy homeowners in Hesperia. They are anticipating an investigation of KB Homes by the California Attorney General’s (AG) Office in regards to the company’s previous joint venture with Countrywide.

Herein lies the rub for the homeowners – flaws in construction that were never repaired and unscrupulous marketing initiatives by the former joint venture of KB Homes with Countrywide. Repairs have been made to the cracked stucco of several homes, along with other repairs, but outstanding issues continue to loom over the company for other reasons.

Accused of bait-and-switch by KB home buyers in nine Inland Empire cities, Countrywide KB Home Loans is being blamed for using deceptive practices in convincing buyers to procure KB homes at inflated prices. The complaint was filed in the state’s attorney general office earlier this year by several homeowners.

Homeowners claim that they were convinced by KB Home sales reps that they could afford larger loans than they actually could; that their salaries were unknowingly falsely inflated on their loan applications; and that KB threatened to charge penalties if borrowers obtained their mortgages with other lenders.

Homeowners, along with their advocates Laborer’s International Union of North America (LIUNA), claim that Countrywide KB Homes has left collateral damage in its wake. According to the unhappy homeowners, defects on many homes are no longer under warranty and foreclosures that have devastated communities are all that’s left of the former joint venture. Many of the homes are also underwater.

In all negotiations with KB Home, homeowners were told to contact Bank of America who now owns Countrywide.

One homeowner not mentioned in the complaint said that she was rushed through the process and pressured to order all the bells and whistles. The cost of her home jumped by an additional $170,000. Instructing KB Homes that she did not want a balloon loan, she said they told her that she had to get her loan through them.

She also said that her husband’s wages were multiplied by 10 times on their loan application without their knowledge. The homeowner and her husband never viewed the entire packet. Instead, they signed and initialed where instructed. She also alleged that she was forced by KB reps to purchase all her appliances through them, instead of going to Home Depot, which was her preference.

All nine complaints reflected similar stories. They bought homes at inflated prices, home values have plummeted and they are underwater in their mortgages, really underwater. They claim it will take years to recover the values. Many homeowners are attempting to obtain mortgage modifications by Bank of America.

California is not alone in its grievances filed against Countrywide KB Homes. Complaints have also been filed in the state attorney general offices of Nevada and Arizona.

With all the issues at stake, AG Jerry Brown may be hesitating in order to determine the correct course of action to take against KB Homes.