The federal lawsuit was brought by Mark Zachary, a regional vice president and manager of the Countrywide KB Home Loans division in Houston.
He seeks unspecified compensatory and punitive damages against the joint venture of mortgage lender Countrywide Financial Corp. and builder KB Home.
The lending practices of Countrywide Financial and other mortgage companies have come under scrutiny amid a surge in home loan defaults among borrowers with poor credit histories. On Tuesday, Countrywide reported a fourth-quarter loss of $422 million after losing $1.2 billion in 2007’s third quarter.
In the suit, Zachary contended he was given an excellent performance review last February then fired three months later after he blew the whistle on fellow employees and outlined instances in which appraisers were “being strongly encouraged to inflate homes’ appraised value by as much as 6 percent.”
That resulted in buyers owing more than their home was worth, Zachary claimed in the lawsuit filed Jan. 17 in U.S. District Court in the Southern District of Texas.