HOBB NEWS UPDATE: Builders Exposed - All the sign were there...Who are the real losers?

[Guest guest]

A message from Janet Ahmad

Builders Exposed - All the signs were there. Who are the real losers?

The review of events reported in this News Update began years ago when the

building industry devised a plan to make billions, and now the walls are caving

in on them. The questions are; what kind of scams will the next generation of

homebuilding with empty promises of sound homeownership bring to our

communities? How can we prevent history from being repeated?

All the signs were there, even before July 2005 when HUD fined KB Home $3.2

million for mortgage irregularities. Not long afterward its CEO Bruce Karatz was

caught in a scandal of messing with backdating stock options.

Shortly thereafter the Charlotte Observer announced an FBI Beazer Homes

Investigation in a four-part series that exposed Beazer's lucrative scam of loan

fraud involving first-time buyers.

Instead of stopping the bleeding a band-aid of industry spin obscured the

industry sins. Using skillful marketing techniques on young first-time

homebuyers, friendly sales representatives worked their magic to create

'pulse-loans' - if a individual entering the model home door had a pulse, the

builder's loan company had a mortgage for them and the house was thrown up in a

matter of days.

Scams of the powerful homebuilding industry are slowly and painfully unfolding

daily in nationwide news. The first eye-opening report came on August 13, 2007

in a BusinessWeek special report 'Bonfire of the Builders,' where the editors

discussed " how by rushing into the mortgage business big-time, homebuilders

helped fuel the housing crisis. Now they're hurting-and so is Wall Street. "

In one of the articles this past week American Watchdog explains how the 2007

real estate disaster happened and what consumers should know and do. " For over

three years Americas Watchdog has been warning of a coming real estate disaster,

as a result of greedy lending practices. Despite the warnings, mortgage lending

practices did not change, greedy mortgage lenders & homebuilders had their way

with unsuspecting consumers, and now the US economy is tittering on the verge of

a serious recession or worse. "

Currently the bad building practices of Lennar are being reported and showing a

significant pattern of critical design flaws, construction defects and customer

neglect. In my message in the May 13, 2007 HOBB News Update I reported that

Lennar was getting blasted in a number of states especially Florida and the

South Carolina, Westcott Plantation where homeowners were demanding Lennar Homes

buy-back their defective homes.

Friday, Lennar may have met their match when Brockovich held a press

conference announcing she would represent the South Carolina, Westcott

Plantation homeowners after she confirmed high levels of Volatile Organic

Compounds (VOC's) contaminates in their community.

Also in town was Georgia's HOBB Rep. Kimball to support the Lennar

homeowners as well as the Arbitration Fairness Act of 2007 that would discourage

binding arbitration in builder contracts and the Home Lemon Law.

If things aren't bad enough for Lennar its all too familiar construction defects

are getting attention in Texas. Ten days ago unhappy Hutto, Texas homeowner's

packed city hall asking that Lennar buy-back their homes after the City Building

Officials confirmed construction defects in their Hutto Parke community.

Meanwhile, builders are whining that business is in the toilet and homebuilder

stock prices have plummeted by as much as 75%. Stockholders are crying over

their losses in the stock market and filing lawsuits. Investment groups urge

homebuilders to address compliance failures. September 7. 2007 the giant

Countrywide Mortgage announced it was cutting 12,000 jobs as rumors of

bankruptcy spread. Beazer is on the verge of bankruptcy and KB Homes is still

limping along as other builders use splashy campaigns, auctions, to clear out

inventory.

Who are the real losers; the answer is every taxpaying citizen in America?

Families, when the breadwinner looses his or her job because of its relationship

to the building industry or mortgage industry. Those who were duped into

believing they qualified for a house they couldn't afford. Communities sit with

abandoned houses where house prices dropped overnight due to epidemic numbers of

foreclosures. The children who once danced and jumped for joy around the big

new house now watch their friends and neighbor move out and soon move out to an

unknown future as well.

See the media coverage of the building industry exposed and more enlightening

articles below!

Your participation is vital. Together we have and will continue to make a

difference! Help us to help you by keeping in touch.

We would like to hear from you so, please take a few minutes to post your

comments on the HOBB Forum.

Thank you,

Janet Ahmad, President

HomeOwners for Better Building

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NEWS UPDATES:

News 2 - Lennar meet their match, unhappy homeowners & Brockovich

Brockovich Plans to Sue

She made millions fighting for the health and safety of homeowners, a story that

caught the attention of hollywood film makers. Now Brockovich is part of a

team seeking to represent several country homeowners in a lawsuit they plan to

file in the near future. " I am here as an advocate first and foremost. I am as a

consultant secondly, " said Brockovich... According to the EPA volatile organic

compounds or VOCs include a variety of chemicals some of which may be harmful.

The chemical Brockovich's firm is now concerned with is benzene. The firm hired

experts to retest some homes. Results showed various forms of benzene at, what

she says, are higher than EPA-approved levels. Read more...

ABC NEWS 4 Lennar Troubles - Brockovich and Contamination

Brockovich Here To Help Westcott Plantation

" They've asked for help-they're sick, we're finding contaminants and somebody

needs to give them some answers, " Brockovich pleads. Brockovich says testing at

Wescott has shown higher than allowed levels of chemical compounds, mostly

Benzene, a colorless and flammable liquid that used to be added to gasoline. Now

she says that compound can be found underneath people's homes in levels more

than 70 times the EPA allowed amount. Read more...

Brockovich takes on Lennar Homes

Brockovich to conduct inquiry in N. ton

Environmental advocate Brockovich is investigating a North ton

neighborhood that she said she believes is contaminated with a cancer-causing

chemical... She said the Wescott case reminds her of other neighborhoods in the

country she has studied, in which toxic chemicals seeped from waste sites to

residential areas. An EPA official said the agency is investigating whether the

areas in question have been used as dumping sites...Brockovich said she'll take

on the Wescott case despite threats from Lennar. She said the company told her

this week that it would conduct " a smear campaign " against her if she continued

her investigation. Read more...

Live 5 News: Brockovich takes on Lennar in ton

Westcott Plantation Worries Bring Brockovich To Town

Brockovich came to ton to help unhappy homeowners living in Westcott

Plantation. " She flew out and met with homeowners, about eight of us, and

brought in members of her own team to check into it, " Hull says. They found the

homeowners are bringing in other more dangerous chemicals, like benzyne and

acetone, chemicals commonly found in paint thinner. Read more...

ABC News: Worst Month for New Home Sales in 7 Years

During the Past Year, Sales of New Homes Have Dropped 21 Percent

August was the worst month for sales of new homes in seven years, according to

figures released this morning by the government. The official sales pace for

last month was a seasonally adjusted annual rate of 795,000 units - well below

the 867,000 economists were betting on and the slowest since June 2000. Read

more...

Public Citizen Reports on Binding Mandatory Arbitration

Report faults binding mandatory arbitration

Credit card holders stand little chance of winning in mandatory arbitration of

disputes with their banks, according to a report released Thursday by national

consumer advocacy group Public Citizen. Arbitration firms used by companies such

as MasterCard Inc., Visa, Discover Financial Services LLC and American Express

Co. ruled against consumers in about 18,000 of 19,000 disputes analyzed in

Public Citizen's study. The group examined data from California because it is

the only state that requires arbitration companies to publish the results of

cases they hear. However, consumer advocates at Public Citizen and in land

are confident the problem is national in scope. Read more...

Group Claims These Are Just the Initial Stages, with More Homeowner Hardships to

Come

Real Estate Disaster the Result of Greedy Lenders and Homebuilders, Says

Watchdog Group

According to the release, the single biggest contributor to the 2007-2008 real

estate disaster has been mortgage lenders being most concerned about making fast

profits, regardless of the long term impact on the economy. This boils down to

nothing more than greed, which AW says manifested itself in three primary ways:

pay option adjustable rate mortgages, stated income loans and massive appraisal

fraud on the part of homebuilders... Massive appraisal fraud occurred when

homebuilders conspired with appraisers to over-value builders' new houses by as

much as 25 to 35 percent. As a result, says AW, homeowners in existing

neighborhoods naturally assumed their homes were worth more money than they

actually were. AW says that now " our big worry is formerly hot real estate

markets adjusting down 25% to 35% to pre-frenzy levels by this time next year. "

Read more...

Binding Arbitration - Little guy seldom wins, study finds

Binding arbitration a loser for consumer

In a review of 34,000 arbitration cases, Public Citizen said that companies

initiated nearly all of the cases and used arbitration firms that they know will

rarely rule in favor of consumers. The report focused specifically on cases

handled in California by Minneapolis-based National Arbitration Forum.

California is the only state that requires arbitration companies to publicly

disclose details of arbitration cases. Read more...

PR Web: New Home Implosion Just Beginning

Americas Watchdog Explains How The 2007 Real Estate Disaster Happened Along With

A Grim Preview of 2008

For years Americas Watchdog has been warning about the implosion of the US real

estate " bubble. " Wall Street talks like the problem is behind us. In reality the

" problem " is just in its initial stages, with more severe hardships that will

affect individual homeowners as well as the over all economy. In order to better

understand this real estate and economic disaster, Americas Watchdog along with

its Homeowners Consumer Center have put together the main reasons this disaster

happened, along with what citizens can do to position themselves from the storm

that is about to come. Read more...

KB Home Troubles Deepen as Cancellations Increase

KB reports $35.6 million loss in Q3

Home builder KB Home (NYSE: KBH) on Thursday reported a net loss of $35.6

million in the third quarter ended Aug. 31, compared with net earnings of $153.2

million in the same quarter last year. KB Home's home-building operations

generated 3,907 net orders in the third quarter, down 6 percent compared to

third-quarter 2006. And the company's 2007 third-quarter cancellation rate of 50

percent was lower than its 60 percent cancellation rate in third-quarter 2006

" but higher than the 34 percent rate in the 2007 second quarter, reflecting the

challenged housing and credit environment. " Read more...

Pulte Fails to Install Hurricane Clips

Builders Eliminate Hurricane Clips

In 2004 Pulte Homes decided to stop installing hurricane clips on houses that

they are building in Sun City Hilton Head, a hurricane-prone area located near

the coast. Pulte has recently resumed installing hurricane clips on new houses

that they're building here, but refuses to install them in the more than 2,000

houses they built in 2004, 2005, 2006 and early 2007 Read more...

Public Citizen Audio Report on Binding Arbitration

Creditors have upper hand in disputes

What credit squeeze? The Federal Reserve says Americans are charging as much

stuff as ever on credit cards. But a report out today from the consumer watchdog

Public Citizen says that when we dispute those charges, cardholders lose almost

every time. Helen Palmer reports. Listen to this Story

AARP Reports: Pennsylvania to regulate Builder Arbitration

Pennsylvania Moves to Regulate Home Building Arbitration Contracts

The Pennsylvania House of Representatives is considering legislation that would

set conditions for the enforcement of pre-dispute arbitration agreements in

contracts between home builders and customers, and make a failure to comply

grounds for a court to void the clause... The bill would make a home

construction contract voidable by the consumer if it has any of the following

types of clauses, a clause purporting to waive a customer's right to a jury

trial, an agreement not to assert any customer claims or defenses arising out of

the contract, a provision authorizing a homebuilder to recovery attorney's fees

and costs from the customer... Read more...

Investment Group blame builders for selling families homes they could not afford

CtW Investment Group Urges Homebuilders to Address Compliance Failures

The CtW Investment Group, pointing to large homebuilders' role in creating the

current crisis in the housing and credit markets, today called on the boards of

directors of the nation's largest homebuilders to establish dedicated compliance

committees to protect the companies and their shareholders in the face of

mounting legal and regulatory scrutiny. " Homebuilders are not passive victims

here, " said Bill , Executive Director of the CTW Investment Group.

" Through improper business practices, particularly within their mortgage

affiliates, the nation's largest homebuilders in fact helped cause the

industry-wide collapse. This turmoil has already destroyed billions in

shareholder value, while exposing shareholders to considerable legal, regulatory

and reputation risk. " Read more...

Houston KHOU TV: Contractor Sting

A catch and release contractor sting

The Texas Department of Licensing and Regulation conducts stings, looking for

unlicensed contractors. " , this is a huge problem here in Houston, " one

undercover investigator said. " Not only in this city, but all across the state

of Texas. " Investigators invited 11 News to take part in their second such

operation in Houston. Agents have taken these stings statewide, but they can't

arrest violators. They can only issue fines that can go as high as $5,000. In

April, investigators caught almost 40 men at one location, including

Kenrick. He was notorious at the time for allegedly taking money without

finishing work. Now he's now paying off a $3,000 penalty. Read more...

Lennar Troubles Worsening

Lennar Reports Biggest Loss in Its 53-Year History

Lennar Corp., the largest U.S. homebuilder, reported the biggest quarterly loss

in its 53-year history after $848 million of costs to write down the value of

real estate. The third-quarter net loss was $513.9 million, or $3.25 a share,

exceeding the most pessimistic estimates from analysts and suggesting the worst

housing market in 16 years shows no signs of stabilizing. Revenue at Miami-based

Lennar fell 44 percent to $2.34 billion, the lowest in more than three years.

Read more...

Lennar the Latest to Downsize

Troubled home builders turn to layoffs

Lennar Corp. became the latest to downsize, revealing Tuesday that it has

slashed 35 percent its work force amid the national mortgage crisis. The latest

cuts follow similar moves by other big builders. Pulte Homes Inc. cut 1,400

full-time jobs, or 10 percent of its work force, last year. Centex Corp. also

slashed 10 percent of its salaried work force in 2006 to around 6,400. A

tightening credit market, rising foreclosures and the sales slowdown have

boosted housing inventory while forcing painful markdowns that have hurt housing

companies' bottom lines. Read more...

Homebuilder Mortgage Fraud Exposed

Mortgage scam threatens 200 homes with foreclosure

....The couple now fear they are victims of a $100 million mortgage fraud that

may have touched hundreds across the south metro. Up and down their street,

friends and neighbors who rented from Parish Marketing and Development - an

Eagan homebuilder - have received foreclosure notices informing them their

two-story dream homes will be sold at sheriff's sales. Some houses already have

been resold. As the housing market has cooled and foreclosure rates have

skyrocketed, authorities are investigating a bevy of mortgage fraud cases across

the state and nationwide - particularly in rural and far-reaching suburbs. This

latest investigation is notable not only for the dollar amount but also for the

number and concentration of homes. Read more...

Defective Lennar Homes in Texas

City of Hutto Confirms Defective Lennar Homes

After Thursday night's City Council meeting some are saying the commonality of

expansive soils problems and defective trusses are a major concern. Hutto Chief

Building Official McDowell reported to the council that excessive mail

pops, cracks in drywall, slabs and masonry are prevalent and that homeowners are

complaining that Lennar Homes repairs are inadequate. McDowell found that

excessive movement has caused increased stress loads to the building components

due to expansive soil in the area; causing the structures to shift beyond normal

tolerances causing the cracks. Angry homeowners stepped to the podium

complaining they obtained what they say are falsified HUD Builders

Certification, form 92541, in which Lennar certified that the soil the homes

were built on was not expansive. See Building Official's Report...

The Housing Bubble - Money Pit

The Gold Mine Has Turned Into The Money Pit In Florida

The Bradenton Herald reports from Florida. " Jo Lynne Navarro wants her $270,000

back. That's how much the Sarasota County woman paid to reserve two Bel Mare at

Riviera Dunes condominium units two-and-a-half years ago. The units existed only

in glossy sales brochures at the time, but Navarro - like many others lured by a

sizzling condo market - was eager to buy early. " Read more...

Analyst predict Lennar & KB in worse shape

Homebuilders Slash Prices as Earnings Fall

A Lennar property in Florida demonstrates the industry's dilemma heading into a

key week of earnings and data. Video: TheStreet.com

Lennar Homes trouble brew in Texas

Hutto residents protest Lennar subdivision

Since purchasing their new homes, numerous residents of the Hutto Parke

subdivision say they have found cracks and nail pops in their walls and

ceilings, foundation problems and defective roof trusses - and do not want

others to have to experience the same. Residents allege the subdivision's

homebuilder, Lennar Corp., sold them " defective homes " and lied on Housing and

Urban Development documents, claiming the homes were built on un-expansive soil.

Read more...

Janet Ahmad, President

HomeOwners for Better Building

http://www.hobb.org

210-402-6800