KB Home agrees to drop arbitration from warranties
KB Home agreed Wednesday to drop binding arbitration from its customer warranties as part of a class-action lawsuit settlement.

Mandatory Arbitration Clauses Reduce Consumer Rights
When American consumers sign contracts — for credit cards, bank loans, mortgages or telephone service — language in the fine print often waives their right to employ the full extent of the law should the company violate the contract...The fine print of many contracts says consumers "waive the right to go to court" to resolve any disputes about a product or service. They are instead committed to binding arbitration... Claybrook says the system is flawed. "The process completely favors the corporation," she said. "The corporation does repeat business with the arbitration company and if the company routinely finds in favor of consumers or gives large awards to consumers, they don't get used again."

Off the Kuff
Building influence
Here's an interesting article from the This Week section of the Chron regarding an acrimonious and public battle between a disgruntled homebuyer named Jordan Fogal and the builder who constructed her house, Tremont Homes... Let's start with the baseless attack on civil juries, something that I've noted before. Just once, I'd like to see a reporter ask someone who offers such an opinion if they hold similar feelings about juries in criminal trials... Attacking juries like this is cynical, dishonest, and really quite insulting, since after all everyone reading this is a potential juror. That this now seems to be a standard talking point for the homebuilding industry certainly doesn't give me any faith in their preferred system of arbitration...But what really gets me is the last quoted sentence. The lawyer for the builders is also an arbitrator for the AAA, which is the group used to rule on these builder/buyer disputes.

Texas Senate Committee on Jurisprudence

FANNIE MAE NO LONGER INVESTING IN MORTGAGES CONTAINING MANDATORY ARBITRATION CLAUSES
FANNIE MAE NO longer invests or accepts delivery of residential mortgage loan products that contain mandatory arbitration clauses.  According to Fannie Mae Announcement 04-06, Fannie Mae issued, among other things, new instructions to lenders outlining the policies for purchasing and accepting residential mortgage loans. Specifically, the instructions included a prohibition against purchasing or accepting delivery of residential mortgage loans containing mandatory arbitration clauses. A limited exception exists, permitting the use of mandatory arbitration provisions in mortgages that contain a waiver provision. The waiver provision shall provide that if the loan is sold or an interest in the mortgage loan is transferred to Fannie Mae, the mandatory arbitration clause becomes null and void.

FREDDIE MAC PROMOTES CONSUMER CHOICE WITH NEW SUBPRIME MORTGAGE ARBITRATION POLICY
Freddie Mac announced today that effective August 1, 2004, it would no longer invest in subprime mortgages originated on or after that date that contain mandatory arbitration clauses. Freddie Mac is the first among secondary mortgage investors to adopt such a stance on subprime mortgages with mandatory arbitration clauses. This policy is aligned with the corporation’s existing prohibition on the use of mandatory arbitration for prime market mortgage investments.

You may have unknowingly waived your constitutional right to a trial by jury when you purchased you new home, used your credit card or made a long-distance phone call. Today, mandatory arbitration agreements are found in almost all consumer contracts, and they are successfully being used by big corporations to block access to courts by consumers who have been treated unfairly. Go to www.texaswatch.org to learn more about arbitration and its pitfalls for consumers.

By Caroline E. Mayer The Washington Post. Arbitrators can limit an aggrieved individual's access to a company's documents, thus possibly reducing support for the complaint. Arbitrations are decided in private. Decisions are kept confidential, so consumers don't necessarily learn what the arbitrator based a decision on. And many consumer agreements call for the arbitration firm to be chosen by the company being complained about.

By Caroline E. Mayer Washington Post Staff Writer.

As an arbitrator, you're going to get work as long as parties choose to use you, and if this is your career or it makes up a good part of your practice, then if you render a decision that is unpopular" with parties that frequently use arbitration, they "may not choose to use you again."…The homeowner is convinced she won't get a fair hearing.

Link: http://www.washingtonpost.com/wp-dyn/articles/A64365-2002Jul13.html