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HOBB Weekly Update Message
Monday, 01 January 2007

A message from Janet Ahmad - Texas Legislative Session should be good news for builder accountability and new homebuyers

Texas Legislative Session should be good news for builder accountability and new homebuyers
A message from Janet Ahmad:
This years Texas Legislative session just may become ‘ground zero’ of heated debate that highlights the magnitude of increased shoddy homebuilding since the creation of the scandalous Texas Residential Construction Commission (TRCC).  The brainchild of homebuilder influence, and spearheaded by builders Bob Perry and David Weekley, TRCC was created to regulate homebuyers.
 
The Texas legislature begins in a couple of weeks and the issues of bad building, massive builder mortgage fraud, epidemic foreclosures, abusive binding arbitration clauses and the failed state ‘builder-protection-agency,’ TRCC will be priority issues this session.  More than any other time, there is unity among consumer groups and media attention like never before.
  
The fact is that all credit for such a mess falls squarely on the National Association of Home Builders (NAHB) inspired by an overconfident and unregulated Texas Homebuilding Industry that has put Texas in unflattering headlines.  After great success to limit liability for Texas Homebuilder’s and to incredibly regulate homebuyers, NAHB successfully worked for passage of similar abusive “Right-to-Repair” legislation in 29 other states; the first step toward regulating homebuyers in all other states.  To be sure Texas Homebuilder Bob Perry and his campaign contributions influence is lurking somewhere in states politics throughout the country.  His motives and questionable behavior has been the topic of national political headlines by the news media. See related articles: Homebuilder Bob Perry and his money in the news


Texas was once the playground for outrageous legislation however, this time the session appears headed for a showdown from angry families stuck with defective homes and their determination should not be underestimated.

Whether living in Texas or any other state your participation is important and will provide invaluable experience to tackle the same issues that are destroying homeownership in all states.
Janet Ahmad

Please take a few minutes and post your comments on the H O B B   F o r u m

HOBB News Updates
BIG BUILDER Magazine - Legend Homes; Illegal workers has multibillion-dollar effect
Illegal workers' multibillion-dollar effect on high-volume home building is two-fold, cheap labor and future home buyersLast holiday season, Legend Homes in Houston got a frightening look at what its business would be like without immigrant labor.  “Between Thanksgiving and New Year's we practically had to shut down,” says Scott Villarreal, the company's vice president of sales and marketing. “Here we were having to slam these homes [to make numbers for the company's fiscal year] and our workers went home for vacation. And it's not a two week thing or a week thing, it's a month thing. If we had to feel that the whole year …” he trails off, clearly not wanting to contemplate the scenario. Read more...

BIG BUILDER Magazine: Invisible Men
Without undocumented workers' role in the new-home labor economy, both costs and capacity may be at risk
The big builders that build two out of every five of the nation's new homes collectively pay at least $8 billion a year to hire undocumented workers, according to an analysis by BIG BUILDER. And they like it that way. What they don't like to do is to think about how much more the same amount of labor would cost if proposed legislation to end illegal immigration becomes law. The building industry has enjoyed the benefits of cheap, oftentimes illegal, labor for years and now it looks like, one way or another, those days may be over. With 15 percent of big home builders' costs directly tied to labor, builders have a giant stake in the outcome of two contentious proposals now being debated in Congress. Either version of the immigration bill would hurt. Builders could lose their illegal workers because they cannot get across the border, causing prices to rise because of worker scarcity. Or their prices will rise because they have to pay legal guest workers a more competitive market wage. Read more...

Inspection News Forum
Can someone offer some expertise on what is happening to this house? Defective New Pulte House in Kansas.  See: Pulte 5 months old house. Post your comments about this house or your own experience on this forum as well as the HOBB forum.

KB Home in North Hampton
More of the same built by KB Home
For years now KB continues to ignore the defects of homes in the North Hampton Subdivision in San Antonio. The events of North Hampton prompted Federal Investigations and the problem continue to linger.  Where water flows and cracks appear.  See defective KB Home - Related information: KB Home Feature

KB Home has trouble finding a market to build homes on swampland

KB drops project near New Orleans
The Los Angeles company said Thursday that it let expire a contract to jointly purchase 3,000 acres of farmland west of New Orleans. Instead, the builder and its partner, Shaw Group Inc. of Baton Rouge, La., said talks were continuing with the owner to acquire a smaller parcel.  With much fanfare a year ago, KB Home was among the first major builders to enter the New Orleans market. The area had long been ignored by big builders because of its lackluster economy and its unusual geographic features, including its location below sea level.  Read more...

NJ Home improvement contractors still a problem

Complaints fall as home renovators now must register
For the past year, home improvement contractors have been required register with the state before they could be issued construction permits by New Jersey towns. Consumer complaints have declined, although officials aren't yet ready to credit the new law. But they aren't ruling it out, either."It could be that some of the contractors who would have been the basis of complaints did not register and could not pull permits," said Stephen B. Nolan, acting director of the state Division of Consumer Affairs...The division had received about 2,500 complaints regarding improvement contractors by late December, Nolan said, about a 25 percent drop from the 3,400 recorded in 2005. He said he did now know why there was a drop, but added that "the registration is a great thing." Read more...

Lobbing, Affordable Housing Scheme & KB Home
Details revealed in lobbying case
Even before leaving office six years ago, a former aide to outgoing Mayor Ron Gonzales began a complex and illegal scheme to hide lobbying work that netted him millions, according to court documents obtained Friday by the Mercury News. As early as 1999, Tony Arreola, then the mayor's deputy chief of staff, set up his wife as the head of a corporation called Silicon Valley Strategies, prosecutors allege. Soon after leaving City Hall, they say, Arreola and another ex-Gonzales staffer, Sharanjit ``Sean'' Kali-Rai, went about lobbying, then hiding the income by shunting it to the dummy business. Read more...

Outstanding Report: KB Home a big factor in high foreclosures

Builders often key players in high-risk game
... Colorado's home foreclosure rate to the highest in the nation this year and Weld County to the highest in Colorado, real estate experts say: stagnant prices, too many houses for sale, 100 percent loans with rising interest rates, mortgage fraud, unregulated brokers, false appraisals and buyers reaching beyond their means... He and others say some builder incentive programs, particularly those that require buyers to use an affiliated lender, also can raise the risk of loan defaults... "The Post analysis found high foreclosure rates in several communities of one national builder, KB Home. In most cases, the loans for those homes came from KB's mortgage branch. In a Northglenn neighborhood built by KB Home, 56 of the original buyers have been foreclosed. Fifty-one, or 91 percent, got their loans from KB's mortgage company. In Kentfield, a Thornton neighborhood, 80 of the original buyers have been foreclosed. Seventy, or 87 percent, borrowed from KB's mortgage company. About half were foreclosed on their original loans, which KB sold to other lenders, and half refinanced before their foreclosures.  Related Special Report: KB Home Foreclosure Rate More Than Double Other Builders
Read more...


Denver Post: Homeowners lose

Homeowners' losses are others' gains
A crew of nine movers swarms over a Lakewood townhome, quickly clearing out three floors and piling the contents in the alley. Luke Beuthel, a field inspector with a property management company called Mercury Alliance, opens drawers in the kitchen one by one, snapping digital photos to show they are empty. Nearby, locksmith Bill Grasmick hurries to replace a deadbolt on the front door. In under an hour, the house is emptied and physical control gained by Wells Fargo, holder of the delinquent mortgage. Read more...

The Housing Bubble: 56% KB Home of homes foreclosed
“There Is A Tsunami Coming”: Colorado
The Denver Post reports from Colorado. “With more than 18,000 foreclosures expected this year, a record for the metro area, Colorado has had the highest foreclosure rate in the country. The current foreclosure epidemic traces more to overbuilding and aggressive lending than to fundamental economic problems.”...“The Post analysis found high foreclosure rates in several communities of one national builder, KB Home. In most cases, the loans for those homes came from KB’s mortgage branch. In a Northglenn neighborhood built by KB Home, 56 of the original buyers have been foreclosed. Fifty-one, or 91 percent, got their loans from KB’s mortgage company.” “In Kentfield, a Thornton neighborhood, 80 of the original buyers have been foreclosed. Seventy, or 87 percent, borrowed from KB’s mortgage company. About half were foreclosed on their original loans, which KB sold to other lenders, and half refinanced before their foreclosures.” Nearly all the original loans were insured by the Federal Housing Administration, which collects fees from borrowers to cover losses.” Read more...

Minnesota voters deserved to know about Bob Perry

Editorial: Disclose campaign giving promptly
Knowing that a Texas multimillionaire had dumped half a million dollars into a final-weekend ad campaign besmirching DFLer Mike Hatch might not have altered the outcome of last month's gubernatorial election. But Minnesota voters deserved to know about it before they went to the polls on Nov. 7. The secrecy that shrouded Houston homebuilder Bob Perry's gift until last week was made possible by a defect in state campaign laws. The flaw needs correction by the 2007 Legislature. Read more...

Foreclosures - Still Growing
Two Million Homeowners Facing Foreclosure
A new Center for Responsible Lending (CRL) study reveals that 2.2 million American households are likely to lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market. The CRL study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006. CRL's research suggests that risky lending practices have triggered the worst foreclosure crisis in the modern mortgage market, projecting that one out of five (19.4%) subprime loans issued during 2005-2006 will fail. Read more...

TRCC offers information on builder records - Is it a reliable source for homebuyers?
Check out your builder - Web site allows users to check background of companies, remodelers
The Texas Residential Construction Commission site at www.texasrcc.com includes information on builder and remodeler registration, inspection reports, and records of any administrative action taken against the company.  Is your complaint publicly recorded? Are the records accurate?  Send us your comments This e-mail address is being protected from spam bots, you need JavaScript enabled to view it This email address is being protected from spam bots, you need Javascript enabled to view it Read more...

KB Home Paychecks Highest in industry - What did customers get? 
Building paychecks: Ex-CEO of KB Home tops industry rivals
Over the last three years, former CEO Bruce Karatz made $232.6 million in compensation. That's nearly three times what the chief executives earned at Pulte Homes Inc. and Centex Corp., which are bigger and more profitable.  Among the nation's 12 largest builders, Karatz's closest competition came from Robert Toll, the CEO of Toll Bros. Inc. He pulled in $138.7 million over three years--a sum that Karatz outdid by nearly 70 percent. Read more...

The Housing Bubble in Florida
“Speculators Scrambling To Adjust” In Florida
The Herald Tribune reports from Florida. “New home construction, the linchpin of this North Port’s spending plans, has slowed to a comparative standstill and even optimists say these doldrums are far from over. The massive drop in home building, which started in April, has left everyone from City Hall staffers to spec home buyers scrambling to adjust.” Read more...

Pennsylvania homeowner flooding problem
Flood problems arise when it rains
Stormwater runoff, and the flooding and erosion it creates, is as serious a threat to homeowners and the county's environmental eco-system as one can imagine. One report called it "the most pervasive problem within Chester County's watersheds."...the folks who live near Inniscrone development in London Grove. Or the 750 residents of Glen Hardie condominiums in Tredyffrin. They are all people whose homes and lives have been - or could be - upended by the runoff that occurs after a storm. "Every time it rained, the water would come barrelling down from upstream," remembers Megan Gelb, an East Caln resident who lives near Ludwig's Run. "It scoured out the soil around the roots holding these huge trees. The trees would drop (into the stream) and take a huge quantity of ground with it." Read more...

 
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Reckless Endangerment
BY: GRETCHEN MORGENSON
and JOSHUA ROSNER

Outsized Ambition, Greed and
Corruption Led to
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