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Former California Homeowners Lash Out at Builder
Several former homeowners spoke here on Thursday about their disenchantment with the builder, KB Home
, at its annual shareholders’ meeting. The speakers said the company had pushed them into high-risk, high-interest loans for homes they could not afford and eventually lost to foreclosure.The company had a joint lending venture with Countrywide Financial — Countrywide KB — that issued roughly 70 percent of the loans originated for the builder...The protest on Thursday was the latest effort to draw attention to what critics say was KB’s role in the foreclosure crisis.
New York Times
Former California Homeowners Lash Out at Builder
By JENNIFER STEINHAUER
Published: April 2, 2009
LOS ANGELES — A major home builder that helped fuel the country’s building boom is now under attack for what some homeowners and builders say was its role in the bust that followed.
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A protest was held Thursday in Los Angeles during KB Home’s annual shareholders’ meeting. |
Several former homeowners spoke here on Thursday about their disenchantment with the builder, KB Home
, at its annual shareholders’ meeting. The speakers said the company had pushed them into high-risk, high-interest loans for homes they could not afford and eventually lost to foreclosure.
During the meeting, a few dozen construction workers, many of whom had their work dry up when the home-building market imploded in Southern California, protested across the street.
“I tried to communicate to the board members to try to do better for people in the future,” one of the former homeowners who addressed the board, Santiago Ramos, said after the meeting.
The meeting was closed to reporters. A KB Home spokeswoman, Heather Reeves, said in an e-mail message, “We want every KB homeowner to know that we stand ready to assist them in any way we can to ensure that they are pleased with their purchase.” | KB Home is one of the country’s largest builders, accounting for 3.1 percent of new home sales in 2007, the latest year for which data is available, according to the National Association of Home Builders. The company had a joint lending venture with Countrywide Financial — Countrywide KB — that issued roughly 70 percent of the loans originated for the builder. The venture ended in 2005, but KB still has lending arrangements with other financial institutions.
The protest on Thursday was the latest effort to draw attention to what critics say was KB’s role in the foreclosure crisis.
The Laborers’ International Union of North America, which represents construction workers, has filed complaints about the builder with the California attorney general. The union says KB engaged in “deceptive practices” and steered buyers toward its loans to control home prices, pushing interest-only loans to buyers who often did not understand what they were getting into.
A state lawmaker from Southern California, where home values have plummeted and foreclosures have skyrocketed, has introduced a bill that would prohibit builders from lending money to homebuyers.
“Builder-originated loans create an inherent conflict of interest,” the lawmaker, Assemblyman V. Manuel Pérez, a Democrat, said in an e-mail message.
No state has such a law, said Sue Johnson, the executive director of the Real Estate Services Providers Council, a trade group.
“It would be disruptive to the home-building industry,” Ms. Johnson said, adding that most home builders had loan arrangements with financial institutions.
Timothy Lilienthal, a spokesman for PICO National Network, a religious group that has protested and organized around the foreclosure issue, said the criticism of KB reflected a broader unhappiness with banks.
“People are getting tired of banks, and bank accountability is a major theme we see coming forward,” Mr. Lilienthal said. “And KB was the originator of so many bad loans in California.”
Mr. Ramos, a construction worker as well as a former KB homeowner, said company officials pushed him to sign an interest-only loan through Countrywide KB for the home he bought for $430,000 in 2005 in Hesperia, Calif., and threatened to sue him when he resisted.
In her e-mail message, Ms. Reeves, the spokeswoman, said the company recognized that “many Americans have been adversely impacted by current economic conditions.”
“That is why we are always working to assist buyers in finding the right home for their budget,” she said.
http://www.nytimes.com/2009/04/03/us/03homes.html?ref=us |
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