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HOBB Update Message
Tuesday, 21 July 2009

A Message from Janet Ahmad: Big Arbitration Firm Pulls Out of Credit Card Business

A Message from Janet Ahmad
Big Arbitration Firm Pulls Out of Credit Card Business
According to
a BusinessWeek Article this past Sunday, Minnesota Attorney General Lori Swanson took a significant step to put a stop to abusive Mandatory Binding Arbitration.   Despite the good action in Minnesota there is still nothing in federal law to prohibit private arbitration companies from treating consumers unfairly in the first place.  Clearly though the actions by the Minnesota Attorney General sends a message to Congress as well for the need to pass the Arbitration Fairness Act (AFA) introduced by Senator Feingold and Congressman Johnson.

After coming under increasing fire for bias towards major credit-card companies, the nation’s largest arbitration firm involved in adjudicating delinquent credit-card debt has agreed to pull out of the business, Minnesota Attorney General Lori Swanson disclosed on Sunday, July 19. The settlement with the National Arbitration Forum comes after the Minnesota AG sued the firm on July 14 for consumer fraud, deceptive trade practices, and false advertising.

Under the terms of the consent decree, dated July 17 and signed by the AG and NAF officials, the arbitration firm by the end of this week will stop accepting new consumer arbitrations of any sort. The Minnesota suit said that Bank of America, JP Morgan Chase, Citigroup, Discover Card, and American Express use NAF, which is based in St. Louis Park, Minn.”  See the full story

Be sure and read the latest news update below… Help us to help you by keeping in touch. Tell your story through HOBB , to your elected officials, and write the press.  We would like to hear from you so, please take a few minutes to post your comments on the HOBB Forum

Janet Ahmad, President
Home Owners for Better Building
 News Updates:
New York Times: Financial Misdeeds Little Legal Liability and New Opportunities
NY Times GRETCHEN MORGENSON: Looking for the Lenders’ Little Helpers
It is hard not to be dismayed by the fact that two years into our economic crisis so few perpetrators of financial misdeeds have been held accountable for their actions. And what of the giant institutions that helped finance these monumentally toxic loans, or arranged the securitizations that bundled the loans and sold them to investors? So far, they have argued, fairly successfully, that they operated independently of the original lenders. Therefore, they are not responsible for any questionable loans that were made.  Read more...

Texas State Representative David Leibowitz Vows to Help KB Homeowners to Fight Back

Wading into a neighborhood dispute
Rep. David Leibowitz, D-San Antonio, has stepped into the latest round in the fight between some homeowners in three KB Home neighborhoods and their builder-controlled homeowners associations.  Leibowitz held a meeting last week with homeowners, has attended a recent homeowners association hearing with a resident and is gathering documents and complaints. “They're playing the odds,” Leibowitz told the homeowners Thursday night. “They're assuming you won't fight back. We're going to fight back.”  Read more...

BEWARE: KB Home More of the Same? From HUD Ban to Stimulus Money
Stimulus Tax Dollar at Work for KB or More of the Same
KB Home offers mortgage services in a joint venture with Countrywide KB Home Loans. In addition, the company, through its subsidiary, KB Home Mortgage Company, provides title and insurance services to its homebuyers. KB Home sells homes under various purchase contracts in Arizona , California , Colorado , Florida , Georgia , Nevada , New Mexico , North Carolina , South Carolina , and Texas .  KB Home was fined by HUD for $3.2 million in 2005 for its leaning practices in conjunction with Countrywide and KB Mortgage.  Today KB enjoys taxpayer stimulus money.  Related articles:   Bad Guys at Countrywide Profit on Good Ole Mortgage Fraud    HUD Investigation      Read more...

Beazer Homes Big Fraud Problems
Beazer Homes Agrees to Pay $53M to Settle Mortgage Fraud Charges
In the most blatant case of mortgage fraud disclosed to date, Atlanta-based Beazer Homes USA Inc. has agreed to pay a total $53 million to settle a U.S. Dept. of Justice lawsuit.  In a separate action, the Securities and Exchange Commission has filed civil charges against Michael T. Rand, Beazer's former chief accounting officer. Rand is accused of conducting a fraudulent earnings scheme and hiding his wrongdoing from outside auditors and other company accountants. The New York Times and The Washington Post report separately that In the mortgage fraud case, prosecutors said Beazer ignored income requirements in making loans to unqualified buyers, and sought to hide from the Federal Housing Administration that some company branches had excessive default rates on their loans.... In the end, the SEC said, Beazer understated the company's income in SEC filings by $63 million between fiscal years 2000 through 2005. In addition, the company overstated its income and understated losses by a total of $47 million in fiscal year 2006 and the first two quarters of fiscal year 2007.  Read more...

LA Times: Waste Byproduct Phosphogypsum Makes Cheap Drywall
Chinese drywall blamed for odors and corrosion in U.S. homes
State and federal authorities have traced the problems to Chinese-made drywall but haven't yet fully determined the causes. Some Chinese experts, however, suspect that the culprit is a radioactive phosphorus substance -- phosphogypsum -- that is banned for construction use in the U.S. but has been used by Chinese manufacturers for almost a decade...Phosphogypsum contains radium, prolonged exposure to which can lead to a higher risk of lung cancer, and that is why the EPA banned phosphogypsum for use in construction in 1989...Some people in China liken the practice of mixing phosphogypsum in drywall to the recent scandals involving melamine, the industrial chemical that contaminated Chinese baby formula and animal feed.  Read more...

NY TIMES GRETCHEN MORGENSON: Big Money Little Logic, Foreclosures and Delinquencies 73% Higher
So Many Foreclosures, So Little Logic
LAST week, the stock market tumbled on news that housing foreclosures and delinquencies rose again in the first quarter. The Office of the Comptroller of the Currency said that among the 34 million loans it tracks, foreclosures in progress rose 22 percent, to 844,389. That figure was 73 percent higher than in the same period last year. Foreclosures remain one of the great financial ills for the economy. The Bush administration largely overlooked foreclosures affecting average homeowners, focusing instead on propping up elite, troubled financial institutions with taxpayer funds. The Obama administration has said it wants to wrestle the foreclosure issue to the ground by encouraging mortgage loan modifications, but its efforts have gotten little traction...But the most fascinating, and frightening, figures in the data detail how much money is lost when foreclosed homes are sold. In June, the data show almost 32,000 liquidation sales; the average loss on those was 64.7 percent of the original loan balance.  Read more...

Wall Street Journal: Shoddy Homebuilding
Shoddy Construction Haunts Home Buyers
Like California , Texas and Florida , Nevada experienced a surge in construction-defect claims in recent years... Owners of defective properties say they’re finding it even harder to get repairs now because of rising builder bankruptcies. Some builders, especially smaller ones, also carried inadequate liability insurance, construction experts say. Other homeowners say they are hamstrung by mandatory binding arbitration clauses in purchase contracts and new-home warranties, as well as “ right to cure ” laws, which require homeowners to notify builders and give them a chance to remedy a defect before the homeowners can file a lawsuit. More than 30 states have some type of right-to-cure legislation, according to the home-builders group. Read more...

Homeowners the ping-pong ball between Nevada's Legislature and Lobbyists Haven
On home defect legislation, lobbyists went to the wire
Construction defect settlements are governed by Chapter 40 in Nevada statutes, and builders have grown to hate it. They seethe as each new defect notice, or “Chapter 40 notice,” arrives by mail or courier... And then there were the feds. In an ongoing investigation, the FBI appears to be looking into whether homeowner associations and their elections have been corrupted by businesses — including possibly construction defect law firms — so they could bring suits against builders and win those guaranteed legal fees...To scrap Chapter 40... The net result of eliminating Chapter 40, and Wadhams’ real goal, was to all but eliminate construction defect costs for builders....Builders would then force homebuyers to sign contracts that protect them from liability...A builder lobbyist was open about why they walked away with nothing.  Read more...

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