Builders, house flippers face more accountability
New changes to a state law have made home builders slightly more accountable if they build a defective home, and also have broadened the definition of who qualifies as a builder... House flippers and other individuals who rehabilitate homes don't have to register as "builders," but need to be aware that they must guarantee their fixer-upper work. "There's going to be a benefit to you if you're more proactive," Javore told builders and remodelers. Builders who make repair offers before the inspection process won't have their names put on the TRCC's Web site, for instance. The agency also will have to strike the addresses of homes from all public records, making it impossible know exactly where a defective home is located. Consumer groups say little of substance changed with the updates to the law because it focuses on getting builders to register with the agency. The TRCC still lacks the authority to force a builder to repair a defective home, said Janet Ahmad of Home Owners for Better Building.

WARRANTY WEEK - The Newsletter for Warranty Management Professionals
Last week, in an article titled "Bonfire of the Homebuilders," Business Week magazine announced the end of the housing boom and the beginning of the cleanup. While sales are declining, warranty accruals are declining even faster. Is it because of warranty cost cutting? Could it be better quality construction? Or are they simply putting less aside and hoping that nobody notices? Also, a letter to the editor about compliance with state laws on service contracts...Builders have reacted predictably to the once-skyrocketing price of homes by building too many. Lenders, it seems, have helped buyers to exaggerate their incomes so they could qualify for mortgages they cannot afford. Now some of those new homes are empty, either because nobody bought them or the buyers foreclosed. So what does this have to do with warranty? Read more...

D.R. Horton Sued for Lending Practices
D.R. Horton Inc., one of the nation's largest homebuilders, is being sued by a one-time customer who says he was forced to use the company's affiliated mortgage service to buy his home, according to a regulatory filing. The lawsuit charges the homebuilder with violating the Real Estate Settlement Procedures Act, according to a filing with the Securities and Exchange Commission...Horton's revenue from homebuilding fell to $2.55 billion from $3.59 billion, and the number of closings on homes plunged 28 percent. The company's cancellation rate for homes reached 38 percent, twice the norm.

Linden official arrested on bribery charges
A Linden city building inspector was arrested today on charges he accepted $10,500 in bribes from a building contractor in exchange for favorable inspections and fast-tracked permits, authorities said. Matthew Valvano, 49, of Linden, took the cash in his city hall office and at the contractor's construction site during four meetings secretly recorded by the FBI, according to a criminal complaint unsealed in federal district court in Newark. "You wash my hands, I"ll wash yours," Valvano told the contractor during one encounter, according to authorities.

Cement company owner gets prison in perjury case
The president of a Riverview cement company was sentenced to one year and one day in federal court in Detroit today after a jury in April convicted him of obstructing justice and lying to a grand jury about paying bribes to city of Detroit officials. Alan Pighin, 58, of Temperance, who heads Century Cement Co., was also fined $5,000 and ordered to spend two years on supervised release once he gets out of prison. Jurors found Pighin lied under oath when he denied paying two city construction inspectors $1,000 each and he intentionally failed to tell the grand jury he installed a free concrete driveway worth $1,500 at the home of Detroit inspector Dwight Harris. The obstruction of justice charge related to Pighin suggesting that Harris

Defects dull dream home's luster
Lack of public records makes it tough to determine a builder's track record of quality, customer service.Take a walk through any new housing subdivision and start knocking on doors. Construction defects aren't hard to find. One man has a crack in his foundation that the builder refuses to fix -- because the crack isn't big enough yet. Down the street, a father of seven is packing up and moving out because he says mold is taking over the family's two-year-old house... Going to court is the final option for homeowners who are unhappy with the builder's solution -- but some homeowners quickly find that the arbitration clauses in their housing contracts bar them from lawsuits.  Arbitration decisions are never made public, although one state hopes that will change. In 2005, the Texas Residential Construction Commission's arbitration subcommittee recommended that the state make arbitration settlements public record, just like civil lawsuits.

As homebuilders struggle and houses get harder to sell, builder-bashing gripe sites are grabbing more attention and more traffic
The outside of Susan Sabin's house in Lenexa, Kan., is covered with lemons: lemon-shaped foam cutouts, twinkling lemon Christmas lights, and a lemon-adorned wreath on the front door. If you go to her Web site, you can see for yourself. You'll also see photographs of splintered beams, bowed floors, and a graphic that declares: "Pulte Homes sold me a lemon!"

Residents told to solve developer dispute
Other protesters said they are not terrorists and have, in fact, been the victims of terror-like attacks, including having their protest signs removed from their houses late at night. Protesting homeowner Nancy Ferguson and other protesters said without their making noise and generating publicity, their happy homeowner neighbors would not have gotten their housing problems solved as fast by Ryland Homes. "They should be thanking us," Ferguson said. Also stunned by the vitriolic tone of the debate, Robert Brassfield of the happy homeowners group said he planned to apologize to the protesters after the meeting for the use of the word terrorist. He was seen talking to the protesting homeowners moments later.

American Home's explosive growth capped by bankruptcy
American Home Mortgage Investment Corp., a publicly traded real estate investment trust that grew rapidly during the housing boom to become the nation's 10th-biggest residential mortgage lender, has filed for Chapter 11 bankruptcy protection. Home employed about 7,500 workers at more than 550 loan production offices in 47 states and the District of Columbia. The New York-based lender funded 196,000 mortgage loans in 2006 totaling $58.9 billion -- more than double the $23.1 billion in loan production for 2004 -- for a 2.2 percent market share, according to the company's last annual report to investors.

Major Flaws Found in Home Now Part of State Investigation
A First Coast News Investigation, last week, showed how a number of homes in a Westside neighborhood are under inspection to see if the houses meet state requirements. More than 50 homes make up the Morse Glen subdivison. First Coast News has learned that inspectors hired by a local law firm are re-inspecting 34 of those homes for structural problems. Our investigation found walls that hang over foundations by several inches. We found threaded rods, that should be embedded in the foundation, are visible. See Related Article

BusinessWeek Cover Story - Bonfire Of The Builders 
Earlier this year, Beazer received a subpoena from the Justice Dept. seeking documents related to its home loans, and the company is also under civil investigation by the North Carolina Attorney General's office... Wall Street egged on the often-reckless underwriting by buying vast quantities of home loans for repackaging as securities. Now that the boom has fizzled and foreclosure rates are rising, the important role of large homebuilders as lenders is also coming into sharper focus...Builders allegedly violated federal lending standards to get customers to sign on the dotted line. KB Home (KBH) paid a record $3.2 million settlement in July, 2005, to resolve allegations by the Housing & Urban Development Dept. that the builder's mortgage unit overstated borrowers' income, among other practices, to obtain loan approvals. KB, which denied wrongdoing, sold its loan business before settling... Busy developers that provided Wall Street with equity-underwriting business discovered they had friends in the investment banking world.

Cibolo residents upset over homebuilders' projects
 The sound of hard rainfall and the clap of thunder reverberated outside City Hall here July 24 as a dozen residents complained to City Council about rainwater damage to their new homes and what they called poor drainage and construction methods by homebuilders. "We are back again with the same problems and issue," Ahmad told the Cibolo council. "We are finding (house damage) problems are more prevalent than we first thought. These residents are not looking for a lawsuit, they are just looking for some help because something went wrong with these developments and the common problem is they have no drainage easements. Drainage was an after thought with these builders," she said.

Building a case
Some Albuquerque homeowners allege Longford Homes cut corners on construction. But Longford says its homes are just fine. Client Juliette Alarcon and her family were among the first to move into the then-new Mountain View Estates development in Southwest Albuquerque in 1998. A bad storm that first year created a sinkhole in front of the home that eventually split the sidewalk and created a channel of water under the house, Alarcon says. Longford told her the problem was caused by a backhoe that cracked a pipe during construction, and it had the hole dried and backfilled, she says. Alarcon says she and her family later that year noticed cracks in the interior and exterior walls. And Alarcon says her bathtub flooded the garage through a leak, and that Longford told her the plumber forgot to seal the tub.

Owner Says New Home Passed Inspection With Major Flaws
"I think the mentality was get her done, paint it and it will be fine, nobody will know. I didn't know at first," says Norman...He says inspections are being done on 34 of the more than 50 homes in the neighborhood and a number of problems have been found...State Legislators changed the law regarding building inspections. Where city inspectors used to do site inspections, the job has now been turned over to private inspectors that are hired by the property owner.

Building arbitration in limbo
When disputes arise over the quality of home construction in Ohio, consumers often prefer to go to court while builders often prefer to go to arbitration. New judicial rulings now leave open the possibility for both. Last month, the Ohio Supreme Court let stand the ruling of a Cincinnati appeals court that said a Butler County couple's workmanship claims against their builder belonged in arbitration... So-called forced arbitration has become a standard item in the fine print of home purchase contracts. Unless an arbitration clause is "unconscionably" unfair to one party, fights over leaky roofs, cracked basements or defaulted payments go to a mutually chosen arbiter, usually a construction professional, architect or lawyer, some active, some retired.