Labor union protests KB Home on behalf of borrowers
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One of the biggest construction worker unions is warning of plenty more housing problems ahead -- particularly for borrowers living in new-home communities -- and is blaming the nation’s home builders.
Not only are housing values plunging from their bubble-era peaks, homeowners who purchased at these newer developments are probably more likely to have 100%-financed, adjustable-rate mortgages because of builders’ efforts to push risky, subprime loans, according to a report today from the Laborers’ International Union of North America. As a result, the report claims, certain new-home communities are littered with vacancies created by foreclosures putting downward pressure on prices and forecast another wave to come.
The union zeroed in on Maricopa County, Ariz., and discovered that more than a third of mortgages made by the finance arms of three of the biggest builders there -- KB Home, Lennar and Richmond American -- were five-year ARMs set to adjust in 2010 and 2011.
‘At the height of the housing boom, the homebuilders were increasingly relying on predatory and risky mortgage products such as those with negative amortization, loans requiring only stated income, or piggy-back loans with high-cost second mortgages, in order to qualify customers for houses which were sold at what are now clearly inflated prices.’
The union, whose members were among the first hit by the recessionary effects of the housing downturn, protested builders’ practices outside KB Home’s Westwood headquarters today. On hand were several homeowners living in a KB development in Buckeye, Ariz., who said they are underwater -- owing more on their mortgages than their homes are currently worth -- and are facing foreclosure as their monthly payments ratchet higher and prices slide.
One homeowner in attendance was Joni Lynn, pictured. She says that when she bought her KB home in 2006, she was steered into taking on a first and second mortgage. She now owes about $204,000, but the county tax assessor lowered the value of her home from $210,000 to $148,800.
KB Home spokeswoman Lindsay Stephenson disputed the union’s claims.
‘We could not disagree more with the assertions made by LIUNA. While we respect a union’s right to voice its opinion, we rest well knowing we delivered the American dream in the form of a quality home to thousands of satisfied KB Home customers. 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.’
Most of the major builders, including KB Home, retreated from the mortgage business when the market started to slow. KB Home sold its loan business to Countrywide FInancial Corp. three years ago, though it kept a stake in the venture.
-- Annette Haddad
Questions? Comments? Tips? Email annette.haddad@latimes.com