HUD Violated Public Trust
Homeowners who have battled insurance companies over Northridge earthquake claims are outraged--and rightly so--to learn that the state Insurance Department absolved insurers of any wrongdoing in return for contributions to a foundation run by political associates of Insurance Commissioner Chuck Quackenbush.
By comparison, the action--or in this case, inaction--by the federal Department of Housing and Urban Development regarding the sale of condominiums in a quake-damaged complex pales. But HUD nonetheless violated the public’s trust when it sold 18 condominiums in a 50-unit North Hills complex that two private engineering reports have recommended be torn down and rebuilt. Buyers said they were never told about the condition of the property; HUD says it didn’t know.
It didn’t know? The Federal Housing Administration, the nation’s largest insurer of home mortgages and an arm of HUD, brags that it has the most comprehensive appraisal standards in the industry.
But when it came to the condition of Nordhoff Townhomes at 9047 Langdon Ave., they weren’t good enough. Eleven HUD units were sold during a three-year period when wooden shoring bolstered the roof of the complex’s garage and other construction and repair work was obviously going on. The agency knew nothing about the two engineering reports, one issued in 1995, the other in September. And until the Nordhoff Townhomes Homeowners Assn. settled with a Farmers Insurance affiliate last month for $20 million, HUD had not been aware that a lawsuit had been filed.
A HUD spokesman told The Times that the agency, as is its practice, disclosed any known defects and encouraged buyers to get an independent home inspection--sound advice for any home buyers, as this case sadly shows.
But although buyers should always beware, HUD isn’t just any seller. It prides itself on ensuring that people buy safe homes. If property is beyond repair, HUD takes it off the market--as it now has removed the complex’s remaining condominiums. At the very least, it owes the buyers of the 18 units an explanation of why it didn’t do so sooner.
