New Home Builders NewsBlog.com

Housing Accord Puts Builders First; Strapped Homeowners Offered Little Aid

Washington, DC. -"Senate Democratic and Republican leaders rushing to address the nation's housing crisis reached agreement yesterday on a package that would provide billions of dollars in tax rebates to the slumping home-building industry while offering little to homeowners threatened with foreclosure... Instead, lawmakers settled on a sharply scaled-back array of measures...Home builders and other businesses suffering losses in the flagging economy, meanwhile, would get the lion's share of federal spending in the bill: $6 billion in tax rebates...Still, some economists, local politicians and advocates for borrowers reacted with disappointment. They estimated that 8,000 families per day are sliding into foreclosure and said that without a major new mechanism for renegotiating mortgages, the package announced yesterday is unlikely to help most borrowers struggling to keep their homes. 'It's not clear what good it's really doing,' said Dean Baker, co-director of the Center for Economic and Policy Research. 'It's a bipartisan effort not to help the right people.'...Both parties wanted to help home builders and other businesses. Under the agreement, corporations that lose money in 2008 and 2009 would be permitted to apply their losses to tax returns from as far back as 2004, making them eligible, according to a bill summary, to 'receive any applicable refunds.'"
April 3, 2008

Wrong Relief; A Senate housing package would be better without an unjustified tax break for businesses.

Washington, DC. -" DEMOCRATS and Republicans in the Senate have joined hands and are marching to rescue the U.S. housing market...But the mere fact that both parties agree on 'principles' to deal with the mortgage problem does not guarantee that those principles are valid...We refer to the awful idea of extending the tax code's current 'carryback' provisions for net operating losses...Under current law, companies can use net operating losses to offset the taxes they owe on profits made in the two previous years...The Senate is considering extending this 'carryback' period from two years to four, meaning that companies that lose money in 2008 and 2009 could get money from Uncle Sam on the basis of profits they made way back in the first half of this decade. And who would be the biggest beneficiaries of this new tax break (estimated cost: $6 billion)? Well, a good guess is the folks who made money hand over fist during the housing bubble but have been losing money at the same rate since the subprime mortgage market collapsed last year: the home construction industry and Wall Street firms such as Merrill Lynch (MER) and Citigroup (C). In other words, this provision is a large, unwarranted bailout for the very industries that helped send the U.S. economy on its scary roller-coaster ride in the first place. Business lobbies failed to get the carryback provision written into the fiscal stimulus plan that sailed through Congress in February...It deserves to die again."
April 3, 2008

Senators ditch aid in housing bill

U.S.A. -"Mortgage companies are embracing it. The home builders who overreached in the housing boom stand to gain billions in tax breaks. And investors who snap up foreclosed homes will get a sweet tax credit. But consumer groups?...As the Senate unveiled its bipartisan housing bill on Wednesday evening, it was clear that the path to passage meant ditching the provisions that might help hundreds of thousands of homeowners...As a result, housing advocates are feeling steamrolled because a bankruptcy provision aimed at helping homeowners in foreclosure was removed from the bill. The compromise bill also slashed in half the foreclosure prevention funds proposed in the original Democratic bill...'If you did a cost-benefit analysis, I think consumers might not fare better than industry,' said Brenda Muniz, legislative director of ACORN, the community housing agency. ' Regardless of the fact that the [housing industry] got us into this problem, they still have a lot of power. We’re disappointed, but I can't say we're surprised.'...Nonetheless, the bill is still shaping up to have a generous pile of tax breaks and credits for Big Business — most notably home builders, who will be able to write off in 2008 and 2009 major losses going back four years...'It started off in a very good place for consumers, average Americans,' said Andrew Jakabovics, a housing expert for the Center for American Progress. 'But it turned into something that was targeted at a narrow sector of the economy.…The net operating loss provision is basically a handout to the building groups.'... The so-called carry back provision was a big win for the National Association of Home Builders...The union characterizes the tax measure as a corporate handout for a handful of big firms that helped cause the subprime crisis and that made billions in profits off subprime-related projects. 'This bill will force American taxpayers who are already struggling with foreclosure, job loss and shrinking retirement savings to pay again for home builders' reckless and unethical behavior,' LIUNA General President Terence M. O’Sullivan said."...
04/03/08

Builders Get Breaks From Congress

Washington, DC. -"Homebuilders and the mortgage industry are emerging as big victors in a bipartisan agreement reached by Senate leaders on legislation designed to limit the housing crisis. The $15 billion measure, announced Wednesday by Majority Leader Harry Reid, D-Nev., and GOP leader Mitch McConnell of Kentucky, contains a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe. That's good news for big homebuilders such as KB Home (KBH) and Pulte Homes Inc. (PHM), which have been saddled with massive losses over the past year...Homeowners facing bankruptcy, however, won't find relief in the proposal...The tax carryback also drew the ire of critics, who immediately labeled it a giveaway to big business.'Why does nearly half of the money in a bill supposedly intended to help struggling homeowners go to a multibillion dollar tax break for corporate homebuilders who helped cause this mess?' Jacob Hay, spokesman for the Laborers' International Union of North America, which represents construction workers, said in an e-mail...Earlier this year, the builders' trade group was so dissatisfied by lawmakers' actions — notably not including the tax provision in the economic stimulus bill - that it snapped shut its political purse. NAHB said it would stop making contributions to congressional candidates 'until further notice.' Since 1990, the trade group has given nearly $20 million to federal candidates, with 35 percent going to Democrats and 65 percent to Republicans, according to the Center for Responsive Politics."...
April 2, 2008

The stealth bailout in the works for homebuilders

Las Angeles, CA. -"'With both parties in Congress voicing a new urgency to help millions of homeowners at risk of foreclosure, the Senate voted overwhelmingly on Tuesday to move forward with a package of housing legislation.'...Now part of the bailout you haven't heard much about: tax breaks for homebuilders. 'Corporate homebuilders - including those responsible for the mortgage and housing crisis - would receive billions of dollars in tax breaks under a provision of the Foreclosure Prevention Act currently pending in Congress,' the Laborers' International Union of North America argued in a news release today...'Under the bill's little publicized "'carry-back'" provisions, builders would get billions in tax breaks.  The carry-back provision would allow homebuilders to apply losses from 2006 and 2007 as far back as five years against taxes paid on profits.'...When Congress is through with the omnibus foreclosure prevention legislation, it says here it will resemble the world's largest Christmas tree, with boxes of bailouts, goodies and giveaways for every Who down in Whoville and every interest group and corporate lobby remotely connected to the business of building, buying or financing houses.  Don't be surprised if the homebuilders find two piles of goodies under the tree: carry-back provisions to reduce taxes, and new tax incentives to encourage buyers to purchase new homes."...
April 2, 2008

New Report Exposes Multi-Billion Dollar Handout for Corporate Homebuilders Who Helped Cause the Housing Crash and Mortgage Crisis; Under the Foreclosure Prevention Act, Taxpayers Will Pay as Much as $33 Billion to Reward Those at Fault

Washington, DC -"Corporate homebuilders – including those responsible for the mortgage and housing crisis – would receive billions of dollars in tax breaks under a provision of the Foreclosue Prevention Act currently pending in Congress, according to a report released today. The report, A Multi-Billion Dollar Bailout for Those at Fault: Corporate Homebuilders, the Housing Crash and the Mortgage Crisis, was released by LIUNA – the Laborers’ International Union of North America – which   represents workers in the construction industry. Hundreds of thousands of construction workers have lost their jobs due to the housing and mortgage crisis, including 232,000 jobs lost in 2007 alone. The Foreclosure Prevention Act is being held up as a way to help struggling homeowners, and LIUNA supports many provisions of the bill. But under the bill’s little publicized 'carry-back' provision builders would get billions in tax breaks. The carry-back provision would allow homebuilders to apply losses from 2006 and 2007 as far back as five years against taxes paid on profits – a three-year extension of the current carry-back allowance – even though much of the builders' profit came from their own subprime lending and speculative over-heating of the market. According to the report, the 15 largest corporate homebuilders would receive a third of the benefit of the carry-back provision. The report  notes that the largest homebuilders made $16 billion in profits on $100 billion in revenues in 2006, much of it from a dramatic increase in subprime and high-risk lending, and from feeding speculators. The report also shows that the carry-back provision could further     decimate the housing market by providing an incentive for builders to dump existing inventory at any price, knowing they could carry back the loss. 'This bill will force American taxpayers who are already struggling with foreclosure, job loss and shrinking retirement savings to pay again for homebuilders' reckless and unethical behavior,' LIUNA  General President Terence M. O'Sullivan said. 'Corporate homebuilders are tone deaf to even ask for it and Congress should not acquiesce to it. This bill needs to be fixed so it does not cause further damage by rewarding those who helped cause the crisis and who can well fend for themselves.' The report outlines how corporate homebuilders steered more and more of their customers to subprime and high-cost mortgages through their own mortgage subsidiaries as the housing bubble grew. For example, subprime loans through the nation's fifth-largest builder, Los Angeles-based KB Home (KBH), increased 405 percent from 2005 to 2006. At the nation's second-largest builder, Miami-based Lennar (LEN), subprime loans increased 158 percent during the same time period. As the builders pushed more risky mortgages, they also fed the housing bubble with record housing starts absorbed by speculators. In major markets such as Phoenix, Las Vegas and Fort Lauderdale, one in six new homes was sold to investors, artificially inflating housing costs. 'Corporate homebuilders profited from the creation of this crisis,' O’Sullivan said. 'They should not be further rewarded with a multi-billion dollar bailout.'The half-million members of LIUNA – the Laborers’ International Union of North America – are on the forefront of the construction industry, a powerhouse of 10 million workers who produce 5  percent of the U.S. economic output. For copies of A Multi-Billion Bailout for Those at Fault: Corporate Homebuilders, the Housing Crash and the Mortgage Crisis, and a state-by-state look at the mortgage and housing crisis impact on jobs and foreclosures, email jhay@liuna.org or call 202-942-2285.

Source: Laborers' International Union of North America (LIUNA)
Jacob Hay, 202-942-2285
jhay@liuna.org

 

 

       

 

       

       
     

   

           

HUD Secretary Alphonso Jackson steps down; The Bush appointee's decision comes amid an investigation for cronyism in awarding federal housing contracts. His resignation takes effect April 18.

Washington -"Housing and Urban Development Secretary Alphonso Jackson resigned today amid a criminal investigation into favoritism in awarding HUD contracts that critics said was blunting the agency's effectiveness in dealing with the subprime mortgage mess...Last week, Democratic Sens. Patty Murray of Washington and Christopher Dodd of Connecticut sent a letter to the White House calling for the secretary's departure, saying his legal problems represented a 'worsening distraction' at HUD at a critical time... 'We are deeply troubled by the growing number of allegations of impropriety . . . and the secretary's refusal to answer appropriate congressional inquiries on these matters,' the senators wrote. 'Unfortunately, the allegations surrounding Secretary Jackson, as well as his rejection of appropriate congressional oversight of his department, undermine his ability to effectively address the current housing crisis.' The investigation into Jackson began in 2006, after he publicly disclosed that he had revoked a contract because the vendor told him he did not like President Bush. Amid an inspector general inquiry, Jackson told investigators that he had misspoken. Jackson, 62, has since then been fending off allegations of cronyism involving HUD contractors. The FBI is looking into ties between Jackson and a friend who was paid $392,000 by HUD for work as a construction manager in New Orleans after Hurricane Katrina. In addition, Jackson is also being sued for allegedly trying to punish the Philadelphia Housing Agency for nixing a deal with his friend, music producer and developer Kenny Gamble."
March 31, 2008

Help line: Ivory Homes gets cracking after call from News

Salt Lake City, Utah -"A year after Dennis Keaton's new home was built, he said he noticed a crack through the walkway leading to the back of his Clearfield house. He said his warranty from Ivory Homes provided him with assurances that these types of problems would be fixed. The problem, he said, was getting Ivory Homes to actually fix the problem. Keaton said he had been calling since 2003 and nothing happened...After four years of no results, he was worried whether the warranty would still cover concrete replacement. That was when Keaton contacted The Deseret Morning News Help Line. Within four days of the Deseret Morning News contacting Ivory Homes, Keaton received a call from an Ivory Homes field warranty, his walkway was removed and a new one was poured. Keaton was correct about his warranty covering the replacement...    The most common reasons for cracked concrete are either a poor base upon which the concrete is poured or tree roots..."...
June 28, 2007

Liens Placed On Homes Over Problems With Subcontractor; Homeowners Listed as Defendants

Denver, CO. -"More than 200 home property owners in the Denver metro area are finding their names listed as defendants in a lawsuit because materials used to build their home were not paid for. The lawsuit, called a Mechanics Lien, claims a subcontractor still owes money to a supplier of heating and air conditioning units that were installed in new homes. In many of the cases, the homeowner had no idea...Donald Wilson says his client is still owed $291,000 by Barrett Barnes Heating and Air Conditioning Inc., which has filed for bankruptcy...'It's not what you'd expect,' said Misty Brown, who lives in the Tollgate Crossing neighborhood in Aurora. She bought her home from builder DR Horton (DHI) last December and was served legal documents on Thursday...Court documents obtained by 7NEWS show the majority of homes affected in Arapahoe County were built by DR Horton in several different subdivisions including Tollgate Crossing and The Conservatory. Wilson said similar cases have also been filed in Adams, Douglas, Elbert and El Paso Counties. The subcontractor also reportedly did work for other developers...Wilson said that involving property owners, who likely presumed all building materals were paid for when they bought their home, is part of a state statute that dates back to the late 1800's...property owners are typically protected under title insurance. Anyone who receives legal notice about this case is urged to locate title documentation presented at closing, then contact their title company. Homewoners can ask to 'tender defense,' which allows the title company to represent them through the legal process."...
POSTED: 1:37 am MDT June 20, 2007
UPDATED: 4:31 am MDT June 20, 2007

Live Oak residents upset with homes' problems

San Antonio, TX. -" Unhappy that his 11/2-year-old Live Oak home has wall cracks wide enough to stick a hand through, Ronald Jech recently took an unconventional path in the hope of getting his house repaired...Jech aired his complaint online with a Web site, www.RylandTrouble.com, which features dozens of photos of his house, along with an inspection report.  The site has gotten more than 10,000 hits in the few weeks since it went live. And Jech and a handful of neighbors, who also are having problems with homes built by Ryland Homes (RYL) in the Bridlewood Park subdivision, for four weekends have staged a protest of sorts, picketing from the beds of their pickups...One of their signs reads, 'Warning. Talk to Homeowners Before You Buy.'... Jech, who is about to retire from the Army after more than 29 years, said he and others resorted to the unconventional tactics only after several months of e-mails, phone calls and letters to Ryland Homes did not result in repairs to the homes...Jech this week said he would have loved for the builder to fix his home last year, when he started complaining, but now is worried that the foundation has shifted so much that the home is beyond repair. He would prefer that Ryland buy back his home. Jech and a neighbor on his street have posted 'open house' signs in their yards and plastered photos of the damage in their front windows. 'They keep telling us, ''It's normal. It's normal,'"' Phung Luong said of the cracks in the house she shares with her mother and grandparents...Todd Ferguson, who lives on the bottom street of the hillside neighborhood with his wife, has video of rainwater washing over a retaining wall like a waterfall into his backyard and one of his neighbor's yards. Ferguson said he didn't want to complain to TRCC because he didn't think the state's dispute resolution system would help. The Fergusons and other owners signed binding arbitration agreements when they purchased homes, which means they cannot sue. And it's hard to find attorneys willing to take a homeowner through arbitration, Ferguson said. 'The builder has control in the legal system and at the TRCC,' Ferguson said. 'They know what to do there...'... The neighborhood association recently sent Ferguson a letter threatening to sue him if he doesn't remove the small sign. So far, he's left it in place...When they protested their tax appraisal at the Bexar Appraisal District last week, they were given maps that show their house is in a floodplain. They do not have flood insurance... 'Every night before you close your eyes, you see this big crack,' she said, pointing to the ceiling. Cosmetic repairs, which have been tried by the builder, have not worked. The cracks always return."...
06/08/07