Union Blames Builders for Mortgage Problems

Los Angeles Times (08/08/08); Haddad, Annette
The Laborers' International Union of North America, a large construction workers union, says home builders played a major role in the housing slump and mortgage crisis. The union notes, for example, that approximately 33 percent of the mortgages underwritten by KB Home, Lennar Corp. and Richmond American Homes' mortgage units in Maricopa County, Ariz., will see their rates adjust in 2010 and 2011 when the five-year fixed-rate period expires. The union adds that 100 percent, adjustable-rate mortgages are common in newer developments, leading to an increase in foreclosures and falling home values in these communities. "At the height of the housing boom, the home builders were increasingly relying on predatory and risky mortgage products . . . in order to qualify customers for houses which were sold at what are now clearly inflated prices," the report concludes.