WARNINGS - FOR ALL HOME BUYERS

Warning #1: If a builder/developer offers a 10-year warranty on the new home -- this will ensure that neither the VA or FHA WILL NOT be inspecting the home before closing. This was an agreement between federal agencies and national homebuilders years ago. This also prevents both the VA and FHA from intervening if the home proves to be defective after purchase. Warranties are only as good as the builder and, in extreme cases, warranty repairs WILL NOT restore the lost property value, especially if it is related to the home's foundation.

Warning #2: Most new home purchase contracts contain "Binding Arbitration" clauses! Agreeing to this clause strips you of your constitutional rights as an American citizen, in that you CAN NOT seek legal recourse against the builder who built and sold you a defective home. In all cases, the builder/developer gets home field advantage by choosing the arbitrating association, typically one that has ruled in their favor in the past. Here is a good test of the builder's purchase contract -- request that you be provided a copy of an unsigned contract for your attorney to review. If the agent states that they are not allowed to release "unsigned" contracts --run, don't walk, away quickly!

Before you sign anything, visit: Advocacy Group Expands Consumer Mortgage Protection Services For All Homeowners

Before you sign anything, contact this agency: Mortgage Inspection Service

Americas Watchdog is all about consumer protection, corporate fair play and integrity in our political system. If a consumer feels like they are one of the millions of US homeowners cheated in the mortgage process, a new home purchaser, whose house was built by undocumented workers, or whose new home is defective, please contact Americas Watchdog at 866-714-6466. or visit our Homeowners Consumer Center at and send them a contact note via their web site.

If you have already signed, contact this agency: National Mortgage Complaint Center

A sign of changing times and/or customer service? ----"Eat Burger, Waive Right to Sue"

Mandatory arbitration agreements forcing people to give up their rights to sue are now standard fare in everything from cell phone contracts to Hooters’ employment agreements. But the owner of an East Texas Whataburger has apparently taken arbitration mania to a new level. Every public entrance to the burger franchise displays a sign informing people that simply setting foot on the premises means that they are giving up their right to sue the company for any reason, even if, for instance, they get a little e coli along with their fries. Instead, customers will be forced to arbitrate their claims before the American Mediation Association, an organization that seems to consist of three lawyers in Dallas hired by the Whataburger (part of a 58-year-old fast food chain deemed a “Texas treasure” by the state legislature).

Attorney Dan Sorey spotted the sign in early January while in Kilgore investigating the scene of a motorcycle crash for a case. The Whataburger offered an ideal vantage point to study the intersection where the crash happened. Sorey says when he went in, he told a befuddled cashier that he didn’t think that the arbitration notice was enforceable, that anyway he wasn’t agreeing to it, and, “I need a taquito and a coffee.” He says he sat down, watched some traffic, and ate his taquito. “I didn’t choke, I didn’t burn myself, and I didn’t sue ‘em,” he reports. Sadly, while we suspect there is a good story behind the signs, the Whataburger franchise owner did not respond to requests for an interview. We'll just have to assume that the signs are the product of one too many late-night talk-show jokes about McDonalds' coffee lawsuits.

"The Reality of Mandatory Binding Arbitration": click here .

People Over Profits: The Arbitration Fairness Act of 2007

Jordan Fogal's Consumer web site.

Jordan Fogal's Congressional Testimony regarding Binding Arbitration

A must read for anyone who does not understand the consequences associated with Binding Arbitration Clauses in consumer contracts.

ANOTHER SERENDIPITOUS EVENT!

Warranties for Newly Built Homes: Know Your Options: Federal Trade Commission, Protecting America's Consumers.

Federal Trade Commission (FTC): “Most warranties require that both parties abide by the arbitrator’s decision, without appeal. If your loan is financed through the FHA or VA and you file a claim against the third-party warranty company, you can choose between arbitration or going to court. If you choose arbitration, be aware that you are bound by the decision.”

Title 24: Housing and Urban Development, PART 203—SINGLE FAMILY MORTGAGE INSURANCE, Subpart A—Eligibility Requirements and Underwriting Procedures Insured, Ten-Year Protection Plans (Plan): HUD.

24 CFR 203.204(g), (Title 24, Code of Federal Regulations, which is Housing): “(g) In the event of any dispute regarding a homeowner complaint or structural defect claim, Plans must, unless prohibited by applicable law, provide for binding arbitration proceedings arranged through a nationally recognized dispute settlement organization. The sharing of arbitration charges shall be as determined by the Plan. A Plan must contain pre-arbitration conciliation provisions at no cost to the homeowner, and provision for judicial resolution of disputes, but arbitration, which must be available to a homeowner during the entire term of the coverage contract, must be an assured recourse for a dissatisfied homeowner.”

Instead of calling it "Binding Arbitration", it should be called.."The chains that will imprison you."

Photograph by Garvey Scott.

CNN video:Sanchez House Divided, Part 1 and Sanchez House Divided, Part 2

Smart Money, January 1, 2000. Old artice but still applicable in today's housing market:Ten Things Your Home Builder Won't Tell You

A portion of the article:

What's wrong with arbitration? Well, for starters, arbitrators are less likely than juries to award treble damages, say construction-industry attorneys. Also, arbitration is more costly, believe it or not, than taking a case to court. First there's the filing fee, which, for a homebuyer's claim of $50,000 to $100,000, is $1,250, if administered through the American Arbitration Association. Plus, there's a hearing fee of $150 per day; an arbitrator fee, which usually runs $750 to $2,000 per day (usually split between the parties); and you still have to pay a lawyer because smaller awards mean that it's tough to find attorneys who will work on a contingency basis. The result? "It's so prohibitively expensive that consumers may find they just don't want to pursue a claim," says Drake.

Jim Blackstone found out just how expensive. Soon after he and his wife bought a $165,000 home in Moore, S.C., from Pulte Homes, he came across leaks in his basement and crawl space, cracks in his fireplace and a load-bearing wall built on gravel. When the company didn't fix the problems to his satisfaction, he went to arbitration. In May he was awarded $31,700, much less than the $174,000 he sought. The judgment barely covered the $30,000 he estimates he spent fighting the case. "That's more than he deserves," Bob deHoll, an attorney for Pulte, says of what Blackstone got. "We offered to come back and fix the problems several times."

Homeowners Against Deficient Dwellings' (www.hadd.com) article: The Abuse of Binding Arbitration in New Home Contracts, A Consumer’s Perspective

Warning #3: If a builder/developer offers you a mortgages (I call these operations, one-stop shops) be very suspicious! Search the Internet -- mortgage fraud and predatory lending practices are extremely widespread activities. If the "deal is too good to be true" (incentives such as free upgrades, price reductions, furniture, cars, etc.), but you must use their mortgage company to qualify for these deals, it is your first warning sign that "danger lies ahead". Also watch for "binding arbitration clauses" in the mortgage contracts. MORTGAGE FRAUD and PREDATORY LENDING practices are both state and federal crimes, but very few suspect they were taken advantage of, therefore the crime goes unreported. If the contract states: I if the homeowner sells the home before 1 year of ownership, they must pay the originating mortgage company a percentage of the profit. This has been definded an "UNFAIR TRADE" practice and a possible violation of state laws and the Real Estate Protection Act.

"Remember, with anything free, there's usually a catch."

VERY SMALL print that is typically found at the bottom of every Pulte Homes "sales" advertisement: "Incentives require financing with Pulte Mortgage LLC, or paying cash. Financing incentives are subject to buyer qualification. The package cost will be deducted from the total incentive amount available for the home. Some packages may require an escrow hold back in order to complete work. Prices and claims are subject to change without notice. The builder reserves the right to modify floor plans, specifications or exteriors without notice or obligation. See your sales associate for complete details."

If it looks like a duck, quacks like a duck,

there is a 100% guarantee that it is a DUCK!

LOOKS LIKE THE DUCK IS STARTING TO QUACK VERY LOUDLY!

Builders Pay $1.4M in Title Case,Monday October 29, 5:43 pm ET

Homebuilders Agree to Pay $1.4M to Settle Government's Title Insurance Kickback Allegations

WASHINGTON (AP) -- Six homebuilders agreed to pay $1.4 million to resolve federal allegations that they illegally established title insurance companies that took payments amounting to kickbacks. Under the settlements announced Monday, PULTE HOMES, INCT., KB Home, Beazer Homes USA Inc., Meritage Homes Corp., Ryland Group Inc. and Tousa Inc. all denied any wrongdoing, but said they settled the civil cases to avoid legal expenses.

Title insurance protects homeowners and lenders against unknown claims or liens on property. The Housing and Urban Development Department alleged the builders were illegally using their own "captive" title insurance companies to receive payments for a portion of the insurance risk, when no such arrangement is necessary in the single family home market, according to settlement agreements posted on HUD's Web site.

"These complicated business arrangements serve no other purpose than to hide referral fees and kickbacks which are expressly forbidden by law," Brian D. Montgomery, assistant housing secretary, said in a prepared statement.

The builders agreed to halt the practices. Had settlements not been reached, the government could have pursued civil lawsuits against the companies.

Two earlier rounds of allegations against five other builders and one lender resulted in settlements totaling $3.5 million, HUD said.

State officials have also been investigating these practices. Two years ago, three of California's largest title insurers -- LandAmerica Financial Group Inc., First American Corp. and Fidelity National Financial Inc. -- agreed to halt what officials called a kickback scheme that cost home-buyers $25.4 million.

Those insurers also agreed to pay more than $38 million in refunds and fines. In February 2005, Colorado officials signed a $24 million settlement with First American in a similar case.

Warning #4: Trust no builder/developer. They will treat you like a king or queen up until the day you close on the house. Hire your own structural engineer and certified home inspector to monitor the construction of your new home. Your home must be 100% defect free and building code compliant prior to closing. This holds true for a home on the resale market.

Warning #5: Consult with an attorney before you sign ANYTHING! Ensure you understand all of the fine print (and some bold type) contained in your purchase contract. Do not assume that these contracts have your best interests in mind. Have your mortgage paperwork verified by an independent mortgage agency or professional before you sign on that dotted line.

Warning #6: There is NO state that has ANY form of consumer protection laws regarding bad home purchases. Sad but true. We have consumer protection measures for our septic tanks (and waste treatment plants) from the effects of bad toilet paper but no consumer protection measures for homeowners who were sold poorly constructed homes. Currently, all existing consumer protection laws favor the builder. Why?

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