Re: Request for a Congressional hearing concerning accountability of the home building industry.

Dear Members of Congress,


Each year, thousands of unsuspecting home buyers become owners of defectively built new homes due to faulty design, code violations, cracked foundations, missing critical materials, improper site preparation and grading, moisture problems and leaks that can lead to mold/rot, substandard workmanship, and even unsafe structures. Thousands lose their life savings, as well as the value of their homes, and years of stress from trying to get laws enforced and the builder or warranty company held accountable for its failure to honor the contracts.


The January 2004 issue of Consumer Reports Magazine stated that 15% of new homes have at least two serious defects; at least 150,000 new homes every year. Many serious defects can be quickly hidden under concrete or siding, unobservable even by professional home inspectors until the damage shows up. URL to Consumer Reports Article, “Housewrecked:”


http://www.consumerreports.org/main/content/display_report.jsp?FOLDERfolder_id=372399&ASSORTMENTast_id=333143&bmUID=1070994736893


Thus far, it has been the consensus of our elected officials to punish Americans further by supporting building industry legislation that harms homeowners under the guise of consumer protection and affordable housing. There is nothing affordable about defective housing. Builder sponsored legislation will enable bad builders to continue to build substandard homes and breach the warranty without fear of consequences. Such legislation is often referred to as Notice and Opportunity to Repair (NOR) or Right to Repair. About half the states, at this writing, have passed NOR laws, which generally require strict compliance by homeowners, who may or may not have the law’s usually complex requirements disclosed to them.


Irresponsible home builders harm the reputation of the home building industry and of good builders, and drive up the cost of housing and builders’ insurance. Bad builders create claims, lawsuits, and hidden costs of new housing such as unnecessary repairs, lost wages to take off work and deal with a construction defect dispute, experts’ fees, legal fees, and loss of equity. Some of these cases end in foreclosure, only to have the foreclosing bank sell the home without proper repairs to another unsuspecting buyer.


Without emotional distress awards most families-after attorney fees, potential taxes on an award if they collect it, and costs-are unable to make the needed repairs. That is, assuming they win and collect, and many who prevail in court are never able to collect a dime. Most lawyers don’t take these cases because they don’t pay well enough, leaving homeowners with mediocre, (or worse), or no legal help. Most of these cases are not class-actions, but leave individual homeowners to do battle with sometimes huge corporations and their legal departments. Irresponsible home builders often file appeals, dissolve the corporation but go on building under another name, and never pay the judgment. With multiple corporations, suits and complaints are also less available to the public when researching builders before buying.


Additionally, even though homeowners have paid their builder, if the builder did not pay the subs and suppliers, the homeowner can find they have liens on their property due to the builder’s failure to pay those parties.


Numerous home building or housing industry scandals have been investigated and even prosecuted in past years, at an increasing rate but these cases are the tip of the iceberg. State agencies ignore most complaints because there are not yet enough of them on the same builder or other entity.


It is time that these matters are seriously investigated by the Federal Trade Commission which, in the 70’s, warned the building industry about shoddy construction. Until bad builders, instead of homeowners, feel the repercussions for construction defects, there is no incentive for safe and sound construction, or ethical business practices.


Our homes are the most expensive and important purchase most of us ever make. A home is the one product that, if built with severe defects, can ruin a family financially.


As a taxpayer and constituent, I am in accordance with the following resolve;


1.) Knowing that arbitration clauses take away our 7th amendment right under the U.S. Constitution to a jury trial in damages over $20: We ask that a ban on mandatory arbitration be placed on all consumer contracts, as it was never intended to be used in business-to-consumer contracts.


2.) Knowing that arbitration and out of court settlements with confidentiality clauses, (“gag orders”), take away our 1st amendment right to free speech under the U.S. Constitution: We demand a public database of home builder and warranty company complaints so that home buyers may do meaningful research before choosing these companies. We demand a ban on “gag orders” beyond discussing the details of a settlement; that we may be allowed to disclose valid complaints to consumer agencies without fear of retaliation, for the protection of future home-buyers.


3.) Knowing that in most states a homeowner may not be able to recover attorney’s fees and other costs above and beyond actual repairs/damages: We request laws change to make these costs recoverable so that a prevailing homeowner can pay all costs and still repair their house; to “break even,” or be “made whole.”


4.) We demand trained, skilled and supervised labor in the home building industry along with licensing, bonding, code enforcement, and law enforcement, for residential builders in all states.


5.) We demand emotional distress awards and/or punitive damages for homeowners that have had to suffer greatly; such awards help a financially devastated family pay all of its costs, and act as a deterrent to builders who continually and blatantly ignore codes and laws.


Thank you for your consideration in these matters.


Homeowners Against Deficient Dwellings, a non profit organization. (HADD, Inc.)