Homeowners of Texas

Corporate Corruption of the Political Process

2010-06-11T16:07:00.000-07:00

I think it is important to understand a couple of things when addressing the problem of corporate control of the political process:

1. It takes some thought to understand the totality of corporate control over our elective process, made worse by the Supreme Court's "rearranging" of the First Amendment to confer unlimited "free speech," i.e. legalized purchase of elections, on corporations. [See also: www.homeownersoftexas.org/Supreme-Court-rejects-limits-on-corporate-spending-on-political-campaigns.html.]

2. Any notion that honest associations, such as the ACLU, can out-raise and outspend the combined force of corporations, acting through its many front groups, like the U.S. Chamber of Commerce ( $ 144 M last year), is not based on reality. Corporations outspent labor and all its allied associations by a factor of 10-1, according to the last figures I saw.

3. It is hard for small businesses to understand that they are pawns, as are individuals. The frustration of small business people is not caused by "the Government" or "Obama" or "Liberals" – it is caused by the greed and animalistic competition from big business entities. Illustration: How many independently owned gas stations still exist in this country? Very few, if any. How can a small paint contractor compete with the large homebuilders, using immigrant labor at bargain basement prices? They can't.

4. So where is the logjam in our current "system of government"? By controlling most elections and most re-elections thru vast amount of money, big business blocks most efforts to impose reasonable protections for the citizens. Example: We currently have a $75 M cap on suits against oil companies, imposed as "Tort Reform". The current Attorney General of Texas, Greg Abbott, received over $2M in contribution from the oil industry in the last four years. How much effort will he give us if Texas gets hit by the BP oil disaster? Houston homebuilder Bob Perry, the largest political contributor in Texas, has given over $21M in the last few years to the Governor, Attorney General, all but 6 Legislators, and all nine Texas Supreme Court justices, successfully preventing the licensing of builders and regulation of homebuilding in Texas.

5. Based upon this scenario, it has become clear that the only way to break the logjam is by Constitutional Amendment. This will be hard because Congress controls the amendment process. To prevail, the public must be educated and aroused; influential groups and leaders must sign off on this effort; as I see it, only a unified movement can effect this change of attitude; this takes time and effort but, it can be done.

The right to equal protection and the right to vote for citizens of color came by amendment to the Constitution, after a Civil War fought over that issue, in 1870; women's right to vote came by amendment only in 1920; the poll tax was repealed by amendment in 1964 and the right of young people to vote at age 18 came only recently, in 1971. As they did before, as to each great issue, the naysayers will say that our proposal to reboot Democracy cannot be done. I for one don't know how long it will take but I say that it can. The alternative is unthinkable.

Guest article by Lou McCreary, attorney, Law Office of Lou McCreary, Austin, TX

Keith Obermann on Tort Reform’s influence on corporate behavior, including BP.

2010-06-09T12:36:00.000-07:00

The 6/7/10 edition of Countdown with Keith Olbermann (http://www.msnbc.msn.com/id/3036677/#37581966) focused on the effect of Tort Reform on corporate behavior, specifically BP. Keith cited secret company documents that said BP has for years rewarded “dangerous cost cutting” in a regulatory environment that posed little danger to Big Oil because of limits to their legal liability. In addition to greed and relaxed oversight, we can add Tort Reform to the list of how we got here [in an economic recession].

Senator Durban challenged a BP employee who said that without limits to liability they couldn’t afford to drill for oil. “I happen to believe that if you’re engaged in drilling, which carries and can carry this level of damage; it carries with it a responsibility that you accept liability for the damage. If you cannot accept that liability, stage the Hell out of the business." Keith also cited a PBS and Propublica report that said liability caps promoted shortcuts at BP, including neglecting equipment, faking inspections, and punishing those who raised concerns. Cutting corners, the report said, is what got you promoted.

Next on the program was Christopher Jones, a lawyer and brother of one of the men killed by the BP accident. After showing and describing photos of his brother and orphaned nephews, he slammed the BP CEO for saying he was trying hard and “wanted his life back.” Jones tearfully said he wanted his brother’s life back.

BP said today that it would create a Wildlife Fund from the revenues it receives from the oil it has recovered so far. That’s the moral equivalent of pledging that the after-tax profits from a string of armed robberies would be used to compensate the victims of those robberies.

MSNBC political analyst Richard Wolffe spoke about the need for President Obama to make some sort of address to the nation but not in a typically pristine White House fashion. He said Republicans blame a regulatory failure that allowed BP to drill in the first place, but at the same time they want less regulation. [How can you have it both ways?] Less regulation is an ideology that Republicans have promoted for two decades as a way to free up business freedom and risk taking. He acknowledged that there’s a direct connection with that deregulation philosophy and ideology and BP’s behaviors.

TDI Sunset Review Hearings

2010-05-29T14:02:00.000-07:00

It was clear that most of the legislators on the Texas Sunset Commission viewed TDI’s primary function as “protecting the solvency of insurance companies” rather than controlling insurance rates.

The following information was provided by Insurance Commissioner Mike Geeslin at Texas Sunset Advisory Commission hearings last week:

Insurance is a huge $100 Billion industry in Texas, with a market size that puts our state among the top 10 or 11 National markets worldwide. The Texas Department of Insurance (TDI) has 1,493 employees and an annual budget of $104 Million.

Contrast that $104M budget to the meager $1 million budget of the Office of Public Insurance Counsel (OPIC), which represents consumer interests instead of the insurance company interests. OPIC is funded by assessments on insurance policies totaling $3.2 Million annually, of which $2.2 Million is returned to the General Revenue Fund of the State of Texas.

The Austin American Statesman recently ran an article about TDI and the insurance issues in the upcoming elections that stated that there are currently 121 registered lobbyists representing the insurance industry. That’s almost 1 insurance lobbyist for every legislator since there are 181 legislators.

Commissioner Geeslin testified about how tough the last two years have been for the insurance industry in Texas for homeowners insurance. He said the industry loss ratio was 171% in 2008 and 102% in 2009, including all overhead and expenses. He failed to say that the industry had just come off of 5 years in a row of record and excessive profits.

The Dallas Morning News (4/13/10, Page 3A) reported the loss ratios for years 2003 through 2007 without expenses added in. Since the typical cost of overhead and expenses is about 30% to the “claims paid” loss ratio, you can add 30% to each of these numbers, subtract that figure from 100%, and determine profit levels, which don’t include investment income:

YEAR LOSS RATIO PROFIT

2007 39% 31%

2006 38% 32%

2005 59% 11%

2004 25% 45%

2003 57% 13%

Texas Builders & Realtors tout $500 million mortgage loan program

2010-05-29T04:48:00.000-07:00

Does this make sense while other agencies are tightening budgets to address a $18 Billion deficit and teacher, fire and police jobs are cut?

Half a Billion dollars!!! – “It’s the single-largest financing initiative for state homebuyer funds in the 27-year history of the program and serves as the state’s response to the recent expiration of the federal homebuyer tax credit,” said Gordon Anderson, a spokesman for the Texas Department of Housing and Community Affairs (TDHCA).

TDHCA announced that the State will make available the first $50 million under an “unprecedented $500 million in new mortgage revenue bond authority” (Bond 77). The timing and sheer magnitude of this program is suspicious, and we wonder who the real beneficiaries are. Is it the low to medium income Texan home buyer seeking the American Dream, or is the program more for the builders, realtors and mortgage lenders?

See Why the Housing Stimulus and FHA, Fannie Mae and Freddie Mac loan guarantees put Taxpayers (and the economy) at Risk for our point of view. Some builders have advertised their own equivalent of the federal homebuyer tax credit. Think of it as a sales price or rebate offer.

Promoted as helping families overcome the biggest obstacle to buying a home, the Bond 77 funds will be used for low-interest loans and down payment and closing cost assistance. That means borrowers will have less skin in the game and are at greater risk of foreclosure if they have financial problems and must sell, but inflated property values have fallen. It also is promoting the American Dream to more.

Another program that puts buyers at greater risk is, in our opinion, the USDA Home Loan Program. It offers zero-down loans to low and very-low income families needing affordable housing, but we worry that the program actually suckers people into buying homes built on rich farmland. This is some of the most expansive clay soil in the country – soil that’s great for farming but terrible for home building. It shrinks when dry and expands up to 30% when wet, which is why it tends to crack foundations and cause all sorts of structural problems in homes unless builders spend thousands of dollars extra to properly engineer the foundations. Too often they don’t, especially with the starter homes that the USDA Home Loan Program targets.

The American Dream of homeownership is a goal that sounds nice, but didn’t this cause the housing bubble and global collapse in the first place? See Texas Homebuilding and the Global Financial Collapse.

So who really benefits from artificial market stimulus? Is it really the buyers, or are they presented with a false “perception” of value created by tax credits, rebates and fire sales? The housing industry can use these tricks to inflate appraisals of neighboring homes. Appraisers must compare actual sale prices instead of list prices, but they don’t factor in promotional offers such as lower interest rates or down payment and closing cost assistance.

And finally, how can Governor Rick Perry justify this TDHCA stimulus at this time? It seems like a massive gift to his builder friends in the Texas Association of Home Builders?

Relying on mess-makers to fix mess

2010-05-27T14:20:00.000-07:00

Of top hats, top kills and bottom feeders [HOT shows similarities with Texas homebuilding.]

By Maureen Dowd, New York Times, 05/26/2010
http://www.dallasnews.com/sharedcontent/dws/dn/opinion/viewpoints/stories/DN-dowd_27edi.State.Edition1.6f4e14e.html

It's unnerving, disorienting. A particularly noxious blend of helplessness, fear and fury that washes over you when you realize the country has again been dragged into a costly and scary maelstrom revolving around acronyms you've never heard of.

Our economy went in the ditch while traders got rich peddling CDOs and CDSs. Even many bankers – much less average Americans who lost their shirts – were gobsmacked by the acronyms and scrambled to figure out how collateralized debt obligations and credit default swaps worked.

And now a gazillion gallons of oil have poisoned the Gulf of Mexico, thanks in part to unethical employees at a once-obscure agency known as MMS – the Interior Department's Minerals Management Service. MMS is charged with collecting royalties from Big Oil even as it regulates it – an absurd conflict right there. So MMS has had the same sort of conflicts of interest as ratings agencies like Moody's and Standard & Poor's had with Wall Street. [and the TRCC with Texas homebuilders]

Consorting with the industry intensified once two oilmen took over the White House. Dick Cheney, Duke of Halliburton – responsible for the cementing of the calamitous well, now under investigation – had his aides conspire with BP America and other oil companies to draw up an energy policy.

As when derivatives experts had to help unravel the derivatives debacle, now the White House is dependent on BP to find a solution to the horror it created. The financial crisis and the oil spill are both man-made disasters brought on by hubris and avarice. [The housing bubble was also a man-made brought on by an unregulated homebuilding industry with vertically integrated builders who owned their own mortgage companies and taught banks and mortgage companies the art of predatory lending.]

With poignant scenes of oil-soaked birds and out-of-work fishermen on TV, the White House is still scrambling to get on top of this latest catastrophe. The laconic president is once more giving too much deference and trust to rapacious corporate scoundrels and failing to swiftly grasp and articulate the alarm of Americans.

One West Wing official admits that, even with all the crises they were juggling, they should have acted more urgently to re-examine the dark legacy of Cheney in the Energy and Interior departments.

Monitoring the plume of doom – a symbol of national impotence – we're learning another whole new vocabulary, from "top hat" to "top kill." We are trapped in a science-fiction nightmare we can't wake up from, possibly because of a dead battery in the control pod connected to a dead man's switch for the blowout preventer, whatever that means.

We're glued to a House energy subcommittee's "spillcam" website and Google Earth pictures of the spreading slick, nauseated by the news that once more, government officials charged with protecting us were instead enabling greedy corporations.

In a report released Tuesday, Mary Kendall, acting inspector general of the Department of the Interior, described an agency that followed Cheney's lead in letting the oil industry write the rules. [That's just like Texas letting the homebuilders write legislation setting up the TRCC. In both examples, Foxes designed the henhouse. See http://www.homeownersoftexas.org/TRCC-Eulogy.html for a looping set of cartoon images about this issue.]

Larry Williamson, the MMS Lake Charles, La., district manager, told investigators: "Obviously, we're all oil industry. We're all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they've been friends with all their life," hunting, fishing and skeet-shooting together. [This is like the "revolving door" between legislators, regulators, and industry lobbyists. It's a corrupting influence that's especially strong in Texas under Governor Rick Perry.]

The tragedy is that MMS eerily presaged the disaster in the draft of a May 2000 environmental analysis of deep-water drilling in the gulf. The agency noted that "the oil industry's experience base in deepwater well control is limited" and that given the prodigious production rates, "a deepwater blowout of this magnitude in the U.S. Gulf of Mexico could easily turn out to be a potential showstopper" for the Outer Continental Shelf program.

But MMS got rid of those caveats in the final report, just as they deemed a remote-controlled shut-off switch an unnecessary expense for drilling companies several years ago.

As we watch a self-inflicted contamination that has no end in sight, consider this chilling arithmetic: One oil industry reporter reckoned that the 5,000 barrels a day (a conservative estimate) spewing 5,000 feet down in the gulf counts for only two minutes of oil consumption in the state of Texas.

County Rule Making? – Nope, thanks to the Builder’s Lobby

2010-05-20T15:08:00.000-07:00

You bought land out in the country outside of the city limits and built your dream home there, calling it Green Acres. Or you bought into a subdivision just minutes away from the city where land prices made homes more affordable. Then, after spending the money and settling in, you find out that the land next to you was sold and will now become a trash dump, hog farm, chicken ranch, gravel dump, or concrete plant. What can you do?

Not much; you’re unfortunately out of luck. You can complain to the city planning office, but it’s out of their jurisdiction, so there’s nothing they can do. And the county has no ordinance-making authority to enforce building codes or adopt zoning regulations.

Nearly 25% of Texans live in unincorporated areas that lack any real power to prevent undesirable businesses from being located near homes and neighborhoods.

So why don’t Texas counties have ordinance-making authority? It’s quite simple. Over the years, in consecutive legislative sessions, the Texas Association of Builders and their allies, such as Bob Perry, have blocked proposals to grant counties such authority. Homebuilders like having little regulation when building in Texas and even less in the counties. They want to keep it that way.

Homeowners are the real losers when counties have no authority to determine what’s built within their jurisdictions. Just as homebuilders can develop entire subdivisions with no oversight or environmental controls in unincorporated areas, gravel and concrete plants can be built adjacent to existing neighborhoods, creating imminent threats to health and safety.

There's an ongoing controversy in eastern Travis County where Texas Industries wants to build a concrete plant directly across the street from a relatively new subdivision. The homeowners are distraught because their property values will plummet if the concrete plant is built, and in addition to the pollution and noise from the plant, they must contend with over 40 concrete trucks a day driving past their neighborhood. The Travis County Commissioners don’t want the plant to be built, but the last we heard, they felt they were powerless to stop it.

As we recall, similar problems exist in Williamson County, where the location of a landfill caused residents a lot of grief. Counties with rapid growth, such as Williamson County, will likely suffer the most serious consequences from the lack of ordinance making authority thanks to the Texas homebuilders lobby.

Hats off to Texas housing market?

2010-05-14T13:01:00.000-07:00

The Real Estate Center at Texas A&M University is promoting a new study that says Texas homeowners and renters enjoy significantly lower housing costs than the national average. But if the study examined the NEW home market, it would find that Texas has become the nation’s magnet for bad builders. Even good builders are forced to adopt bad practices to compete with unscrupulous ones who cut corners and hide behind laws put in place to protect them from lawsuits and accountability. That’s because Texas has cheap land and labor, does not license or regulate builders, and provides no statewide enforcement of building codes. Anyone can be a builder in Texas with no proof of competency and financial responsibility.

Powerful builder lobbyists have created a business and legal environment where most Texas homeowners simply can’t recover legitimate damages. That’s why we recommend buying USED homes built before 2003 rather than new ones and are working to change the laws.

Homeowners of Texas is a nonprofit consumer advocacy working on legislative reforms that protect homeowners and provide a level playing field for dealing with contractors, insurance companies, lenders and service providers. The current lack of rules and enforcement led to market failures in a Free Market society where sociopathic corporate “bullies” (builders, banks, etc.) can’t lose but everyone else does. (http://www.homeownersoftexas.org/Licensing.html)

Obama picks Solicitor General Elena Kagan for Supreme Court

2010-05-10T14:50:00.000-07:00

HOT endorses President Obama’s nomination and sees many traits that will make Elena Kagen an excellent Supreme Court Justice for homeowners and ordinary citizens, since she knows that Equal Justice should apply to All Americans regardless of background or social stature. Obama said that “rather than accept a comfortable life as an attorney in a corporate law office, Elena chose a life of service to the law and all those whose life it shapes.” He described lessons she learned from her parents who stressed service, charter and integrity. How refreshing! We can only think of the recent Supreme Court decision about unlimited corporate campaign contributions and wonder if the outcome would have been different with Kagen there.

From the MSNBC News story and video below, Obama described Kagen as “one of the nation’s foremost legal minds” and cited her “openness to a broad array of viewpoints” and her “fair mindedness.” She has a reputation for bringing together people of competing views and earning their respect.

Visit msnbc.com for breaking news, world news, and news about the economy

HOT Concerns with Centex plans for Hills of Rivermist retaining wall repairs

2010-05-07T13:14:00.000-07:00

According to your 4/27 press release, Centex says that it has installed new inclinometers and that its engineering plans have undergone peer review, but we are concerned that people hired by Centex are beholden to them and expected to support them. We must question the neutrality of such a “peer” review since, to our knowledge, no one has yet addressed several of the issues we have raised, including:

· Dr. Dave Petley’s 2/04/2010 analysis includes photos showing Toe Heave and Lateral Scarp that have yet to be explained by Centex or the City of San Antonio. Petley is a landslide expert and geography professor at Durham University in England. The “water balloon” theory mentioned below seems to explain Petley’s analysis.

· A Western North Carolina Landslides blog complains about the “Fraudulent Concealment of Hazardous-Soil Conditions” in Texas and elsewhere outside of North Carolina, and how local governments are often complicit in that.

· State representative David Leibowitz has continued to voice public concerns "with the construction practices at Rivermist going back to 2007." Even before the first collapse of the Rivermist retaining wall, Leibowitz asked the city about the quality of the fill material.

· In Little Rivermists are everywhere in San Antonio, TREC inspector Mark Eberwine questioned the Centex wall design, saying, “If you stack tons and tons of unconsolidated earth on top of undisturbed soils, behind a 'retaining wall' and you fill the earth with millions of gallons of water (it's call rain), this water held by the dam is a 'lake'. What licensed engineer or homebuilder doesn't understand this?”

· My own analysis of USDA Web Soil Survey data shows that the Hills of Rivermist subdivision was built on expansive soil that is known to be unsuitable for building (“very limited” in their words). That was “before” the retaining wall was built and tons of fill dirt added. Was the dirt that was added as fill on top of expansive soil also mostly expansive clay soil?

· In The Hills of Rivermist Water Balloon Fight, I explained the characteristics of expansive clay soil and suggested that such soil could render the new Centex wall ineffective. Using the same “water balloon” theory, I am concerned that the newly installed inclinometers may give the City and Rivermist residents a false sense of security since very wet clay soil could easily “ooze” out around the pilings and underneath the wall itself.

· In Texas Builder at center of San Antonio Crime Scene, I raised unanswered questions about why Centex was allowed to remove physical evidence (i.e. tons of fill dirt) from a potential crime scene, why City police and a private security firm prevented independent inspectors from accessing the site until after the fill dirt was hauled away, and why the Texas Attorney General never got involved in this case. We may now never know the answers or how expansive or contaminated that soil was.

Gov Rick Perry Official Theme Song: Macho Macho Man!

2010-04-30T12:52:00.000-07:00

This video reminded me of Texas politics, where the pigs are the cronies and represent government corruption, or at least the appearance of it. It was too funny not to post.

Hills of Rivermist retaining wall failure and the Water Balloon theory

2010-03-22T14:30:00.000-07:00

It doesn’t take a structural engineer or geotechnical soil scientist to question the integrity of a retaining wall design built by Centex that collapsed twice before, or to question the new plans recently submitted by Centex to City of San Antonio planners.

See HOT analysis of the Soil Conditions in the neighborhood and the new design proposed by Centex-Pulte.

Is Centex doing “the right thing” with its buyback offers?

2010-03-11T20:08:00.000-08:00

Centex said in a press release (http://www.rivermistinfo.com/CentexMedia.pdf) that it is extending buyback offers to 27 homeowners displaced by the retaining wall collapse at The Hills of Rivermist in San Antonio. That gesture seems at first glance as the right thing to do, but Centex made no public apology for the damage they caused, and their offer still won’t make the victims whole.

WHAT’S COVERED

Besides buying back the homes, presumably at what was paid, Centex said they will “compensate homeowners for their moving costs, costs of home improvements they may have made, and other incidental expenses, as well as reasonable attorney’s fees to assist homeowners in reviewing legal documents.”

WHAT’S NOT COVERED

Centex didn’t offer to cover the heavy consequential damages and emotional stress that likely resulted when families were forced to evacuate, leave their belongings, and move into a hotel room for weeks at a time. That emotional stress can affect a marriage, a child's school performance, and a parent's work productivity, even threatening a promotion opportunity or the job itself. It's common these days to work 8 hours at the office and another 4 hours at home just to stay employed; but with the evening routine disrupted, work productivity can suffer.

Centex said it won’t pay the fees for legal representation of homeowners who retained an attorney, but that can prevent some from accepting the buyback offer. Because Texas laws are so biased against homeowners in disputes, and because the attorney’s risks in taking on such cases is so high, the only way some people can get legal representation is through a contingency contract. Contingency fees are often at least 30% of the settlement or judgment award, so accepting the Centex offer could cost homeowners $60,000 or more just to settle their mortgage debt and pay their attorney. That’s being victimized twice.

PRESSURE TO SETTLE

Families living in cramped hotel rooms without their familiar surroundings just want this ordeal to end and are likely under tremendous natural pressure to accept the Centex offer. The prospect of making new long-term living arrangements while paying the mortgage on their uninhabitable Centex home makes it worse. Centex knows this, but many families can’t afford to accept the buyback offer. Some may make counter offers that add enough of a cash settlement to also cover attorney contingency fees and use the media to pressure Centex into accepting. Others may walk away from their mortgage loan or negotiate a short-sell with the mortgage company and a willing buyer, but it’s possible that the home’s only value is the scrap building material when demolished. We saw this happen to another defective home that once cost about $250,000 and is now on the tax roles for $1,200.

Centex also is under pressure to settle and settle quickly from a business and PR perspective. The question is whether they learned enough from the 10-year Bob & Jane Cull versus Houston builder Bob Perry case, where a jury recently ordered Perry to pay $58 million in actual and punitive damages. Did Centex-Pulte learn anything about what’s right for the displaced families, the Rivermist subdivision, the City of San Antonio, the Pulte brand, and the Pulte shareholders? The “right thing,” in our view, would have been to take responsibility early and make amends and settle quickly. By waiting so long and offering a settlement that many can’t even afford to accept, this builder sets itself up for expensive lawsuits from displaced families and others in the neighborhood whose home values plummeted. Pulte assumed a huge risk by not acting more decisively, and we might even expect shareholder lawsuits as a result. The best advice I can give the company at this point is to read Jim Collins’ “How the Mighty Fall” (http://homeownersoftexas.org/Builder-Advice.html).

Public officials treating Criminal Acts as Civil Disputes

2010-02-26T10:44:00.000-08:00

While Williamson County seems to “treat people guilty of an accident as though they were criminals,” the State of Texas treats criminal acts by unscrupulous homebuilders, including fraud, racketeering and corruption, as civil contract disputes rather than crimes. So I say to the Texas Attorney General and district attorneys, let’s go after the REAL criminals.

This thought was inspired by Mike Gauthier’s Letter to the Editor below

Punishment for son's death

Re: Feb. 17 article "Man indicted in son's death in hot van."

I was deeply saddened by this story. What could be more tragic and emotionally stressful than losing a child to an accident? Charging Mr. Hu with a crime in this case borders on cruelty. There was no intent to commit a crime, and nothing was preplanned. Mr. Hu is guilty of nothing but a tragic mistake. I once thought of Williamson County as a place where you will pay the price for a crime, and that was good. Now I fear they have crossed a line and are treating people guilty of an accident as though they are criminals.

Haiti, Katrina & Hills of Rivermist remind us of the need for good government policy and building codes

2010-02-08T06:19:00.000-08:00

From:

A hint of climate calamity, Austin American-Statesman, 2/7/2010
http://www.statesman.com/opinion/insight/commentary-a-hint-of-climate-calamity-217213.html

What can we learn from Haiti's experience with natural disasters? "Natural disaster" is something of a misnomer. As we observed with Hurricane Katrina, whether or not a disaster kills large numbers of people or leads to large economic losses depends partially on government policy, the strength of dikes, the enforcement of building codes, the speed of response.

. . .

Haiti's recent experience is sobering and should remind us of the importance of disaster risk reduction. Such investments in building codes and preparedness would not only be cheaper, they would save thousands of lives.

[HOT: San Antonio’s Hills of Rivermist wall collapse teaches similar lessons about government policy and building codes, but in this case the “natural disaster” was the known shrink-swell characteristics of expansive soil and a wall not built to withstand them.]

Texas Builder at center of San Antonio Crime Scene

2010-01-29T11:27:00.000-08:00

SHODDY CONSTRUCTION – Last week some 80 San Antonio homeowners in The Hills of RiverMist were displaced when a 40-foot tall retaining wall collapsed. For many, their lives have been ruined. The culprit is both the builder and developer. Centex, which was acquired by Pulte Homes, installed the failing retaining wall and also built the homes, including those on top of the wall and those at its base. They charged $10,000 extra for homes on top and called it a “lot premium” because of the view. (See running news coverage at http://www.homeownersoftexas.org/San-Antonio-Sinkhole.html.)

SHIFTING BLAME – After the wall came down, Centex called it a “soil shift,” a “slope failure,” a “land slide,” and a “sinkhole” – all in veiled attempts to blame God or Mother Nature or anyone else. We even saw news reports saying the neighborhood was built on a fault line, implying that it might have been a “mild earthquake.” Give me a break.

DESTROYING EVIDENCE – Centex was quick to bring in its own engineers to do the analysis and to bring in their own crews and heavy equipment to remove the landfill (and evidence). The police kept others out. So there soon won’t be any evidence left for inspectors and engineers hired by homeowners to examine for themselves. Isn’t evidence tampering a crime?

APPEARING RESPONSIVE – Pulte and the City of San Antonio have been very quick to do Damage Control – both structurally before forecasted rains and PR-wise. They quickly issued press releases, held public meetings, created websites, and even put displaced homeowners up in hotels. Such public relations containment makes good business sense, but will it last until the homeowners are made whole? What do you think?

BLAME THE BUYERS – Builders like Centex want lawmakers to think that buyers have a choice of signing the builder’s contract or not – of buying the home or not. If they don’t want to be bound by binding arbitration, they can simply go to another builder. But can they? According to a 2009 study of the 13 builders in The Woodlands, all of them had binding arbitration clauses in their contracts and none of them would allow buyers to opt-out. Even the “free” home warranties they gave to the buyers as a gift at closing had arbitration clauses. That means you can’t buy a new home in The Woodlands without being forced into arbitration.

RESTRAINT OF TRADE – HOT testified yesterday in front of the House Committee on Judiciary & Civil Jurisprudence, asking for a ban on Pre-Dispute Binding Arbitration clauses in agreements for Texas homesteads and ending the practice that is so common among Texas builders. The refusal to negotiate contract terms of a sales contract and opt-out of arbitration is, in our view, an illegal restraint of trade. Nearly all sales contracts used by small and medium builders originate from the Texas Association of Builders, and many of these builders join the association so they can use the boilerplate contracts without needing their own teams of attorneys. Builders of all sizes have business reasons to disallow negotiated changes to the contracts.

PUT BLAME WHERE IT BELONGS – According to news reports, Centex said the wall was engineered to comply with city codes, but where’s the proof? Where are the plans with the engineering stamp? Who did the design work? If they knew a name, wouldn’t they have pointed the finger there instead of at God? Centex later admitted to never getting a building permit and that no inspections were done. So even if the wall was engineered properly, which we doubt, it doesn’t seem to have been built to spec.

NO INSURANCE OR WARRANTY COVERAGE – Most home insurance policies won’t cover structural defects or soil issues, and neither will the home warranties. Statewide warranty standards developed by the TRCC include important exemptions that make them nearly worthless. One such exemption is “soil conditions.” So with binding arbitration and no ability to file a civil suit, these homeowners have nowhere to turn.

THE BIGGER PICTURE – Centex may be at the center of this crime scene, but the Texas home building industry is at the center of a larger crime scene – one that contributed to the global economic collapse. See [1] Who's to Blame for the Financial Crisis? (http://www.homeownersoftexas.org/blame.pdf), [2] Texas Homebuilding and the Global Collapse (http://www.homeownersoftexas.org/collapse.pdf), and [3] CRUEL HOPE (http://www.liuna.org/Portals/0/docs/PressReleases/Report%20-%20Cruel%20Hope.pdf).

Arbitration Hearing (1/27/10) – House Committee on Judiciary & Civil Jurisprudence

2010-01-28T13:22:00.000-08:00

Arbitration Hearing (1/27/10) – House Committee on Judiciary & Civil Jurisprudence

Below are our rough notes and impressions. Please excuse any misspellings of names and add your own comments.

Chairman Todd Hunter called the public hearing with little advanced notice and a list of invited speakers to address Interim Charge #2 on Arbitration and continue hearings from last year’s regular session. HOT was one of those invited to testify and, after learning about the hearing, dozens of Texas homeowners also came to Austin and testified.

Committee information: http://www.capitol.state.tx.us/Committees/MembershipCmte.aspx?LegSess=81R&CmteCode=C330
Archived video (3:57min) at http://www.house.state.tx.us/fx/av/committee81/00127a20.ram
Witness list at http://www.capitol.state.tx.us/tlodocs/81R/witlistmtg/html/C3302010012710001.HTM Speakers representing both sides of the issue were given 5 minutes to make their points.
New information can be sent to Committee clerk Jennifer.Welch@house.state.tx.us (512-463-0790)
Working Group will be created to continue examining legislative options and will likely hold another public hearing (date not yet posted).
HOT Arbitration page: http://www.homeownersoftexas.org/ARBITATION-mandatory-binding-unfair-and-everywhere.html
HOT 1-page flyer: http://www.homeownersoftexas.org/Binding_Arbitration.pdf

Overall issue:

Arbitration is a dispute resolution alternative to civil suits that seems to work well in business-to-business (B2B) disputes where both sides have similar resources.
Arbitration is widely criticized when applied to business-to-consumer (B2C) disputes where there’s wide disparity of resources between parties involved.
Those favoring B2C arbitration said it was faster and cheaper than a civil suit. HOT strongly disagrees.

Tom Archer (HOT President)

Endorsed pending federal legislation – the Arbitration Fairness Act
Recommended that Texas abolish pre-dispute binding arbitration agreements in contracts pertaining to a Texas homestead, including sales contracts, home warranties and home insurance

David Payton (Houston trial lawyer who handles residential defense cases)

He said arbitration is a Great solution for commercial construction where both parties are more equal.
He said homeowners also do better in arbitration than in jury trials (yeah, right).
All 3 of his latest Residential cases ruled in favor of consumers (yeah, right – What was the award vs. the damages?).
American Arbitration Association (AAA) statistics: 1256 commercial cases vs. 76 residential cases.

Bob Perk (Associated Builders & Contractors, Corpus Christi)

He said arbitrators have technical construction experience and decide on facts, where juries decide on emotion.

Pam Bolton (Texas Watch Policy Director)

Costs are MUCH higher for consumers and there’s bias since arbitrators are beholden to industry for repeat business. They only see the consumer once.
Open issues include preservation of rights to a class action, attorney fees, and no gag order. Arbitration does NOT work for small disputes. Spending $1500+ per day is not justified to recover small (e.g. $500) damages unless as part of a class.
Because of the secrecy of arbitration proceedings, consumers can’t research a company’s business performance.
Total costs of arbitration are often hidden from consumers (due to added fees).

Mark Kincaid (Texas Trial Lawyers Association) – This GREAT testimony starts at 0:49.

The fundamental issue is Forcing arbitration on the weaker party when they would not normally choose it.
Why do some argue for pre-dispute consumer arbitration but don’t let them decide? The consumer’s Adversary makes the choice and forces it on the consumer.
Consumers don’t voluntarily choose arbitration when signing contracts.
Selecting a dispute resolution process for everyone is too paternalistic. (We know better than you.)
Consumers don’t rise as a group and ask for laws that force arbitration on big corporations.
He recommends prohibiting pre-dispute arbitration clauses when there’s disparate bargaining power or litigation funding between the parties.
MOST lawsuits are settled before a trial commences. The threat of a trial motivates this.

Lee Parsley (Texans for Lawsuit Reform)

He said a ban on pre-dispute arbitration agreements would limit the right to contract.
He said the Arbitration Study Group should focus on “specific” reforms (i.e. not given free reign).

William Allensworth (Construction Law professor at UT)

He said arbitration is good for homeowners. (yeah, right)
He said home building is complicated and disputes are inevitable, suggesting that arbitrators with specific construction knowledge are best qualified to decide the cases.
He said judges and juries don’t have the required knowledge and first must be educated, leaving appeals options likely, and increasing the cost. He said it takes at least a semester to teach Construction Law students the info they need in order understand construction and construction contracts.
He said arbitration has no Summary Judgment process, so all points can be heard.
He described the procedure as “reasonably fair and relatively fast and low cost.”

Judge Mike Shliss

He was asked about “Rule 11 mechanics.” Rule 11 covers Post-dispute arbitration where arbitration provides more flexibility for the parties to design their own legal process. How formal do we want this? Will we allow oral testimony or not? What sorts of evidence will be allow? Do we want the rules of law followed? Etc.

Robert C. Lou McCreary (Consumer Attorney) – His GREAT testimony starts at 1:23.

He agreed generally with Judge Shliss about potential arbitration advantages.
BUT, Texas is 46% Hispanic.
Arbitrators are “old white men in suits.”
80% of civil suits are settled at mediation. (Someone else said earlier that 90+% are settled before the trial begins.)
Typical costs = $2500-$3000 per day, split between parties.
600K registered new homes (2004-2009) used TAB’s standard contract with binding arbitration.
Recommendation (1) – Don’t allow Pre-Dispute arbitration in contracts of existing home sales, since there’s NO intrastate commerce involved and thus no conflict with federal law.
Recommendation (2) – Preserve the right to opt-out in respect to the Texas Homestead, which is held sacred and protected.
Recommendation (3) – Require mediation before arbitration.
Recommendation (4) – Stamp: “By signing this arbitration agreement, you the consumer waive your Constitutional right trial by jury right.”

Tom Archer (HOT President) – His GREAT testimony starts at 1:30.

He compared TRCC arguments and Arbitration arguments. Industry said “It’s good for you; take it or leave it.” Not one consumer testified the TRCC was good for them, and not one has testified that Arbitration is good for them.
Arbitration is NOT good for consumers, as some have argued.
He referenced The Woodlands, a Houston suburb where all 13 builders have non-negotiable binding arbitration
Consumers have gross inequalities of resources, a critical issue for their homestead.
There is “NO Freedom to Contract” since consumers have NO negotiating power.
Recommendation – Prohibit pre-dispute arbitration in ANY agreement concerning the homestead, including sales contracts and warranty or insurance agreements.
He referenced Mary Henderson’s case with its $100K in damages but a meager $7K arbitration award that didn’t even cover the costs of the arbitration process.
He referenced HOT’s excellent 1-page Arbitration flyer.

Charles Cervantes (past realtor and now Centex homeowner from San Antonio’s Hills of Rivermist subdivision)

He described the collapsed retaining wall
He described Centex sales enticements, including the use of their in-house Mortgage Company and Title Company.
Because the “old white guys” will see him just once, he worried that he won’t get restitution.

Angela Ward (Centex homeowner)

Simply asks for Fairness.
Doesn’t believe arbitration will be beneficial to her.
Wants the process to be Open and is concerned about the high cost.

Joe Canterbury (Dallas Construction Law attorney & arbitrator representing construction industry)

He said “Homeowners fare well” and suggested that any change to arbitration would have a huge impact on the economy, jobs, courts, and home prices. “Leave B2B arbitration alone.”
Rep. Roberto Alowzo asked about the good/bad of arbitration. “It’s quick, final (get on with it), and cheaper (since there’s no “scorched earth” discovery), and arbitrators have construction expertise.” Cases that may hurt consumers relate to small disputes, age discrimination, and class actions. He recommends putting the arbitration clause in bold print.
He was asked about the Cost (i.e. $25K damages vs. $15K to arbitrate). He suggested that legislation could limit arbitration costs vs. damages.
He was asked about transparency and the need for stenographic records. He said adding a court reporter adds cost but CAN be an agreement between parties. Any party can ask for it, but the other party can object.
He was asked about transparency & confidentiality so the public can know about the track record of the process and the arbitrator.

Brian Ramirez (Centex homeowner)

He was thrust into learning about Binding Arbitration (for the first time). The pre-dispute agreement was NOT part of his home buying decision process.
He learned about “don’t bite the hands that feed you” and has concerns about his prospects for a good outcome.
He asked how he could research potential arbitrators without knowledge of their decision record due to secrecy of the process.
He was asked about permitting of the collapsing retaining wall and why the City would issue a permit for the home but NOT the retaining wall.

Christian Agular (Centex homeowner)

Simply wants to prevent this in the future, saying homeowners need a louder voice, and contractors should be held accountable.

Janet Ahmad (HOBB)

She was not called but jumped up in response to a question of anyone providing legal representation, even though she admitted that she’s NOT an attorney.
She gave a repetitive history lesson of federal & state bills hoping and echoed known problems, saying Forced Arbitration denies choice and is contrary to public interest.
Losing a case involving your home is a “life changing” experience.
She also reference the old time “pistol duel” and called pre-dispute arbitration “a bullet you can’t dodge.”
She said the TRCC, RCLA and “builder’s right to repair” cause Disputes vs. Warranties.
She said, “75% of all San Antonio homes have missed inspections.”
Even a “win” is seldom a win – e.g. put a door knob on.

Martha Cushner (Houston homeowner who took sick time from teaching)

Her testimony was impassioned and tearful and obviously angry. She said she can’t even imagine the Hills of Riverview homeowners’ plight.
She does NOT want to sit with an arbiter behind closed doors and wants the right to an appeal.
She referenced a homeowner with a $2000 claim who spent over $5000 in arbitration.
She was asked for a copy of her contract and its arbitration clause and promised to provide it.
She said went through BBB mediation and was extremely unsatisfied.

Andy Willson (Public Citizen)

He handed out “Forced Arbitration: Unfair and Everywhere” (http://www.citizen.org/documents/UnfairAndEverywhere.pdf), which documents the prevalence of arbitration.
He handout out “Home Court Advantage” (http://www.fairarbitrationnow.org/uploads/HomeCourtAdvantage.pdf), which is specific to pre-dispute binding arbitration in the homebuilding industry.
He referenced a case where the arbitrator had an obvious conflict-of-interest.
Andy recently bought a Centex home and understood what he was signing. He asked to opt-out but was told it wasn’t an option, and his wife pressured the purchase. He endorsed HOT’s recommendation of creating an exemption for the homestead.
He was asked about the retaining walls in San Antonio and responded that such walls are everywhere, but he had no specifics about their permitting or inspection.
He was asked about the arbitration appeal process and statutes of limitation and responded that the 30-day limit applies to malfeasance. Otherwise arbitration appeals are nearly impossible.
He read part of one of the reports, including the fact that “9 out of 9 homebuilders” had binding arbitration clauses.

Nancy Henchell (Sugarland homeowner) – Her effective testimony starts at 2:41

She described people who get angry or give up due their anger and distrust of government, saying fewer Americans (percent) vote in elections than in any other country. The implication is what they vote when they’re pissed and see a chance of change and that legislators who side with industry and against consumers will face their voting wrath.
People who sign MDAs don’t know of the industry’s poor performance or the risks they’re taking.
Deuteronomy said, “Don’t put a stumbling block in front of a blind man.” People are becoming aware that “it just doesn’t pay to buy a new home in Texas.” This CAN’T be good for our economy!
When builders are allowed to act irresponsibility without accountability and with impunity, it’s no wonder
She was asked about the word “mandatory” and said there is no negation option. The representative defended pre-dispute MDA as a ontract, not by law.

John Corby (HADD) – His GREAT testimony starts at 2:48

He asked the Committee why we are here yet again talking about the same issue that is still not fixed. It’s because the home building industry continues to abuse binding arbitration.
The home building industry (not credit cards, cell service, etc.) are the ones abusing MDA, and consumers have demanded resolution for 10 years with no result.
He referenced the anger of homeowners and referenced a Georgia case where such anger drove the homeowner to murdering the builder. (Might they next murder the lawmaker who contributed to the abuse?).
He passionately argued that MDA steals our 7^th amendment Constitution rights.
The solution is to abolish pre-dispute MDA for home building industry by abolishing it for the homestead.
Contrary to what some others say, MDA it’s NOT voluntary, and it’s NOT a contract issue.
He referenced The Woodlands, saying “Invite me to YOUR city, and let’s do a study there.”
He referenced KB Homes and federal legislation that now precludes them (just them) from MDA.

James Winslow

He was a US Air Force construction manager and “knows” construction.
He knew what to look for when he bought a San Antonio home, but it still suffered from serious defects.
He described problems with the TRCC dispute process and its faulty inspection report and now worries about his arbitration case.
He knew what he was signing (i.e. MBA clause) but believed the builder’s promises, saying he was lied to.
Make arbitration a choice and make it transparent. Protect consumers.

Richard Niemark (SVP AAA) – His effective testimony starts at 3:00.

He described AAA as a “nonprofit” corporation that promotes public service options, including Hurricane Katrina mediation services.
He described arbitration as originally B2B, which has slowly grown to B2C.
He acknowledges that the award ratio (builders win vs. consumers win) is WAY OUT OF LINE in Texas, probably due to contracts used in this state. (This is a likely a TAB issue). The CONTRACT is where the problem is, not the arbitration process.
Showing concern with abusive sales and warranty contracts, he said “Arbitrators can ONLY award under the terms of the contract & warranty.”
He was asked about possible safeguards and was asked to be submitted them in written form. [Why didn’t they ask him to respond in public like others when they were asked? This request shows a lack of transparency.]
He was asked how arbitrators are selected and put on the list of arbitrators. He said they’re required to disclose conflicts-of-interest.
He was asked about the potential of having average taxpayers on the arbitration panel vs. just industry specialists. He said they do this in other states, but not in Texas.
He was asked about the appeal process and whether we can add something to opt-out or appeal. His suggestion is to create a separate section of law for consumers and employees. He promised to deliver a Finegold model of what that might look like.

Terry Leightness (Centex resident)

She’s overwhelmed and extremely disappointed with what she heard here today. “What I learned today is that, a homeowner has no rights… We’re going to be losing everything and wonder, how builders can be allowed to get away with this.”
Rep. Alonzo acknowledged told her that people can sign the contract or not (or buy or not), and he put the blame onto the homeowners themselves.

Ned Munios (TAB General Council)

Arbitration is fair, and contract freedom should be maintained.
“Disproportionate bargaining power” is overblown and often does not apply to smaller builders. [But they are TAB members specifically to get those contracts. Without their own legal teams, they naturally won’t negotiate changes.]
He was asked about current law now that the TRCC is gone. He responded that existing TRCC (1-2-10 year) warranties are in place for these San Antonio homeowners. [But those warranties exclude “soil conditions.”]

Wayne Caswell (HOT Communications Director) – My own testimony is at 3:41.

I didn’t plan to testify but signed up late to clarify that signing a contract with MDA is “NOT optional.” The builder’s sales contract is non-negotiable among almost all Texas builders, because it’s a standard contract written by the powerful attorneys at Texas Association of Builders (TAB).
Pre-dispute MBA is an “Illegal Restraint of Trade” – I referenced The Woodlands and the fact that ALL 13 builders include MBA in their non-negotiable contracts.
I described how corporations are duty bound to act in the interests of shareholders – not society. That’s why they will naturally act as a Sociopath unless regulatory oversight prevents that.
I described the environment of how people shop for homes and sign sales agreements that define their future rights.
I forgot to say that ALL 10 of the home warranties we got from them included MBA clauses that force buyers into arbitration even if they were allowed to opt-out in the sales contract.
I forgot to describe the impact of the “gifted home warranty,” which is presented at closing and usually has exemptions such as “soil conditions.” Even if buyers get closing contracts ahead of time and have them reviewed by an attorney, the “free” warranty is first introduced at closing as a “thank you” gift. Closings are often held at 4:00PM on Fridays specifically so there’s no time to review those late submissions.

Leslie & Francis Crouch (Centex homeowners)

Their tearful and emotional testimony was a fitting close to the day’s hearing.
“The builder is my enemy. He has made himself that way.”
They are “homeless homeowners” because of serious defect in their Plantation Homes home.
They don’t have the money to go into arbitration.
“They lied to us.” “We’ll gladly take a polygraph test.”
Gas leaks and toxic fumes caused Francis’ health problems and made the home unlivable.
They noticed the MBA clause but trusted the builder and his promises.
This is the second time they went through this. The first time it was a Ryland home that became unlivable.
The builders hope for and rely on foreclosure so they don’t have to deal with it. [Note the number of builder-owned mortgage companies that immediately sell the mortgage to 3^rd party investors as complex derivatives. This is a cause of the Global Collapse, and it continues today.]

EXTRAPOLATING THE TESTIMONY

Here’s a very hypothetical thought. If Americans can legally use lethal force to protect themselves, their families or their property, might that standard extend to protecting themselves from builders as well as burglars? The emotional impact of builder abuse is often far greater. So what might a jury decide if a homeowner victim shoots their builder? I wonder what the Centex homeowners would decide if they were on the jury, because people at their wits end with nothing to lose – like the Crouch couple – can behave irrationally and do anything. Who could blame them?

Public Hearing on Binding Arbitration - Jan. 27

2010-01-23T15:39:00.000-08:00

HOT will testify and is preparing other witnesses. Let us know if you will be there to testify so we can help maximize your effectiveness. The following information is from John at Bay Area Houston.

The Judiciary & Civil Jurisprudence Committee chaired by Representative Todd Hunter will be holding a hearing on the use of arbitration in Texas in response to interim charge #2.

"Study and make recommendations regarding the use of arbitration in Texas and the effect such practices have on state jurisprudence."

In 2002 two hearings, one in the Senate and one in the House were conducted to examine the abuse of arbitration, especially in the area of new home contracts. The now defunct Texas Residential Construction Commission also performed a study although it was very slanted towards the home builders. At all the hearings, the consumers hammered the home building industry with horror stories attributed to arbitration. This hearing should be no different. Unfortunately after numerous hearings nothing has been done to resolve the problem.

Notice of Public Hearing
COMMITTEE Judiciary & Civil Jurisprudence
TIME & DATE: 10:00 AM, Wednesday, January 27, 2010
PLACE: E2.010
CHAIR: Rep. Todd Hunter

Committee will meet to discuss interim charge number 2 relating to
studying and making recommendations regarding the use of arbitration
in Texas and the effect such practices have on state jurisprudence.
Committee will hear both invited and public testimony.

HOT REACTION to Supreme Court Decision

2010-01-23T14:19:00.000-08:00

With the stroke of a pen and no public debate, the US Supreme Court swept aside 100 years of laws restricting corporate funding of political campaigns, making it clear that our Constitution is under attack by moneyed special interests, with serious implications for Texas homeowners.

CORPORATION AS PERSON – “The Corporation” is an award-winning Canadian documentary that describes the nature, evolution, impacts and future of the modern business corporation and the increasing role it plays in society and our everyday lives. Chapters 1, 2, 3 & 6 examine the corporation as a person and apply personality tests to conclude that it behaves as a sociopath or even a psychopath. Corporations are legally bound to serve the interests of shareholders and NOT society.

LEGALIZED BRIBERY – If a bribe is “Something, such as money or a favor, offered or given to a person in a position of trust to influence that person's views or conduct,” then the US Supreme Court just LEGALIZED BRIBERY in the name of Free Speech. Corporations contributing as part of a group or PAC are anonymous. Their money can help determine the outcome of ELECTIONS, but when they are allowed to contribute directly, they can also influence DECISIONS. That’s where the real danger lies.

UNBALANCED MEDIA IMPACT – Consider the advertising power of big corporations or groups like the US Chamber of Commerce versus that of individual consumers and small businesses. That power extends beyond the dollar value and includes reaction time – the ability to place last minute ads prior to important elections or decisions. Grass roots don’t react as quickly.

QUESTIONABLE TIMING – Does it seem odd that a decision overturning 100 years of law and having such a profound effect would be decided with no public debate? Apparently the Court decided to take up the issue right after Obama was elected and the Senate got a 60% super majority. The final decision was handed down just days after the Haiti earthquake when attention of the media and citizen activists was rightfully diverted elsewhere. Yes, it's in very poor taste to imply that this was intentional, but it was convenient.

ELECTED VS. APPOINTED JUDGES – Texas elects its judges, making them susceptible to influence from campaign contributions. We often cite Houston homebuilder Bob Perry’s contributions to all 9 Texas Supreme Court justices and a critical case decided in his favor. Certainly campaign contributions are not the only way to influence decisions, meaning appointed judges aren’t immune.

MONEYED INTERESTS – If all people are truly “created equal” and have “one vote per person,” the Courts' decision circumvents the fundamental principles of our Democratic Republic, giving disproportionate influence to the rich, where CEOs can make 1,000 time more than their average employees. (e.g. $50M/year CEO salary vs. $50K/year for average workers) This imbalance is clearly not in the spirit of democracy.

UNAMERICAN – What’s worse is that multi-national corporations no longer consider themselves to be American companies. They serve global markets and self-interests, yet the Court’s decision gives them greater influence on our government than average Americans. The Court also opened a loop hole for foreign control of our government and a breach of national security. Is this part of The New World Order that conspiracy theorists talk about?

FREE SPEECH – Our Constitution does not equate money with Free Speech. The right to petition the Government can be done with no money at all. But by equating money with Free Speech, the Court gives those with more money MORE Free Speech. This is the antithesis of “One Man, One Vote” and “Fair and equal representation for all.”

BAILOUT MONEY – The companies that got billions of dollars in taxpayer bailout money can now turn around and use that money against us by bribing officials. This includes big oil, big banks and home builders, Wall Street, insurance companies, and car makers. Impeachment anyone? Amend the Constitution? With their new ability to buy political candidates and influence decisions, that’s unlikely. Maybe an outright Revolt is in order.

BIG BUILDERS – From a new article we posted today, even before the Supreme Court decision “The big builders decided they wanted a more ‘direct connection to lawmakers’ after their experience lobbying the government for aid to combat the industry's protracted down turn” (i.e. the Homebuyer Tax Credit). The article describes how they’re breaking ranks from smaller builders and forming their own industry association. We added comments to make the connection to the Supreme Court decision.

Building Codes Save Lives

2009-08-25T07:48:00.000-07:00

Cutting corners on home improvement projects could cost you big, so get your permits and follow building codes. (This information is from a NW Insurance Council blog: www.nwinsurance.org/pr_bldgcodes.htm)

SEATTLE - With summer winding down, many homeowners are rushing to complete "do-it-yourself" home projects such as remodels or additions.

NW Insurance Council reminds homeowners to protect their homes and their families by following all local and state building codes while working on home-improvement projects.

"Building codes save lives," said Karl Newman, NW Insurance Council president. "While it may sometimes seem like a hassle, getting the right permits and following building codes helps protect you, your family and your investment in your property."

The National Science Foundation conducted a 2004 study on the 2003 Turkey earthquake that killed 168 people. The study suggests that many of those deaths could have been prevented had builders followed Turkey's existing structural codes.

In December 2007, a powerful windstorm ripped through Western Washington and Oregon, causing more than 32,000 claims and $165 million in property damage to homes and small businesses. The December 2006 Hanukkah-Eve windstorm was even more severe with 57,500 claims and $ 220,000,000 in damage in Washington and Oregon.

The damage would have been much greater if homes and businesses weren't built in compliance with modern building codes.

Cutting corners or un-permitted work puts your family and neighbors at risk and can lead to fires, structural instability and water damage. If you're looking to sell your home, faulty work can reduce the value of your home as potential buyers may find the work unreliable. Worse yet, if your home were to experience a loss as a result of a home-improvement project that didn't meet current building codes, it could result in nonrenewal of your insurance policy or a higher insurance premium.

If you're thinking of starting a home-improvement project, NW Insurance Council offers the following key facts about why it's important to follow building codes:

Building codes ensure that homes and building are constructed to protect lives, reduce injuries and property damage.
Obtaining a building permit ensures that a certified inspector can examine your project to verify that it is safe and up to code.
Building codes can help alleviate costly repairs down the road as the result of faulty work.
Building codes protect your investment because they ensure that electrical, plumbing and structural work is done safely and inspected by a professional.

The Economics of Structural vs. Cosmetic Elements in Homes

2009-08-04T15:03:00.000-07:00

INTRO: Consumers buying new homes have vastly different economic perspectives than contractors building them, banks financing them, or insurance companies and other stakeholders.

HOMEOWNERS: The typical mortgage is a 30-year financial commitment, which often includes a consumer’s life savings. But most consumers don’t understand residential construction science or know about decisions made for them by the builder. So, their buying decisions are made from judgments about what they can actually see and understand: the cosmetic elements, which may include granite counter tops and high-quality faucets, textured walls with rounded corners, Decora-style light switches, and monitored security systems. They don't often consider the unseed structural elements or what happens if these elements fail after the home warranty expires. They don't think about the chances of a foundation cracking due to expansive soil, or pipes embedded inside leaking. If that were to happen, the homeowner would face repairs that can easily cost tens or hundreds of thousands of dollars. Consider the repair cost of faulty plumbing in the slab, and how jack-hammering the slab to get to the plumbing can affect the integrity of the slab itself and the framing on top. When the “repair” causes more problems and renders the house uninhabitable, what’s a homeowner to do?

BUILDERS: Good builders, those who pride themselves on making homes that last, are finding it harder to compete against contractors who conceal serious structural defects and offload their warranty responsibilities to 3rd parties. With no regulatory accountability, these unscrupulous builders have learned how to cut corners on the less visible parts of the home and instead use professionally decorated model homes to showcase cosmetic features – the “wow” factor.

MATERIAL SUPPLIERS: As the worldwide price of copper pipe increases, suppliers have responded with less expensive plastic plumbing, which is then embedded in the concrete slab foundation and never again seen. And as lumber costs rise, framers have responded with cheaper grades, smaller sizes and recycled and spliced wood, which can affect the structural integrity of load bearing walls. Builders may argue that decisions to use cheaper materials help them extend homeownership to lower income families, but the end result is a significant number of homes with structural defects that can become uninhabitable, affecting a downward spiral of property values in entire neighborhoods. Rather than covering up shoddy work and substandard materials, we encourage builders to improve their efficiency with on-site supervision, coordinated scheduling of subs, and better communication with Spanish-speaking workers.

MORTGAGE COMPANIES: Banks, like consumers, have little to no knowledge of homebuilding and have shown little interest in a homebuilder's qualifications or reputation or their decisions relating to structural elements or infrastructure components. Instead, the factors banks and mortgage companies use to approve loans include (1) the buyer’s credit worthiness, (2) collateral based on the home’s appraised value, (3) the interest rate, and (4) insurance that covers the home itself and the borrower. Before the housing bubble burst, government regulations forced banks to take on riskier loans to minorities and low-income families with questionable credit and low down payments. They responded by offloading their financial risks by selling mortgage backed securities along with credit default swap “insurance.” And when supply outstripped demand and the bubble finally burst, it became clear that many appraisals were grossly inflated. The banks were in big trouble. Because of the global financial collapse, selling mortgage backed securities is more difficult. We hope banks will now support residential construction reforms that keep them from being stuck with defaulted loans due to construction defects.

INSURANCE COMPANIES: Because current laws allow insurance companies to raise rates whenever profits fall below certain levels, they have less incentive than banks to improve the quality of residential construction. Their biggest exposure would come from widespread damage from hurricanes, tornados and floods. It takes a long time to recover from such losses even after raising rates.

POLICY MAKERS: When politicians understand these different perspectives and natural biases, they can better balance their moral obligation of protecting the health, safety and welfare of the public vs. the lobby influence aimed at protecting practitioners. Another important perspective for them is that a few homes with major construction defects can have a spiraling effect on property values of entire neighborhoods, and thus the tax base that funds public safety and kids’ education.