Lending units of KB Home, Lennar, Richmond American and other builders steered buyers into risky mortgages, a report by the group says.
One of the biggest construction workers unions on Thursday warned of more housing problems ahead — particularly for borrowers living in new-home communities — and lays much of the blame on the nation’s home builders.

Homeowners who purchased at newer developments are more likely to have 100%-financed, adjustable-rate mortgages because of builders’ efforts to push risky subprime loans, according to a report from the Laborers’ International Union of North America. As a result, the report claims, certain new-home communities are now littered with vacancies created by foreclosures that are pushing prices down.

Zeroing in on Maricopa County in Arizona, the report found that more than a third of mortgages made by the finance arms of three major builders there — KB Home, Lennar Corp. and Richmond American Homes — were five-year ARMs set to adjust in 2010 and 2011.

“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 union’s report said.

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By Annette Haddad, Los Angeles Times Staff Writer

Source: Los Angeles Times – U.S.A.