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.