Housing Giants - November 24, 2008 - (Page 25)

because everybody went along with it, even the small builders,” says Janet Ahmad, president of Homeowners For Better Building, based in the San Antonio, Texas, area. Ahmad has reported fraud she learned about to HUD. “I have seen the advertising. ‘For the next three months, you will get $20,000 on a credit card $20,000 worth of upgrades for the home, and you would be first qualified on the sales price,’ and that would not be included in it,” she said. Ahmad says she thinks the fraud is becoming more apparent in new construction neighborhoods where a high percentage of homes are now going into foreclosure and owners are learning that they owe more than their homes are worth. Builder bailout fraud is second only to large flip scams in terms of damage, as it can involve whole developments, according to a report from WestStar Mortgage, in Woodbridge, Va. concessions not tHe answer Florida tops the list for the states with the most reported fraud (see sidebar, next page), but some builders there are so good at crossing their Ts and dotting their Is that they never have a problem with fraud. Builders’ only problem instead is getting buyers to leave their own homes to come see what the builders have to offer. “Price reductions alone have been a rather ineffective means of getting buyers through the door,” says George Schulmeyer, Tampa division president for K. Hovnanian Homes. He adds that getting buyers to sign on the dotted line takes a few more incentives than the company was offering two and three years ago, and that it even takes promotional giveaways such as iPods just to get them to attend showings. “Now what is working is paying as much in closing costs as we are allowed because people are trying to buy homes with as minimal cash as they can,” he says. Now that down payment assistance has been eliminated for FHA-backed homes, many builders have been paying up to the maximum of 6 percent to cover the closing costs, fees and pre-paid items the lender might charge. “We’ve been doing the 6 percent for five to six months now. That will cover a lot of the customers’ other requirements,” Schulmeyer says, adding that the builder also has to throw in about $10,000 to $15,000 worth of free upgrades on homes selling for $250,000 as way to seal the deal. www.Housinggiants.com 11.24.08.Housing giants 25 http://www.hobb.org/component/option,com_frontpage/Itemid,1/ http://www.hobb.org/component/option,com_frontpage/Itemid,1/ http://www.khov.com http://www.housinggiants.com

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