Lawsuit Against Homebuilders and Their Buying Frenzy Brought Up Again
Photo by Steakpinball
There was a lawsuit put forward by homeowners and distressed borrowers. It had alleged eight of the top homebuilders of creating this sort of buying frenzy in the nearby houses. As a result of this, the value of their homes increased and they had to pay whopping amounts. The homebuilders achieved this by marketing the homes which were nearby, to borrowers who were already facing a high risk. Later they went into foreclosure.
Apparently a lower court had made a mistake in ruling that people who owned homes did not have the standing required to go ahead with their claims against fraud. This is according to the 9th U.S. Circuit Court of Appeals in San Francisco. The situation is popularly being described as though having “the backdrop of the national housing crisis.”
There were a number of new developments made by various constructions companies. These included Beazer Homes USA Inc, Dr Horton Inc, Lennar Corp, MDC Holdings Inc, PulteGroup Inc’s Centex Homes, Ryland Group Inc, Shea-Homes Inc which was privately held and also Standard Pacific Corp. These houses were purchased by the plaintiffs in the time period between the years 2004 and 2006.
The Inland Empire area situated in California is one of the highly targeted areas in the foreclosure crisis which is making the country’s housing market collapse rapidly. According to the homeowners, their developers had wrongly assured them that their homes were being built in this region to form a neighbourhood which was meant for families, and thus it would be stable.
The plaintiffs claimed that these homeowners were marketing the property in such a way so as to create a sort of purchasing frenzy thereby putting up an appearance of increased demand, and hence prices. This illusion did not last too long.
When it was over, the foreclosure listings and the number of short sales shoot up rapidly. As a result of this, obviously the neighbourhoods went into a state of chaos. The number of abandoned properties increased fast as did dirty yards.
An increasing number of homes started housing more than a single family. The crime rates shoot up too. The plaintiffs felt that the developers were to be blamed for their homes to decrease in value. A district judge in Riversidedid not accept this sort of a complaint put forward by the plaintiffs.
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