Sunday, October 2, 2011

Federal Appeals Court To Subprime-Peddling Developers: 'Not So Fast, Guys - You're Not Off The Hook On Homebuyers' Fraud Claims Just Yet!'

In San Francisco, California, Courthouse News Service reports:

  • California homeowners can sue many of the nation's largest builders over the economic and social fallout of the housing bubble, the 9th Circuit ruled Wednesday, finding that the penchant for marketing to high-risk buyers could be responsible for today's plummeting home values and blighted neighborhoods.

  • The federal appeals court in San Francisco reversed a lower court's dismissal of claims brought by 19 homeowners against D.R. Horton, Richmond American, Shea Homes, Lennar Homes, and other top developers, their parent companies and subsidiary mortgage companies.

  • The homeowner plaintiffs each put down at least 20 percent on a home in a new development between 2004 and 2006. They seek damages and the option to rescind their purchase based the builders' alleged fraud, misrepresentations and violations of state law.

  • Though developers allegedly promised that they were building "stable, family neighborhoods occupied by owners of the homes," they actually sold houses to unqualified buyers and investors prone to foreclosure.

For more, see Court Revives Claims of Developers' Subprime Fraud.

For an earlier report on the appeals court litigation, see Subprime Showdown in 9th Circuit Hearing.

For the ruling, see Maya v. Centex Corporation, No. 10-55658 (9th Cir. September 21, 2011) (for publication).

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