About 200 workers and homeowners bearing a giant inflatable pig gathered Tuesday outside the Bloomfield Hills, Mich., headquarters of Pulte Homes, the nation’s largest homebuilder.
The homeowners are upset over what they call unethical lending practices by the financial services arm of Pulte Homes. They were joined by former Pulte construction workers who say they were fired for protesting wage and hour violations and trying to unionize.
The protesters sought to meet with company president and CEO Richard Dugas to discuss their concerns about Pulte’s lending and labor practices. Their request was denied and police and private security asked them to leave.
The Pulte parking lot was a stop on Laborers’ International Union of North America (LIUNA)’s “Build America So America Works” campaign, a 3,300-mile, 10-city road trip to raise awareness about the foreclosure crisis.
How might a home building company be to blame for foreclosures? The thing is, Pulte doesn’t just build and sell homes, it also sells the mortgages to buy them. The company originates most of the loans that pay for its properties.
Pulte’s motto is “Homeowner for Life.” So it’s ironic that the company is accused of pushing the subprime mortgages that pushed so many homeowners into foreclosure.
Pulte builds homes all over the country. In recent years, it has been making friends in Washington. According to the Open Secrets database, Pulte Homes spent just $20,000 on lobbying in 2007. That figure jumped to $660,000 in 2008 — the height of the financial crisis. Pulte spent an additional $210,000 on lobbying in 2009.
Public records show that, amongst other things, Pulte lobbied to influence foreclosure legislation.
“To prevent another crisis, we are calling for reform in the homebuilding industry,” LIUNA spokesman Jacob Hay wrote in an email to In These Times, “Currently some of the largest corporate homebuilders are continuing the same practices that caused our economic mess.”
Hay argues that it is a conflict of interest to allow a home builder to sell mortgages on its own properties. The problem is especially acute when the financial services arm sells off those mortgages to become mortgage-backed securities. Pulte makes a profit when it sells the house. Then it makes more money when it sells the mortgage. If that homeowner later defaults, Pulte is off the hook.
Hence the conflict of interest: Pulte has an incentive to build as many houses as possible and lend money to people who might not pay it back — after all, the company gets paid twice over, whether the borrowers default or not. An independent bank that held onto its loans would have an incentive only to lend money to good credit risks. Of course, someone is left holding the bag when these bad loans go bad. As we found out year during the bank bailout, that someone was the U.S. taxpayer.
Pulte spokeswoman Caryn Klebba told the Detroit Free Press that Tuesday’s protest was really an attempt to pressure Pulte’s subcontractors to hire union workers. Our call to Pulte’s Michigan media representative was not immediately returned. We’ll be sure to update you if the company gets back to us.
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