From Wfaa Dallas Fort Worth - North Texas may not be bearing the brunt of the national housing bust, but some local businesses are feeling the pain.
Several local homebuilders have gone out of business. Others are scaling back their operations, cutting jobs as revenue and profit fall.
"The builders have really ratcheted back the size of their organizations," said Ted Wilson, an analyst with Residential Strategies Inc., a Dallas-based research and consulting firm. "Most of the builders I've talked to have reduced their overhead by 30 percent to 50 percent."
Even some local manufacturers are taking a hit. Window maker Silver Line Building Products LLC, a unit of Minnesota-based Andersen Co., recently said it would have to cut 250 job cuts at its Garland plant.
The cause was falling national demand for the company's windows, said Maureen McDonough, a spokeswoman for Andersen. Housing starts have fallen more than 50 percent nationally since their 2005 peak, according to the U.S. Census Bureau.
"We've scrubbed our budgets for three years, and we've done a number of voluntary programs to reduce labor costs," Ms. McDonough said. "Unfortunately, we had to have involuntary reductions now."
Of course, the housing bust is not taking the same kind of toll in Texas as it is in the epicenters of the downturn, such as California and Florida.
Those states have lost more than 80,000 construction jobs apiece since December 2006, according to the U.S. Department of Labor.
Texas, with a milder housing downturn and robust nonresidential construction, has actually added more than 23,000 construction jobs since the end of 2006.
Still, the national trouble has clearly led to a significant slowdown in the local housing market.
Builders started 5,218 homes in the Dallas-Fort Worth area during the first three months of 2008. The total was less than half the 13,731 homes that builders started at the market's peak in the second quarter of 2006, according to data compiled by Metrostudy, a research and consulting firm for the housing industry.
Cutting inventory
"Really what the story is, for the last year or so, builders have been focused on reducing inventory," said David Brown, director of Metrostudy's Dallas office.
Buyers closed on just 7,036 new homes from January to March this year, compared with 12,518 closings at the peak in the third quarter of 2006, according to Metrostudy's figures.
It's harder for would-be homeowners to obtain mortgages because of the global credit crunch. The North Texas job market remains healthier than the national average, but the growth rate has been slowing. And with the U.S. economy hitting the brakes, fewer people want to buy a new house.
"Consumers are not real confident, so they're not quick to make a purchase decision on something this major in this kind of environment," Mr. Brown said.
Companies crumble
The deteriorating North Texas housing market has taken down several local companies with it.
Local homebuilders, including Goff Homes and Colonnade Homes, are no longer marketing houses, and their telephones have been disconnected.
Last month, Arlington-based Steelman Homes LLC, a property management company, filed for Chapter 7 bankruptcy, which provides for liquidation. Richardson-based homebuilder P.B. Building Inc. also filed for Chapter 7.
"A lot of homebuilders have been caught with tighter profit margins and the inability to sell a lot of properties," said Patrick Neligan, a lawyer whose firm is representing P.B. Building. "That kind of double whammy can be seen throughout the housing industry."
Frisco-based Greystone Custom Homebuilders Ltd. filed to reorganize under Chapter 11 bankruptcy.
Carrollton-based Buescher Interests LP entered Chapter 7 bankruptcy in February, but it later switched to Chapter 11. A lawyer for the company did not return telephone calls seeking comment.
Buescher left empty lots and unfinished homes when it went out of business.
Some of the properties were in Craig Ranch, a 2,500-acre master-planned project in Collin County. The development reacquired the properties, said David Craig, Craig International's chairman and chief executive.
Other Buescher homes were in a nearby development called Panther Creek Estates. All told, Buescher left about 70 properties in Frisco, most of them vacant lots, said John Lettelleir, the city's director of planning and development services. The city has been cutting the weeds.
"We just did that earlier this month on the Buescher lots," he said.
Tuesday, May 27, 2008
Monday, May 5, 2008
Housing Slump Hits Detroit Builders - Detroit Housing Market
Metro Detroit's dismal residential housing market -- gridlocked and stagnant amid a global mortgage loan crisis, consumer sentiment at a 26-year low and a glut of unsold and foreclosed homes -- has cast a pall over local builders who only a few years ago were enjoying boom times.
Now, half-built subdivisions dot the region, construction workers are fleeing south and companies from family-owned shops to global firms like Pulte Homes Inc. are bracing for what could be their worst year yet.
One national player, Dallas-based Centex Corp., has decided to leave Michigan altogether. The company has built 4,400 homes in Metro Detroit since 2001 but no longer sees prospects here.
Said Centex spokesman Eric Bruner: "We are in the middle of the worst housing market in modern history."
Pulte Homes Inc. on Wednesday posted a $696 million loss for the first three months of the year; the Bloomfield Hills-based builder has lost more than half a billion dollars in each of the past four quarters.
Last year, Pulte closed on 499 homes in Michigan, less than half the number of the previous year. The company laid off 1,900 employees, 16 percent of its U.S. work force, in 2007.
"The difficult housing environment continued to erode during the first quarter of 2008," Richard J. Dugas Jr., president and chief executive, said in a statement. "Buyer demand for new homes continues to be soft, home prices remain under pressure, and overall buyer confidence is weak."
Small builders who rely on a warm-weather boost aren't getting it in Michigan this spring.
One is Jack Traggel, a roofing contractor formerly of Allen Park. In the early 2000s, he worked on about 50 homes a year. Last year, it was 15. This year, he found two jobs; two weeks ago, he moved to New Orleans.
"I've got three jobs lined up," said Traggel, 38. He hopes to move his wife and son to New Orleans later this month -- which, in turn, will likely result in another empty home in Metro Detroit. In Louisiana, "I've met about four guys I knew back in Michigan," he said.
Signs situation may worsen
There are dark signs that 2008 could be the toughest year this decade for builders.
In 2007, a paltry 5,556 permits to build new homes were filed in the nine counties that make up southeastern Michigan, according to Clawson-based Housing Consultants Inc. That was nearly half the number of permits filed in 2006 and 20,994 less than in 2004, the best year this decade.
In the first three months of 2008, fewer than 1,000 permits have been filed, a 25 percent drop from the same period last year.
"You're finding skeleton crews everywhere," said Mark Kwolek, co-owner of Planned Home Improvement in Westland. "You go to a supplier and the business is closed with no warning. You try to call a contractor and you find he's moved out of state."
About 69,000 jobs directly related to the home building industry have vanished since 2000, according to the state's Department of Labor & Economic Growth.
Stalled subdivisions abound -- a boon for companies such as Pinnacle Homes of Farmington Hills, which step in to buy unfinished subdivisions from banks and attempt to build homes for much less than just a few years ago.
Pinnacle is run by a former Pulte executive, Howard Fingeroot.
"I knew the market well enough to know that this was an overall downturn and one that was going to be around for a while," said Fingeroot, standing amid the empty lots of Kirkway Estates in Lyon Township. "The only way to compete with the foreclosures was to get closer to their prices."
In a venture with AmTrust Bank of Cleveland, Pinnacle will build 85 houses in the 100-lot development. The homes will be from 2,800 to 3,400 square feet and will list for around $330,000, Fingeroot said.
The 15 homes already standing, he added, sold for more than $450,000 each just a few years ago.
"There are still plenty of people who want to buy, and now is the time," Fingeroot said. "I think this is good news for the consumer."
Most home builders have already cut prices in an effort to boost sales. Prices on new dwellings already are down about 15 percent from their peak, according to Deutsche Bank analyst Nishu Sood.
The big worry is that existing home prices might fall further.
The National Association of Realtors says the median home price fell 1.7 percent last year and may hold even in 2008.
But many analysts contend homeowners might be forced to sell at lower prices as millions of mortgages reset to higher interest rates later this year.
Lombard Street Research analyst Gabriel Stein expects house prices nationally to fall for another year, off more than 10 percent or possibly even more than 15 percent, from their peaks.
If existing home prices start to plunge, home builders and the many companies that rely on new homes could feel even more pain.
"The adjustment process will shrink demand further for the builders," analyst Sood writes.
He predicts orders for new homes could fall another 10 percent to 15 percent nationally in 2008.
Now, half-built subdivisions dot the region, construction workers are fleeing south and companies from family-owned shops to global firms like Pulte Homes Inc. are bracing for what could be their worst year yet.
One national player, Dallas-based Centex Corp., has decided to leave Michigan altogether. The company has built 4,400 homes in Metro Detroit since 2001 but no longer sees prospects here.
Said Centex spokesman Eric Bruner: "We are in the middle of the worst housing market in modern history."
Pulte Homes Inc. on Wednesday posted a $696 million loss for the first three months of the year; the Bloomfield Hills-based builder has lost more than half a billion dollars in each of the past four quarters.
Last year, Pulte closed on 499 homes in Michigan, less than half the number of the previous year. The company laid off 1,900 employees, 16 percent of its U.S. work force, in 2007.
"The difficult housing environment continued to erode during the first quarter of 2008," Richard J. Dugas Jr., president and chief executive, said in a statement. "Buyer demand for new homes continues to be soft, home prices remain under pressure, and overall buyer confidence is weak."
Small builders who rely on a warm-weather boost aren't getting it in Michigan this spring.
One is Jack Traggel, a roofing contractor formerly of Allen Park. In the early 2000s, he worked on about 50 homes a year. Last year, it was 15. This year, he found two jobs; two weeks ago, he moved to New Orleans.
"I've got three jobs lined up," said Traggel, 38. He hopes to move his wife and son to New Orleans later this month -- which, in turn, will likely result in another empty home in Metro Detroit. In Louisiana, "I've met about four guys I knew back in Michigan," he said.
Signs situation may worsen
There are dark signs that 2008 could be the toughest year this decade for builders.
In 2007, a paltry 5,556 permits to build new homes were filed in the nine counties that make up southeastern Michigan, according to Clawson-based Housing Consultants Inc. That was nearly half the number of permits filed in 2006 and 20,994 less than in 2004, the best year this decade.
In the first three months of 2008, fewer than 1,000 permits have been filed, a 25 percent drop from the same period last year.
"You're finding skeleton crews everywhere," said Mark Kwolek, co-owner of Planned Home Improvement in Westland. "You go to a supplier and the business is closed with no warning. You try to call a contractor and you find he's moved out of state."
About 69,000 jobs directly related to the home building industry have vanished since 2000, according to the state's Department of Labor & Economic Growth.
Stalled subdivisions abound -- a boon for companies such as Pinnacle Homes of Farmington Hills, which step in to buy unfinished subdivisions from banks and attempt to build homes for much less than just a few years ago.
Pinnacle is run by a former Pulte executive, Howard Fingeroot.
"I knew the market well enough to know that this was an overall downturn and one that was going to be around for a while," said Fingeroot, standing amid the empty lots of Kirkway Estates in Lyon Township. "The only way to compete with the foreclosures was to get closer to their prices."
In a venture with AmTrust Bank of Cleveland, Pinnacle will build 85 houses in the 100-lot development. The homes will be from 2,800 to 3,400 square feet and will list for around $330,000, Fingeroot said.
The 15 homes already standing, he added, sold for more than $450,000 each just a few years ago.
"There are still plenty of people who want to buy, and now is the time," Fingeroot said. "I think this is good news for the consumer."
Most home builders have already cut prices in an effort to boost sales. Prices on new dwellings already are down about 15 percent from their peak, according to Deutsche Bank analyst Nishu Sood.
The big worry is that existing home prices might fall further.
The National Association of Realtors says the median home price fell 1.7 percent last year and may hold even in 2008.
But many analysts contend homeowners might be forced to sell at lower prices as millions of mortgages reset to higher interest rates later this year.
Lombard Street Research analyst Gabriel Stein expects house prices nationally to fall for another year, off more than 10 percent or possibly even more than 15 percent, from their peaks.
If existing home prices start to plunge, home builders and the many companies that rely on new homes could feel even more pain.
"The adjustment process will shrink demand further for the builders," analyst Sood writes.
He predicts orders for new homes could fall another 10 percent to 15 percent nationally in 2008.
Centex Posts Huge Losses - Decline in US Home Prices to Blame
Centex saw a quarterly loss of $910.5 million, or $7.36 a share, compared to net income of $198.9 million, or $1.65 a share, a year ago. The loss from continuing operations for the fourth quarter was $7.34 a share. Revenue slid to $2.31 billion from $3.64 billion in the year-ago period.
Analysts polled by FactSet Research had expected a loss of $2.14 a share on revenue of $2.09 billion. Home closings during the period decreased 33% to 7,100 homes and average sales price slid 15% to $267,953.
Centex management is scheduled to hold a conference call Thursday morning to discuss its fiscal fourth-quarter results. Analysts will be looking for any color on how the key spring sales season is progressing.
More bad news came out of the housing market this week.
The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.
"We continue to believe it is too soon to say the potential for future price declines has abated," said Soleil Securities Group analysts in response to the report.
"The spring selling season is once again likely to be a bust as deteriorating economic conditions and fear of declining prices keep would-be buyers on the sidelines," wrote Morningstar Inc. analyst Eric Landry in an investor note this week.
Shares of Centex and the builder sector traded lower Wednesday after the Federal Reserve cut the key lending rate by a quarter-point. "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters," the Federal Open Market Committee said in its statement. See The Fed.
The government continues to mull ways to help pressured homeowners and the tattered mortgage market.
Members of the House Financial Services Committee went back to work Wednesday on a multibillion-dollar housing-aid bill that is intended to help stem the foreclosure crisis. The bill would allow the Federal Housing Administration to back as much as $300 billion in refinanced loans for homeowners who are facing foreclosure. Financial Services Committee Chairman Rep. Barney Frank, D-Mass., said he expects a vote on the bill Thursday. Is now the time to buy Centex Stock?
Analysts polled by FactSet Research had expected a loss of $2.14 a share on revenue of $2.09 billion. Home closings during the period decreased 33% to 7,100 homes and average sales price slid 15% to $267,953.
Centex management is scheduled to hold a conference call Thursday morning to discuss its fiscal fourth-quarter results. Analysts will be looking for any color on how the key spring sales season is progressing.
More bad news came out of the housing market this week.
The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.
"We continue to believe it is too soon to say the potential for future price declines has abated," said Soleil Securities Group analysts in response to the report.
"The spring selling season is once again likely to be a bust as deteriorating economic conditions and fear of declining prices keep would-be buyers on the sidelines," wrote Morningstar Inc. analyst Eric Landry in an investor note this week.
Shares of Centex and the builder sector traded lower Wednesday after the Federal Reserve cut the key lending rate by a quarter-point. "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters," the Federal Open Market Committee said in its statement. See The Fed.
The government continues to mull ways to help pressured homeowners and the tattered mortgage market.
Members of the House Financial Services Committee went back to work Wednesday on a multibillion-dollar housing-aid bill that is intended to help stem the foreclosure crisis. The bill would allow the Federal Housing Administration to back as much as $300 billion in refinanced loans for homeowners who are facing foreclosure. Financial Services Committee Chairman Rep. Barney Frank, D-Mass., said he expects a vote on the bill Thursday. Is now the time to buy Centex Stock?
Hyde Park by Tremont Homes (Stature Construction) Issues in the Houston Housing Market
For years, neighbors in a stylish Montrose cul-de-sac named Hyde Park Crescent fought to get something out of the developer they claim failed to fix faulty windows, water-soaked balconies and defective roofs that spawned leaks, mold and rot in their nearly new $350,000 homes.
Families alleged in a lawsuit that they were sold flawed town homes and then stuck with thousands of dollars in repair bills. They also contended that the men behind the company committed a kind of corporate identity fraud to avoid responsibility and keep right on building on other fertile ground in construction-friendly Houston.
Over the years, the builder, and other companies associated with it, have left a trail of documented damages and unresolved consumer complaints involving at least four other Houston housing developments, according to documents reviewed by the Chronicle, including lawsuits and Better Business Bureau and government records.
Texas laws offer minimal recourse for homeowners, and their complaints often drag on for years with disappointing results, advocates say. Some owners lose money fixing their homes or lose their homes because they can't afford to fix them.
Jordan Fogal, a homemaker and autobiographer who lost her Hyde Park town home to foreclosure, eventually won a finding of fraud against the builder, Stature Construction, in a costly arbitration proceeding that further depleted her retirement funds.
A neighbor, Susan Ellis, pursued a lawsuit that forced the company into settlement negotiations — after a four-year fight. Ellis and her husband were joined in their suit by four other families at 1515 Hyde Park Blvd., where nine of 44 units built in a tight 2 acres off Waugh Drive have been lost to foreclosure since 2003. The Ellises alone have paid $50,000 in repairs.
'We tried to fix things'
The Ellises and two of the other families recently settled for confidential amounts, their lawyer, William Ferebee, said. The other two couples expect to go to trial in May.
But the builders have never paid Fogal and her husband the $37,308 that an arbiter awarded in October 2006, according to the Fogals and their attorneys.
"I always wondered what life would be like in our sixties. However, I never envisioned ... being homeless, a restraining order against us, being sued ... and having to share a closet," Fogal wrote in one of several online journal entries she's penned about her experience.
Meanwhile, Jorge Casimiro and Thomas Thibodeau, who ran the company responsible for Hyde Park, blamed most of the mess on a subcontractor, saying roofs had been improperly installed, according to legal documents filed when the two sued the roofer.
Casimiro, former CEO of Stature, said his company made plenty of repairs, yet the problems kept mushrooming and homeowners kept complaining, according to court records. "And I do remember that we went out there and we tried to fix things. And I believe that we fixed them at that time," he said in a deposition.
Casimiro and Thibodeau did not respond to repeated requests for interviews.
William Chesney III, an attorney for Casimiro and Thibodeau, said he expected the Ellises' lawsuit to be settled. But he attacked Fogal's claims as lies, as frivolous and as unreasonable, documents show.
Casimiro and Thibodeau continued to develop property under myriad names.
One company Casimiro ran botched the Memorial Villages police station that serves three small towns just west of Loop 610, public records show. In 2002, Stature Commercial Construction was fired from the $3.2 million project.
While under construction, the station filled with mold. The company blamed a roofer but Stature's bonding company paid more than $1.5 million for repairs and other expenses related to the debacle, documents show.
Another related company developed Montrose's Tremont Tower, a troubled condo project that bears the dubious distinction of having one of the region's highest 2007 foreclosure rates, according to a Houston Chronicle analysis of data collected by the Foreclosure Information & Listing Service.
Last year, nearly two dozen Houston homeowners who live in three other developments built by Stature or Tremont Homes asked the Harris County District Attorney's Office to investigate the companies. Their town homes were built in and around Montrose and near Memorial Park.
No criminal action
The homeowners took photos of tell-tale brown stains under leaky balconies. They collected inspection records showing how the builder had sometimes skipped getting required permits.
They documented how the company changed names and then denied warranty claims.
And they provided their own mounting repair bills.
The District Attorney's Office refused to take the case. In a letter, consumer fraud division attorney Valerie Turner said she thought it would be too difficult under Texas law to prove Tremont "intentionally and knowingly promised performance to the consumer, which they knew would not be performed."
"Your complaint, while very serious, is not criminal," the letter concluded. "We are sorry that civil remedies afforded to you and other homeowners under Texas law ... seem inadequate."
Sarah Reid Ford, one of the homeowners, was confounded by the response.
"We could get dozens of witnesses to say: 'These people cheated me, they defrauded me,' ... and at the end of the day, the DA's office does nothing," she said.
Several years earlier, the Better Business Bureau of Greater Houston also unsuccessfully urged prosecutors to investigate after Stature/Tremont failed to respond to consumer complaints and then changed names, said spokeswoman Carol Ritter.
The BBB ejected both companies from its membership rolls.
Though construction complaints are common, Ritter said, allegations about a pattern of substandard construction and deception by Stature were disturbing.
"They know that if they can string this out for as long as possible, they will just bankrupt everybody," she said.
Complaints increase
Though it's possible in Texas to make a criminal case against a builder or remodeler who repeatedly takes homeowners' money and never performs any work, state laws are not strong enough to protect homeowners in many other situations, said Russel Turbeville, chief of the Harris County district attorney's consumer fraud division, who has seen construction-related complaints surge.
"Texas is a bad place to be if you've got a construction problem with your home," he said.
Tort reform and lack of legal protections have left homeowners who believe they have been victimized by builders with fewer ways to fight back, advocates from Home Owners for Better Building and Texas Watch say.
"To the extent there are builders who are gaming the system and preying on consumers we need to have significant reform," said Alex Winslow, of Texas Watch.
But Lee Parsley, an Austin attorney for Texans for Lawsuit Reform, said, "Lawsuit reform is not related to the problems people may be having collecting judgments or arbitration awards, and it has nothing to do with whether the district attorney can attempt to punish a person or company that refuses to pay."
In 2001, Stature Construction had been listed by Hispanic Business Magazine as one of the nation's largest Hispanic-owned businesses, with $28 million in revenue.
For years, the company steadily pumped out more than 50 homes a year in the burgeoning Houston market, according to depositions given by Casimiro.
But Casimiro has claimed his company was a casualty of the lawsuits and subcontractors' substandard work. Casimiro, a former member of the Harris County Housing Authority, has been building in Houston for years — first fencing, then affordable homes and then upscale inside-the-loop developments.
His partner at Stature was Thibodeau, a Houston builder who founded the company with Casimiro's father in 1989. Thibodeau oversaw construction; Casimiro was the business manager who oversaw warranty matters, according to depositions.
Casimiro used Norman Chapa, his brother-in-law, as his go-to guy for dealing directly with homeowners' warranty issues.
Chapa, who has no construction experience, went to federal prison last year after pleading guilty to taking part in an international visa fraud ring involving Chinese citizens, according to his sworn statements and federal court records.
In 2001, the year Stature Construction became inactive, Casimiro and Thibodeau founded other companies, including Tremont Homes. Initially, at least, Tremont Homes used the same offices and many of the same employees.
The hidden defects
The Hyde Park Crescent project, started in 1999, featured a three-story boxy design with steep-pitched roofs and decorative accents. Several couples, like the Fogals and the Ellises, were captivated by what seemed like a sure-thing investment.
"By outward appearances the homes were masterpieces with spacious rooms, hardwood floors and detailed interior finishings," said the Ellises' lawsuit. But in reality, they were "nightmares in the making."
The first problems seemed small — it rained in a few windows; a bathtub leaked.
It took several rounds of repairs before the Ellises and others learned about the mostly hidden defects, their lawsuit says. Roofs and balconies accumulated moisture that slowly discolored and undermined stucco facades.
The Fogals eventually learned their own home had been filled with mold before they bought it for $368,564 in April 2002. There had been nothing in the paperwork at closing that disclosed leaks or roof problems, according to arbitration documents.
Unable to pay needed repairs, the Fogals lost their home to foreclosure in June 2005.
Families alleged in a lawsuit that they were sold flawed town homes and then stuck with thousands of dollars in repair bills. They also contended that the men behind the company committed a kind of corporate identity fraud to avoid responsibility and keep right on building on other fertile ground in construction-friendly Houston.
Over the years, the builder, and other companies associated with it, have left a trail of documented damages and unresolved consumer complaints involving at least four other Houston housing developments, according to documents reviewed by the Chronicle, including lawsuits and Better Business Bureau and government records.
Texas laws offer minimal recourse for homeowners, and their complaints often drag on for years with disappointing results, advocates say. Some owners lose money fixing their homes or lose their homes because they can't afford to fix them.
Jordan Fogal, a homemaker and autobiographer who lost her Hyde Park town home to foreclosure, eventually won a finding of fraud against the builder, Stature Construction, in a costly arbitration proceeding that further depleted her retirement funds.
A neighbor, Susan Ellis, pursued a lawsuit that forced the company into settlement negotiations — after a four-year fight. Ellis and her husband were joined in their suit by four other families at 1515 Hyde Park Blvd., where nine of 44 units built in a tight 2 acres off Waugh Drive have been lost to foreclosure since 2003. The Ellises alone have paid $50,000 in repairs.
'We tried to fix things'
The Ellises and two of the other families recently settled for confidential amounts, their lawyer, William Ferebee, said. The other two couples expect to go to trial in May.
But the builders have never paid Fogal and her husband the $37,308 that an arbiter awarded in October 2006, according to the Fogals and their attorneys.
"I always wondered what life would be like in our sixties. However, I never envisioned ... being homeless, a restraining order against us, being sued ... and having to share a closet," Fogal wrote in one of several online journal entries she's penned about her experience.
Meanwhile, Jorge Casimiro and Thomas Thibodeau, who ran the company responsible for Hyde Park, blamed most of the mess on a subcontractor, saying roofs had been improperly installed, according to legal documents filed when the two sued the roofer.
Casimiro, former CEO of Stature, said his company made plenty of repairs, yet the problems kept mushrooming and homeowners kept complaining, according to court records. "And I do remember that we went out there and we tried to fix things. And I believe that we fixed them at that time," he said in a deposition.
Casimiro and Thibodeau did not respond to repeated requests for interviews.
William Chesney III, an attorney for Casimiro and Thibodeau, said he expected the Ellises' lawsuit to be settled. But he attacked Fogal's claims as lies, as frivolous and as unreasonable, documents show.
Casimiro and Thibodeau continued to develop property under myriad names.
One company Casimiro ran botched the Memorial Villages police station that serves three small towns just west of Loop 610, public records show. In 2002, Stature Commercial Construction was fired from the $3.2 million project.
While under construction, the station filled with mold. The company blamed a roofer but Stature's bonding company paid more than $1.5 million for repairs and other expenses related to the debacle, documents show.
Another related company developed Montrose's Tremont Tower, a troubled condo project that bears the dubious distinction of having one of the region's highest 2007 foreclosure rates, according to a Houston Chronicle analysis of data collected by the Foreclosure Information & Listing Service.
Last year, nearly two dozen Houston homeowners who live in three other developments built by Stature or Tremont Homes asked the Harris County District Attorney's Office to investigate the companies. Their town homes were built in and around Montrose and near Memorial Park.
No criminal action
The homeowners took photos of tell-tale brown stains under leaky balconies. They collected inspection records showing how the builder had sometimes skipped getting required permits.
They documented how the company changed names and then denied warranty claims.
And they provided their own mounting repair bills.
The District Attorney's Office refused to take the case. In a letter, consumer fraud division attorney Valerie Turner said she thought it would be too difficult under Texas law to prove Tremont "intentionally and knowingly promised performance to the consumer, which they knew would not be performed."
"Your complaint, while very serious, is not criminal," the letter concluded. "We are sorry that civil remedies afforded to you and other homeowners under Texas law ... seem inadequate."
Sarah Reid Ford, one of the homeowners, was confounded by the response.
"We could get dozens of witnesses to say: 'These people cheated me, they defrauded me,' ... and at the end of the day, the DA's office does nothing," she said.
Several years earlier, the Better Business Bureau of Greater Houston also unsuccessfully urged prosecutors to investigate after Stature/Tremont failed to respond to consumer complaints and then changed names, said spokeswoman Carol Ritter.
The BBB ejected both companies from its membership rolls.
Though construction complaints are common, Ritter said, allegations about a pattern of substandard construction and deception by Stature were disturbing.
"They know that if they can string this out for as long as possible, they will just bankrupt everybody," she said.
Complaints increase
Though it's possible in Texas to make a criminal case against a builder or remodeler who repeatedly takes homeowners' money and never performs any work, state laws are not strong enough to protect homeowners in many other situations, said Russel Turbeville, chief of the Harris County district attorney's consumer fraud division, who has seen construction-related complaints surge.
"Texas is a bad place to be if you've got a construction problem with your home," he said.
Tort reform and lack of legal protections have left homeowners who believe they have been victimized by builders with fewer ways to fight back, advocates from Home Owners for Better Building and Texas Watch say.
"To the extent there are builders who are gaming the system and preying on consumers we need to have significant reform," said Alex Winslow, of Texas Watch.
But Lee Parsley, an Austin attorney for Texans for Lawsuit Reform, said, "Lawsuit reform is not related to the problems people may be having collecting judgments or arbitration awards, and it has nothing to do with whether the district attorney can attempt to punish a person or company that refuses to pay."
In 2001, Stature Construction had been listed by Hispanic Business Magazine as one of the nation's largest Hispanic-owned businesses, with $28 million in revenue.
For years, the company steadily pumped out more than 50 homes a year in the burgeoning Houston market, according to depositions given by Casimiro.
But Casimiro has claimed his company was a casualty of the lawsuits and subcontractors' substandard work. Casimiro, a former member of the Harris County Housing Authority, has been building in Houston for years — first fencing, then affordable homes and then upscale inside-the-loop developments.
His partner at Stature was Thibodeau, a Houston builder who founded the company with Casimiro's father in 1989. Thibodeau oversaw construction; Casimiro was the business manager who oversaw warranty matters, according to depositions.
Casimiro used Norman Chapa, his brother-in-law, as his go-to guy for dealing directly with homeowners' warranty issues.
Chapa, who has no construction experience, went to federal prison last year after pleading guilty to taking part in an international visa fraud ring involving Chinese citizens, according to his sworn statements and federal court records.
In 2001, the year Stature Construction became inactive, Casimiro and Thibodeau founded other companies, including Tremont Homes. Initially, at least, Tremont Homes used the same offices and many of the same employees.
The hidden defects
The Hyde Park Crescent project, started in 1999, featured a three-story boxy design with steep-pitched roofs and decorative accents. Several couples, like the Fogals and the Ellises, were captivated by what seemed like a sure-thing investment.
"By outward appearances the homes were masterpieces with spacious rooms, hardwood floors and detailed interior finishings," said the Ellises' lawsuit. But in reality, they were "nightmares in the making."
The first problems seemed small — it rained in a few windows; a bathtub leaked.
It took several rounds of repairs before the Ellises and others learned about the mostly hidden defects, their lawsuit says. Roofs and balconies accumulated moisture that slowly discolored and undermined stucco facades.
The Fogals eventually learned their own home had been filled with mold before they bought it for $368,564 in April 2002. There had been nothing in the paperwork at closing that disclosed leaks or roof problems, according to arbitration documents.
Unable to pay needed repairs, the Fogals lost their home to foreclosure in June 2005.
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