Chinese drywall problems hit already-battered market

Miami /
May.May 27, 2009 04:25 PM

A growing number of South Florida families must choose between health and housing. 

For most families whose homes were built with contaminated Chinese drywall, it’s no decision at all. Some choose foreclosure over still unknown long-term health impacts of Chinese drywall. Foul odors and electric problems have been widely reported in homes containing Chinese drywall, and class action lawsuits are rising.

“This is a catastrophe,” says Mike Ryan, a partner at the law firm of Krupnick Campbell in Fort Lauderdale who is representing clients in Chinese drywall cases. “We are going to live with this devastation for years. The Chinese drywall issue is equivalent to a hurricane, but worse because insurance isn’t covering it. These homeowners couldn’t sell their homes if they wanted to, and contractors can’t guarantee a fix because we don’t fully understand the scope.”

The data remains incomplete, though Florida is one of the most heavily affected of the 13 states where problems have been reported. At least 400 statewide complaints have prompted a federal inquiry by the Environmental Protection Agency. What is known is enough drywall was imported from China during the housing boom from 2005 to 2007 to build 30,000 complete homes, according to the Gypsum Association, a trade group that represents drywall manufacturers.

“We don’t expect the Chinese drywall suits to rise to the level of the asbestos claims, but it’s still a significant problem,” said Joe Janssen, a partner at the law firm of Katzman, Garfinkel, Rosenbaum in Fort Lauderdale, who represents plaintiffs in a Chinese drywall class action suit. “The real tragedy is for people who are upside down on their home, can’t afford to have it fixed, and can’t sell it because it’s contaminated. Those people are in purgatory.”

Purgatory’s prisoners can’t afford to rent new homes while attorneys sort through the issues, either. It could take years to settle the competing legal claims and for federal authorities to arrive at definitive conclusions. The prospect has prompted some families to move out of their homes and let the bank foreclose on the property.

An amendment to the Mortgage Reform and Anti-Predatory Lending Act the House passed earlier this month requires the Secretary of Housing and Urban Development to study the effects of Chinese drywall on foreclosures and the availability of property insurance for affected homes.

“It is critical that we address this problem swiftly to avoid devastating results in our communities and long-term effects on the health and well-being of our families,” said Florida Rep. Mario Diaz-Balart.

Ryan says the banks don’t want the Chinese drywall homes either. The material, he said, gives the term “toxic asset” a new meaning. Ryan is working with lenders to arrange abatements. So far, only HSBC has agreed to work with the affected homeowners.

“HSBC has agreed to give our clients a three-month reprieve and not to report the missed payments to the credit agency,” Ryan says. “This is not a matter of creditworthiness. It’s a matter of health and safety. I think once other banks understand that we need to work together to save communities, we can begin to make some progress here for the victims.” 


Related Articles

arrow_forward_ios
The Variety Hotel (Getty)
Lender acquires Variety Hotel in Miami Beach following foreclosure suit
Lender acquires Variety Hotel in Miami Beach following foreclosure suit
Branden Muhl, James Vosotas and Hotel Greystone at 1920 Collins Avenue, Miami Beach (Google Maps, Mahaska, Trans Inns)
Hotel Greystone to reopen in September amid partnership break-up
Hotel Greystone to reopen in September amid partnership break-up
Grand Hotel Fort Lauderdale and Sheridan Capital's Aaron Kurlansky (Facebook via Fort Lauderdale Grand Hotel)
Fort Lauderdale hotel resolves foreclosure suit with $11M refi
Fort Lauderdale hotel resolves foreclosure suit with $11M refi
Variety Hotel (iStock)
Miami Beach hotel heads to foreclosure auction
Miami Beach hotel heads to foreclosure auction
Developer Louis Birdman (One Thousand Museum, Getty)
One Thousand Museum developers score $90M refi to stave off foreclosure
One Thousand Museum developers score $90M refi to stave off foreclosure
A rendering of the the property at 3601 North Miami Avenue and HES Group CEO Francisco Arocha (Photos via HES, Francisco Arocha)
Midtown Miami Triptych dev site owner files for Chapter 11 amid foreclosure
Midtown Miami Triptych dev site owner files for Chapter 11 amid foreclosure
Simon and David Reuben with One Thousand Museum (Getty, iStock)
Reuben Brothers seeks to foreclose on Zaha Hadid-designed One Thousand Museum
Reuben Brothers seeks to foreclose on Zaha Hadid-designed One Thousand Museum
Clockwise: 310-318 Northwest 25th Street, Chaim Cahane, Jonathon Yormak and Jon KrasnerĀ 
Wynwood developer sells retail property in foreclosure for $12M
Wynwood developer sells retail property in foreclosure for $12M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...