White House consumer advocate Esther Peterson this week challenged the homebuilding industry to double the number of new-home warranties issued to consumers during the next year.
In a meeting with industry representatives this week, Peterson criticized homebuilders for not providing adequate warranty protection to their customers.
Reminding the builders that more than three-quarters of all new single-family houses built each year are not covered by the Home Owner Warranty (HOW) program, which is affiliated with the National Association of Home Builders, Peterson said:
"It seems to me that all new-home buyers are entitled to comprehensive protection against breakdown and defects in new homes. The warranty approach which was conceived by some American builders should be embraced by all builders, whether through HOW or a competing warranty plan."
She said she would ask the builders a year from now for "a report on the expansion in quantity and quality of warranty coverages." She asked them also to consider offering various options for more comprehensive coverage through HOW as more underwriting experience is gained.
During the same meeting, Peterson called on the industry to appoint consumer representatives to the 18-member board of HOW.
She further called for more builder cooperation in the consumer complaint mediation procedure by asking the builders to provide added incentives for consumers to take complaints to mediation.
"Giving the consumer a pre-commitment that the warranter - builder agrees to be bound by any decision of the mediator, even though the consumer is free to accept or reject the decision of the informal mediator under the program, would greatly enhance public participation in the HOW program," Peterson said.
The four-year-old HOW program covers 500,000 houses, nearly half of which were brought in last year, said Louis Thompson, senior staff vice president of the National Association of Home Builders, who called that "considerable progress." While NAHB wants to get as many builders as possible into the HOW program, and has "market penetration up to 70 percent in some metropolitan areas," other areas - including much of California - don't have the warranty program yet, he said.