Mortgages

During the housing boom, Lennar’s in-house mortgage provider, Universal American, vastly stepped up its sale of subprime mortgages.

From 2005 to 2006, Universal American increased their use of high cost/subprime mortgage 136.1% - from 9.6% up to 22.7% of their total loan closings. In the span of just one year, prime loans shrank 6.75% while subprime ones shot up 157.6%.

Troy Monson was in the Air Force. When he and his wife Jennifer went to purchase their home from Lennar in Arizona, they wanted to use his Veterans Administration certificate. However, the Lennar salesperson convinced them to get a loan through Lennar’s mortgage company instead.

According to the Monsons, the salesperson lied and told them they could only use their VA certificate one time and that they should save it for the future. The salesperson also said that if they got financing through Lennar’s mortgage company, Universal Mortgage, that Lennar would pay the closing costs. With a VA loan the borrower can get 100% financing. The Monsons had excellent credit and should have qualified for the market rate, which at the time they got their loans in July 2006 was under 6%. Instead however, Universal gave them a first mortgage for $169,000, which is an interest-only ARM that starts at 7.25% and can go as high as 12.25%, and a second mortgage for $42,400 with a variable rate that started at 8.625%.