Home Builders Are Facing a Torrent of Lawsuits Over Shoddy Construction

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Alex Ossola (0:23)

Trump endorses Ken Paxton over incumbent Senator Ron Cornyn in a tight Texas GOP Senate race. Plus, some of the biggest home builders in the US are facing more lawsuits over shoddy construction.

Nicholas Miller (0:35)

Some of the big builders, their reserves for legal liabilities had surged in recent years. Money that they are kind of setting aside in order to pay for settlements and illegal claims that the homeowners bring against them.

Alex Ossola (0:46)

And Spanish authorities say the son of the billionaire founder of the mango fashion chain played a role in his death. It's Tuesday, May 19th. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

First up on today's show, the talks to end the war in Iran. President Trump said yesterday that he called off a US attack on Iran to make room for negotiations. Now, we're reporting that progress seems to have stalled out. Regional mediators and US officials said that Iran's position in the talks hasn't changed much from before. That's raising questions about whether there even is an off-ramp to the conflict.

During a White House press conference today, Vice President JD. Vance said the negotiations are ongoing.

JD Vance (1:35)

So we're going to keep these negotiations private until we've got something, of course, to tell the American people. And at that time, we will.

Alex Ossola (1:41)

Vance also said that Trump is willing to restart the military campaign if necessary.

JD Vance (1:46)

We are not going to have a deal that allows the Iranians to have a nuclear weapon, so as the president just told me, we're locked and loaded. We don't want to go down that pathway, but the president is willing and able to go down that pathway if we have to.

Alex Ossola (1:58)

We understand that the US and Israel have been preparing to carry out new attacks within days. And that strikes could still happen by next week. Tehran has warned of a fierce response if it is attacked again.

Separately, the journal has learned that the US seized an Iran-linked oil tanker in the Indian Ocean overnight. President Trump is keeping up the economic pressure on Iran as well as threatening to presume military strikes. The Pentagon didn't respond to a request for comment.

Back in the US., President Trump has endorsed Texas Attorney General Ken Paxton for Senate over incumbent Senator John Cornyn. Trump's endorsement throws an 11th-hour curveball into a tightly-contested Republican primary. Cornyn has held the Senate seat since 2002 He's been backed by old-school Republican supporters. But Paxton has accused Cornyn of not being firm enough in his backing of Trump. The election is next Tuesday.

In Washington, Acting Attorney General Todd Blanch testified in front of Congress today. He answered questions about the Trump administration's $1.8 billion anti-weaponization fund, which we told you about yesterday. It's drawn criticism from lawmakers in both parties. Blanch will appoint the commission members who will decide how to dole out the funds. He said that none of Trump's family members will receive a direct payout.

Todd Blanch (3:15)

That is not what the AG order that I signed yesterday says. It does not limit it to President Trump or President Trump's friends. To the contrary, President Trump isn't taking a dime.

Alex Ossola (3:25)

But the agreement that created the $1.8 billion settlement fund has now expanded in a way that could be a significant financial benefit to the president. The deal has now expanded to end all pending tax audits of President Trump and of his businesses. A DOJ document posted today said the government would be quote forever barred and precluded from pursuing certain claims against Trump, his businesses, and family members, including anything related to previously filed tax returns.

This spring we've been covering how the US housing market is doing and whether a hoped-for recovery could still happen. Today we've got some different ways to gauge how it's doing. First, Home Depot reported lower profit in its fiscal first quarter. Chief Financial Officer Richard McPhail told the journal that homeowners are still pulling back on big home improvement projects because of economic uncertainty.

Meanwhile, there's a growing trend in the world of mortgages. Lenders are increasingly turning to alternative loans. According to the real estate data firm Inside Mortgage Finance, mortgages using alternative lending practices made up nearly 6% of all home loan originations last year. That's a small portion of the market in the scheme of things. But that's the highest percentage since the housing crash two decades ago, and it's doubled in size over the past three years. Non-conforming loans offer an opportunity for home buyers who might not otherwise qualify for traditional loans, like people who are self-employed. They carry a higher interest rate for the borrower, but they also come with more risk for lenders. Lenders are accepting those risks to boost lending activity during a slower period.