Lennar confirms 400 homes with bad drywall

Lennar, one of the nation’s largest production builders, has identified approximately 400 homes that it built with defective drywall imported from China. The homes were constructed in the state of Florida during its 2006 and 2007 fiscal years, the company said in a July 10 filing with the Securities and Exchange Commission.

Miami-based Lennar noted that the defective drywall is an industry-wide problem affecting numerous home builders, including those in other states. But the company has only found the faulty product, which causes odors and corrosive damage around wiring and metal fixtures, in Florida so far.

Lennar has set aside $39.8 million in a warranty reserve fund to replace the drywall in the homes, it said, but will also seek reimbursement from subcontractors, insurers and others for the costs it incurs to investigate and repair the damage.

The U.S. Consumer Product Safety Commission (CPSC) has received about 608 reports from residents in 21 states and the District of Columbia who believe their health symptoms or the corrosion of certain metal components in their homes are related to the presence of drywall produced in China, according to the CPSC's Web site.

The majority of the reports -- 77% -- have come from the state of Florida. according to the CPSC’s data. Louisiana had 12% of the reports, and Virginia had 4%.

The years 2006 and 2007 saw a surge of home building, partly as a result of destructive hurricanes in 2004 and 2005.