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Builders with unsold homes get little leniency from bankers
In his 35 years as a home builder, Bobby Lunceford earned plenty of accolades. Kennesaw Citizen of the Year in 2000, home builder of the year in 2003 and outstanding Georgian, according to a resolution approved by state lawmakers in 2004. None of that mattered, however, when Lunceford tried to work with five banks to save his business, Bob Lunceford Properties, after home sales plummeted. He asked the banks to suspend loan payments until his homes sold, at which time the loans would be paid off. Instead, “the instant we ran out of money all but one bank began foreclosure proceedings,†Lunceford, 56, recalled. He and his wife, Becky, lost their home, their cars, their life savings and their business, and now live in a rented house.
Builders with unsold homes get little leniency from bankers
Restructuring loans may not be in banks’ best financial interest, experts say
By KEVIN DUFFY
The Atlanta Journal-Constitution
Thursday, January 01, 2009
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In his 35 years as a home builder, Bobby Lunceford earned plenty of accolades. Kennesaw Citizen of the Year in 2000, home builder of the year in 2003 and outstanding Georgian, according to a resolution approved by state lawmakers in 2004.
None of that mattered, however, when Lunceford tried to work with five banks to save his business, Bob Lunceford Properties, after home sales plummeted. He asked the banks to suspend loan payments until his homes sold, at which time the loans would be paid off. Instead, “the instant we ran out of money all but one bank began foreclosure proceedings,†Lunceford, 56, recalled.
He and his wife, Becky, lost their home, their cars, their life savings and their business, and now live in a rented house.
Builders with cash flow problems want more leniency from banks, but banks are trying to shed problem loans to improve their health.
Mounting loan losses erode a bank’s worth and put it at risk of running afoul of regulators, who can order a bank to make changes or even shut it down.
“The regulators are hammering the banks for not following the strict interpretation of all the rules, especially as they relate to residential real estate construction,†said Joe Brannen, president of the Georgia Bankers Association. “Unfortunately, this gets perceived and portrayed as banks not being willing to work with our borrowers.â€
A bank that modifies a troubled loan to help a builder still carries a troubled loan, so its financial picture hasn’t improved.
Therefore, “my incentive to work with that borrower from a regulatory standpoint is largely gone,†said Steve Bridges, president and CEO of the Community Bankers Association of Georgia.
At the same time, foreclosure is considered the last option because banks face steep losses if they have to sell foreclosed properties.
Banks concerned about falling property values are requiring reappraisals. When the new valuations show declines, builders are being told to pay off loans or pay them down. When they can’t do that, the properties are foreclosed on.
“It appears that there is not-so-subtle pressure from regulators to get new appraisals and immediately write down loans based on them,†said Steve King, president of the Greater Atlanta Home Builders Association. “When that occurs the banks often decide that they are better off foreclosing, since they have already been forced to reduce the value of the loan on their books.â€
Rob Braswell, the state banking commissioner, said banks have been advised to work with builders on loans when doing so strengthens the bank’s position.
Mark Schmidt, regional head of bank supervision for the Federal Deposit Insurance Corp., concurred.
“The primary objective should be to reach the best economic conclusion for the bank,†Schmidt said. “Sometimes that means shutting things down and foreclosures. Sometimes that means working with the borrowers to try to get through the economic situation we’re in. That’s largely a bank decision.
“In a deteriorating economy,†he said, “there are probably more banks that are choosing the foreclosure route, not knowing how bad it is going to get. It’s most difficult to work out a loan restructuring in a declining environment.â€
King said “the privately expressed view of the federal regulators is that builders built too many houses and banks made too many real estate loans, and now both groups must pay the price.â€
State and federal regulators shut down five Georgia banks in 2008, largely because of bad real estate loans.
Meanwhile, more than 900 metro Atlanta home builders went out of business from September 2006 to September 2008, the Greater Atlanta Home Builders Association says. The organization’s membership is off about 25 percent.
Brannen said “relative to all banks in the country, our banks are doing slightly better than their peers.†But that doesn’t mean they’re doing well.
About 40 percent of Georgia banks are unprofitable, and banks now employ 9,740 fewer people than they did in the fourth quarter of 2007, Brannen said.
Non-performing loans in Georgia are more than double the national average, late loans increased $5.1 billion to $7.6 billion, and foreclosed real estate is up by $1.3 billion, he said.
At a recent hearing at the Capitol, two housing experts said Georgia’s residential market is in a depression. Legislators called the hearing to try to figure out what can be done to encourage home buying and rescue builders. Some of the testimony blamed banking for putting homebuilders out of business.
The General Assembly convenes Jan. 12, and new bills might be introduced calling for tax incentives, expanded down payment assistance or reductions in home-building regulations.
“A downpayment assistance obviously would be very, very beneficial to citizens,†Lt. Gov. Casey Cagle said after speaking at the hearing.
Strict regulation is not the sole reason for builder-banker tension, Brannen said.
“It would be disingenuous for us or anyone to blame everything on the regulators,†he said. “One reason why they are being forced to be so strict is that some of what was being done by the bankers to work with homebuilders was stretching basic lending fundamentals.
“For the vast majority of our banks, especially in metro Atlanta, real estate lending is the predominant lending they do,†he added. “It is in our collective interest that builders remain successful and solvent, and to go beyond any call of duty to save a loan customer.â€
Lunceford used to have 13 full-time employees and many more subcontractors. Now he does small projects and builds churches for a volunteer group called Builders for Christ.
“When houses don’t sell, there’s got to be some relief in regulations,†he said. “Foreclosure doesn’t help anybody.â€
http://www.ajc.com/metro/content/business/stories/2009/01/01/builder_banker_tension.html
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Comments
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By SlimG
Jan 2, 2009 2:09 PM | Link to this
Poor ol' homebuilders. They took advantage of everyone for the all mighty dollar. Paid agents only on sales, no benefits because they were selling and making big commissions. Now no sells, no buyers, and no loans. Haha. Hope they all go out of business.
Foreclose on anyone who can't pay! Let them go belly up just like everyone else.
By GaNative
Jan 2, 2009 1:45 PM | Link to this
quantumfoam, Politicians have become just like preachers. They are both in the same boat. They both think those that they serve are idiots and preachers pass the pastorialship down to family members.
By catlady
Jan 2, 2009 1:40 PM | Link to this
There is enough stink to go around, folks. Buyers, builders, banks, brokers, Wall Street. Gimme more, gimme more.
My resolve (getting more difficult every day): to avoid doing business with those who have been bailed out. It's tough because I have no say-so about where the state of Georgia invests my pension money. But to the degree I have control, I will avoid those who did such poor business, those who have hurt our country so badly.
Live simply, work hard, make do, live within your means, and get up the next day and pray for the energy and good fortune to be able to do it all over again. That's what my parents' generation would tell us. Maybe it is time we revisited those ideals, instead of expecting someone to "give us a hand" because "we deserve it." No one is "too big to fail" if they do stupid things. You made your bed, now lie in it. It's just bad so many got dragged into the bed with you.
And we and our children and grandchildren will be paying for it for decades.
By quantumfoam
Jan 2, 2009 12:54 PM | Link to this
Blame the regulators, blame the banks,blame the contractors. Yes, blame everybody except those that are really responsible. The people responsible are the citizen voters and the rascals that they put in office ,term after term. As you may have noticed ,just recently the politicians seem to have noticed that voters are stupid. Politicians now believe that not only are they entitled to hold office for life but they may pass the office onto a family member upon their demise. On top of that,family members that have a relative made famous by friendly journalists have an easy ride to election victory. Shall I say Kennedy,Clinton,Jackson.(Jessie),etc. I thought about having some sort of a competency test for voters. Then I realized that we don't even do that for politicians?That fact is very apparent!
By momtoAlex&Max
Jan 2, 2009 12:05 PM | Link to this
They built ridiculously over priced homes. And they kept on building them with utter disregard to the fact that it was an unsustainable growth.
They had no sympathy for the buyers either.
I don't feel sorry at all.
By Helen
Jan 2, 2009 12:04 PM | Link to this
Will Jones is another left winger who graduated in double talk. Got that Anti-Bush comment in there didn't you? Now blaming him for 9/11? You are warped.
By Will Jones
Jan 2, 2009 11:44 AM | Link to this
"Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate according to their own interests, the quantum of circulating medium for the nation -- to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase. Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature. The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoilation desolate the country." --Thomas Jefferson to William C. Rives, 1819. ME 15:232
Same tune, same false elite, same Anti-Christ.
This present crisis is derived from the fractional banking, fiat money scam that is the patently unconstitutional (Article 1, Section 8) Federal Reserve Bank's pyramid of usurers attempting to make the putatively sovereign People bond slaves to indebtedness...who also supported, or failed to correct, the unconstitutional appointment of a draft-dodging closet-queen to the White House to subsequently commit 9/11 (Viz. "The New Pearl Harbor, " Griffin, PhD).
It's whole cloth. Embracing Rome's illegal immigrant/invasion for conquest (Viz. "National Pastoral Plan for Hispanic Ministry," U.S. Conf. of Roman Catholic Bishops) to build trash houses "fast and cheap" is part of the whirlwind We, the People, must arrest...and execute.
Death for Treason
Fly to Quality
Annuit Coeptis
By GaNative
Jan 2, 2009 11:39 AM | Link to this
Will Jones, you mind putting that in Layman's terms? :)
By Will Jones
Jan 2, 2009 11:30 AM | Link to this
"Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate according to their own interests, the quantum of circulating medium for the nation -- to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase. Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature. The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoilation desolate the country." --Thomas Jefferson to William C. Rives, 1819. ME 15:232
It's the Spirit of the Age...an integrated whole. We, the People, must rectify the situation by fully understanding the historical context, and dealing justly with the guilty principals.
The Federal Reserve Bank is a "Ponzi scheme," transparently unconstitutional (Article 1, Section 8) foisted off on America by Robber Barons fronting for the alien interests identified by Our Founder, Thomas Jefferson, as "the real Anti-Christ," just as only "their" adherents voted in the patently unconstitutional majority in 'Bush v. Gore' (Viz. Breyer dissent).
It has engendered a pyramid of soft-handed, false-elite profiteers creating fiat money "out of thin air" and usuriously subjugating the trusting and hopeful eighty percent Middle/Working Class...which is The People...whose moral, legal, and political SOVEREIGNTY is the root and foundation of American Exceptionalism: The American Dream wished for by all good and decent peoples of the world.
Annuit Coeptis
By Helen
Jan 2, 2009 11:25 AM | Link to this
I am surprised to find some many comments showing some of you obviously does not know how the building business works. It appears some are glad people are going bankrupt and loosing everything they own. How mean and cruel of you.
There are a number of really honest, hard working folks in the building business. All of you know someone effected by these folks loss - The building business has put food on many a table. Consider the grading contractor, plumber, electrician, roofer, framer, sheetrock installer, painter, appliance supplier, lighting supplier, garage door installer, closet installer, fireplace company, counter top supplier, alarm company, landscaper, house cleaning crew, superintendent, real estate sales team, lender, attorney....to name the ones that immediately come to mind. The builder did not make all the money...these folks got paid and most of them before the house sold.
You call him "greedy", how about trying to make a living and giving a warranty on his work for a year to ten years after the buyer moved in.
Shame on you! When the company you work for has problems and lay offs, you will be screaming how "unfair".....Be careful what you wish for.......
By Helen
Jan 2, 2009 11:25 AM | Link to this
I am surprised to find some many comments showing some of you obviously does not know how the building business works. It appears some are glad people are going bankrupt and loosing everything they own. How mean and cruel of you.
There are a number of really honest, hard working folks in the building business. All of you know someone effected by these folks loss - The building business has put food on many a table. Consider the grading contractor, plumber, electrician, roofer, framer, sheetrock installer, painter, appliance supplier, lighting supplier, garage door installer, closet installer, fireplace company, counter top supplier, alarm company, landscaper, house cleaning crew, superintendent, real estate sales team, lender, attorney....to name the ones that immediately come to mind. The builder did not make all the money...these folks got paid and most of them before the house sold.
You call him "greedy", how about trying to make a living and giving a warranty on his work for a year to ten years after the buyer moved in.
Shame on you! When the company you work for has problems and lay offs, you will be screaming how "unfair".....Be careful what you wish for.......
By GaNarive
Jan 2, 2009 11:25 AM | Link to this
h_Charles, I find that a bit far fetched thinking a builder pockets 6 figures on the sale of a home. I just don't believe that to be true. Back in 1988 when I purchased my $129,000 home, the builder was given a check at closing for $13,000. Anyway, this economy has certainly taken the gastapo tactics out of the homeowner associations. They no longer have to worry about who's not cutting their grass or painting their house thereby driving down home values. Right now, you can consider yourse fortunate if this economy has not caused you to be upside down (you owe more than the house is worth) in your home.
By h_charles
Jan 2, 2009 11:18 AM | Link to this
What this article ignores is flip side, which was the ability of builders like this to sell homes much cheaper than stubbornly stuck too just before this broke.
None of these builders had any problem gouging GA homeowners with ridiculously overpriced homes that all of us suffered through years ago. They lined their pockets by overcharging for their product when demand was high, making 6 figure profits on each home they sold. Now they are paying the piper.
If these builders had sold homes at reasonable prices instead, there wouldn't have been the overheat and overextended situation we have today.
By GaNative
Jan 2, 2009 11:13 AM | Link to this
Well, I'm not a builder, but I do have sympathy for them and anyone that is going through these rough times. Eventually, those of you who have no sympathy might experience a rocky road later. I'm not wishing that on anyone, but everything seems to trickle down to effect us eventually. I can remember back in 2007 when I was out of work for 11 months. My online buddies kept telling me to get off my lazy azz and go find a job and stop complaining. It was hard for me to explain to them that there were no jobs. Well, now in 2008, most of them don't have jobs and now look who's complaining. The only way to correct this mess is to put the American Citizens back to work. Why are we sending billions in aid to foreign countries to buy friendship and offshoring jobs when we are in dire straits here? Homes and cars are not selling because Americans are either unemployed or under employed. I made more money back in the 80's than I do now. It's pathetic.
By Puzzled
Jan 2, 2009 10:52 AM | Link to this
I don't feel an ounce of sympathy for Mr. Lunceford and his situation. As an experienced home builder, he should have prepared and researched the current climate regarding the economy for supply and demand. We have been in a recession since 2007. This should have been an indicator to regress some of the demand for homebuilding. Unfortunately, he is paying the price like many of us. Everyone will have to bear the burdern of responsibility not just the banks relaxing on lending regulations. You have to think--who is going to buy those homes if you have over ten million people out of work and those that are lucky enough to hold on to their jobs will not seek out any additional loans at this point. It will take 3 to 5 years before we see a light at the end of this long, tortoruous tunnel.
By KenFromCalifornia
Jan 2, 2009 10:43 AM | Link to this
the party is over
why should a bank wait for a builder to sell all his houses "...when things improve"? how far away will that be?
the reappraisal shows that the houses aren't worth what the builder hopes to sell them for. hey, without all the FRAUD of the past 6 years, the builder had no honest reason to ever think his houses were worth what he wanted to sell them for.
the banks are complicit in this, too. they got high commissions from offering all those bogus 3/27 reset loans from wall street. the higher the inflated price of the house, the better the profits for that bank. and who cares if the person getting that loan could never be expected to pay it off?
i'm glad the regulators are not allowing the banks to continue throwing good money after bad. in antioch, california, the once-thriving community of antioch has seen their $450k houses of 2005 now selling en masse for $125k. and what does that mean?
it means THE PARTY'S OVER!
By creative
Jan 2, 2009 10:35 AM | Link to this
The builders were building McMansions because people were buying them. The whole thing was a house of cards that was begging to fall. My husband worked for a builder who is unscrupulous....he owes millions and millions of dollars, but none of his businesses were connected to him personally (LLCs) and he is still living in his McMansion and driving his brand new cars....while his suppliers, etc., don't get a thing from him. He walked away from every property he owned and let them go back to the banks. I bet he doesn't miss any sleep over it either.
By DAN DEACON
Jan 2, 2009 10:25 AM | Link to this
Not all builders are incompetent as some of you have expressed in your comments. If you read the article, Mr. Lunceford had put back money and saved and lost all of it. When you have a banker that is an idiot (and most are ignorant when it comes to resolutions because it requires work and intelligent thinking), it backs anyone in a corner that has significant debt. In the case of Mr. Lunceford, the article says he had several homes unsold, which is characteristic of what's going on presently everywhere. Just try selling your home right now and see how fast or even if it sells. Now, imagine trying to sell several homes. If the bankers involved were thinking they would have extended Mr. Luncefords debt through a workout program and became involved in helping him sell and/or market the homes. Banks have so many foreclosures now that they can't even keep up with their inventory, much less get rid of them. Why would a banker want to add more inventory - it's like adding insult to injury. It's best to keep someone like Mr. Lunceford who has a good reputation within the industry and apparently had a good working relationship with his banks, until they decided to read policy & procedure and take it literally, and force foreclosure and reliinquishing his help. By the way, banking laws allow bankers to work with customers that are delinquent so long as a plan is put in place to resolve the debt. With Mr. Lunceford marketing the homes for what was owed, I'd say that was a good plan for resolution and sufficient to comply with banking regulations. Let's keep up with this and see if one of the bankers and/or his family winds up owning the homes that have a significant amount of equity in them. Don't even think because of fiduciary responsibilities they don't do this. It happens everyday via family members and friends. Bankers now have the reputation of thugs which has been created by themselves - their greed, insensitivity to people and their situations, lack of understanding and thinking abilities and stubborness. It's unfortunate for Mr. Lunceford that he did not have bankers that couldn't see that piling on even more real estate owned by the bank was a heavier liability for the bank since they have no experience in marketing and selling homes on their own and the realy market having an massive oversupply of homes for sale, both new and resales. It's time to take bankers to task and make them accountable for their stupidity and greed.
By sd
Jan 2, 2009 10:09 AM | Link to this
Its a fine line between ambition and greed. Many of these builders are getting what they deserve. In my neighborhood, an overly ambitious builder raped the land of several 100+ year old oaks and bulldozed about 3 acres of land. He wanted to put 12 houses on that tiny lot. His plans were to build poorly constructed large homes with no lots. After he cleared the land, he ran out of money and left me living next to a construction site instead of beautiful trees.
In the 1960s, builders built homes with 4 sides brick, and not on slabs, but with crawl spaces or basements. The homes were modest ranch style homes that still look good today instead of these homes today that do not hold up to the test of time. In those days, builders built houses with seperation between, not because of code, but because they took pride in them.
The builders only know one thing; build. They don't stop until they run out of money. They don't take a look at the market and try to predict supply and demand. They just build. They try to get away with cutting as many trees as possible. Building houses as close as they can by law.
By A1502235
Jan 2, 2009 9:59 AM | Link to this
Banking, the industry, as it's configured contemporarily, found itself with with a maddening assortment of functionaries. Money, a lot of it, was lent; whether or not under fradulent (exaggerated) conditions as personalities prevailed. Now's the time along with a new administration to have a equalization whether or not it's conveneient; but probably it is, as opportunity compounds. Get over it puhleeze.
By Rick in Grayson
Jan 2, 2009 9:51 AM | Link to this
Builders are very poorly regulated. Their are no certifications, degrees, professional licenses that builders must acquire before building homes in Georgia. More must be done to regulate this industry.
Builders have created and priced homes at prices that will be unaffordable for the reduced incomes of this state. Home prices must still decline to be inline with real incomes that have not increased for years.
Builders in the past have relied on knowledgeable trade workers to produce quality homes. These workers have had to shift careers and the illegals that remain will not have this knowledge base. The quality of homes built in the last 5 years and in the future may not be up to standards of previous decades.
By Gerry
Jan 2, 2009 9:25 AM | Link to this
It doesn't matter how builders get paid! Builders who hired illegal workers contributed to the job magnet that draws illegal workers into this country.
Local taxpayers now have to pony up their monetary resources to pay for benefits to illegal aliens and their children. Builders have passed on what should be their "true" labor costs to those of the local community.
At $10,000/child, local taxpayers have to spend hundreds of millions of dollars for K-12 educations for the children of illegal aliens.
US citizens are NOT OBLIGATED to support foreign nationals illegally in this country!
H1-B visas depress wages of college educated workers, while the illegal aliens hired by these builders cost low skilled US workers their livelihoods. Both are disgusting outcomes of policies that local, state, and federal officials have proprogated.
By BobtheBuilder
Jan 2, 2009 9:25 AM | Link to this
I never realised how many people ignorant of business and government intervention there are until reading these comments. If bad things are happening in your life, it is probably linked to the collapse of the homebuilding industry that employed millions whose incomes employed millions more. Do you live in a home? A homebuilder built it. America has the least expensive housing in the world out side of a tin can home in a third world country. Count your blessings and pray for recovery.
By Eric
Jan 2, 2009 9:22 AM | Link to this
These state licensing boards are nothing more than organizations created for profit. They collect the "licensing" fees and then the "builders" are legit with the state. The guys on this blog that are trying to justify the building industry as a whole should have showed more due diligence toward their industry. Of course the entire building industry was in it for the money....isn't that what makes the world go 'round? However, in their zest to corner the market in their area, greed and political correctness ultimately led to the situation we're in right now. Everyone (Developers, Builders, Real Estate Co, Banks, Mortgage Co and local govt P&Z Boards and County Commissioners) are the real reason why we're in this mess. Everybody wanted a piece of the pie....it was so easy to get.
I think people would be shocked if they knew the "genealogy" of a development near them......to see how the groups mentioned above are in some way "related".
These folks need to take personal responsibility for the mess they've gotten themselves into.
By GaNative
Jan 2, 2009 8:45 AM | Link to this
Gerry, our own government and corporations have done worse to us than builders. Ever heard of the H-1B Visa program that has put so many American Citizens on unemployment?
I think you'd have to be someone that was self employed and ran a business to understand the plight of the builders. Based on the comments of how they should have saved and prepaired for this downturn. It's not easy when you don't have a stable paycheck coming on schedule. Builders and other self employed people often find themselves playing catch up because their income is not predetermined.
By Gordon Gecko
Jan 2, 2009 8:32 AM | Link to this
GREED IS GOOD!!Capitalism at it's very best, we need more of it.
By momtoAlex&Max
Jan 2, 2009 8:25 AM | Link to this
I don't feel sorry at all. Most of these guys rode the wave as if the good times were never going to end. Why didn't they build median-priced homes in decent neighborhoods that were less than 50 miles from the Perimeter? Why didn't they work with the buyers? Why did they buld McMansion white elephants?
They were greedy then and now they are paying the price. They over-built. They over prized the homes. Time to pay the piper. Tough t .
By Gerry
Jan 2, 2009 8:12 AM | Link to this
Builders got themselves into this mess by overbuilding! They also used a lot of illegal workers and put US citizens out on the street. They should have to feel the pain of losing their homes, just like the American framers, bricklayers, and carpenters that they kicked to the side of the street.
These builders should be fined, arrested, and thrown in jail for employing illegal workers. They put the interests of foreign workers before those of US citizens!
By Tony Glaze
Jan 2, 2009 7:51 AM | Link to this
One the money,Builders with a 5 mill. credit line...ooooo net worth.Did not save for the tough times.And what did they really loos????How many subs did they shaft??Plenty.......Tough tity for the kitty.
By GaNative
Jan 2, 2009 7:38 AM | Link to this
I agree with J, it's the predatory lenders that caused this mess. Things are going to get a lot worse before they get better. Just think about all the tax liabilities that the IRS is just waiting to choke those who have fallen during this crisis. There are a lot of people who will fall into their grasp. And bankruptcies don't get you out of your tax liability. In order to sell houses and cars now, they are going to have to adjust the credit standards because they've practically ruined everyone. It's a big mess and it's not going to get better anytime soon.
By PR
Jan 2, 2009 7:32 AM | Link to this
You follow economics...supply & demand. The builders got themselves into this mess by being greedy. They built too many houses for the market. They wanted the big $$$, so now they suffer. I have no sypmathy for them, nor the homeowners who lied on their loans and are now out in the street. As for the banks, the bank officers should tgo to jail for writing these bad loans...uit's called FRAUD!
By Jack
Jan 2, 2009 12:43 AM | Link to this
Most new empty houses/subdivisions close to my neighborhood were priced at $400K-$650K. My area is mostly middle class with homes probably valued at $100-$250. This is where the builders and bankers got greedy, trying to build mini-mansions for a retiree and northern/western migration that never came OR worse, thinking that the mortgage industry would continue to hand out $650K mortgages for people that can only afford the $250K house.
We're in this mess because bankers and builders forgot a basic rule of economics, and that rule is that there are always cycles, so you better be ready for a downturn. They weren't. Game over. Thanks for playing.
By Captain Obvious
Jan 2, 2009 12:01 AM | Link to this
ýWhen houses donýt sell, thereýs got to be some relief in regulations,ý
Less rules for the housing market that sounds like the perfect solution.
By JC
Jan 1, 2009 11:44 PM | Link to this
Yes JP, there are plenty of good and decent builders out there who love what they do and give back to their local communities. And unfortunately, there are also plenty of lazy thinkers out there who stereotype all developers and builders based on their impression of a small group.
Consumer, builders are required to be licensed and must pass inspections per the respective local governing codes.
Ed, many businesses are largely unregulated and free to make whatever BIG profits. For instance look at the healthcare medical costs, prescription drug costs and the costs of insurance you are paying for these services. No different for builders. It is appalling for you to have had a smugged builder in handling your upgrade costs but many of those prices for upgrades reflect the additional time and expense in special ordering, handling and incorporating those upgrades. It is no different when you order special features on an automobile or any thing else you may purchase. If the builder was too smug for you to haggle price with, why work with them. Hire another one you may be more comfortable with.
Many, if not all, builders and developers were prudent in their business to be able to prosper for many years. However, look at even some of the builders or even suppliers that have been in since before the Great Depression of the 30s. Some of them are not surviving in todayýs market. And why not? The financing and credit market cruch or meltdown from those greedy investment bankers and their investors demanding high returns and overleveraging those mortgaged back security packages are the real culprits. Was it allowed to grow too fast? Yes. Did it create a bubble destine to bust? Yes. Who are the victims? All of us who tried to work hard, tried earn an honest and prosperous return for our hard work and investment in our businesses that also create jobs for people.
Trevor, there are many builders that cut corners when building and mismanaged their funds. The same things happen in other businesses as well. It is to those types of business people that ýWhat goes around comes aroundý.
Sorethumb is right about the Regulators arriving on the battlefield to stab the dead. Where were they when regulation was needed to stop the overleveraging of the investments by the bankers in the first place? Why are they still employed?
J operated his business correctly, yet his business is being directly influenced and affected by how the banks and the regulators are operating. If the funding is stopped, then the trickle down effect happens. Responsible builders, developers and suppliers go down and unemployment of labor goes up. A lose-lose situation for all.
We will overcome this crisis when we ALL come together and make things happen for ALL parties and not just a select few. The real questions is When will we ALL make this happen?
By mortgagepro
Jan 1, 2009 10:27 PM | Link to this
I'm sure this guy is legit.
However, most builders who scam buyers into using their "required" lender fail to grasp basic math. Greed kills most stupid builders as well as ignorant real estate salesman. Why blame the stupid bankers? These guys are about as smart as a 5th grader. Good haircuts, pea brains. Good riddance!
Laws against "required " providers are needed. I'm sick of Countrywide, Homebanc, Indymac, et al ruining this business.
Home prices need to drop another 20%. It's basic math, again. Something that the NAR and NAb don't quite grasp. AND, JOHNNY BOY dont ask taxpayers to bail out stupid and corrupt RE and builders.
By Sorethumb
Jan 1, 2009 10:26 PM | Link to this
It is funny to hear guys like BR try to explain something they don't understand. The regulatory environment and handling of some of these banks and borrowers have been extremely harsh and made things around Atlanta much worse. Bankers try to be honest about the problems and examiners use it as an opportunity to force writedowns and up reserves which effectively ends any possibility of working out of the problem. They forget the current housing depression happened on their regulatory watch.
By Garafopolo
Jan 1, 2009 10:16 PM | Link to this
It is the end of the world. Stop complaining. Build a 4 bedroom/3 bathroom home in lovely areas for $25,000 and watch your sales soar. Put me down for several because I am a gambler. In the meantime, it is sack cloth and ashes time. Inishfallen. Happy New Year!
By J
Jan 1, 2009 9:51 PM | Link to this
As a builder who did save and had all my homes under contract but 2, the banks still chose to make me pay the loans down immediately as opposed to working through it until the closings. Not to mention they quit funding draws to most builders making it impossible to do biz. Wake up and get the jealous bone out of you butt and realize it is the predatory lending practices lending money to non professionals who flooded the markets. Most so called builders were just fly by nighters that the greedy bankers flooded the market with!!!!! Do some research before you blast this guy or anyone else.
By BR
Jan 1, 2009 9:25 PM | Link to this
If this guy was a builder for 35 years and had awards which showed he was a good builder, where did all his money go? That's what's so funny about home builders: they think that the home sales will never stop so they never save and they live the lavish lifestyle, then when it all comes crashing down they want sympathy from everyone. He deserves to go out of business and lost a very nice home at Brookstone Country Club in Acworth. Maybe next time he'll plan for the future.
By Sorethumb
Jan 1, 2009 9:16 PM | Link to this
Regulators are great for arriving on the battlefield to stab the dead. They forget they were handing out A's to all the banks and blessing all this construction lending. Really surprised some of these guys are still employed.
By consumer
Jan 1, 2009 8:51 PM | Link to this
gentle,
there is no contractorýs board, to provide a test or be approved by, to be a home builder. A business license, maybe. The home builders lobby wants no regulation, or recourse, for consumers but now they want our money.
By Smell a hypocrit -?
Jan 1, 2009 8:50 PM | Link to this
So, when they are going under, they deserve a government handout. When they're making money hand-over-fist, they shouldn't have to pay taxes because that's not right and it's bad for business.
Where to these self-serving hypocrits think their precious bailout money is going to come from? Everyone ELSE'S tax money?
You chased the easy money.
Live by the sword, die by the sword.
(oh, we know plenty of builders and architects. the good ones are struggling but hanging on, the dubious ones are floundering or gone)
(and you cannot have investigative reporting if you've canned most all the reporters)
By RB
Jan 1, 2009 8:31 PM | Link to this
AJC Proactive?
They won't print the names of the Board of Directors when a bank gets shut down..the very people with direct oversight of the bank? Their investigative reporting is feeble at best
By DeKalb Lifer
Jan 1, 2009 7:47 PM | Link to this
Yeah. This is typical AJC reporting. "It's bad. Really bad. And good luck with that."
Idea: Spend five minutes and try to write a suggestion or some analysis to round out your reporting.
Or maybe they don't have analysis at Cox.
It is kind of hard to spell.
By gentle
Jan 1, 2009 7:46 PM | Link to this
consumer
actually builders are required to be licensed. thanks
By JP
Jan 1, 2009 7:40 PM | Link to this
Typical reactions here.
There are plenty of good and decent builders out there who love what they do and give back to there local communities. Of course, there are also plenty of lazy thinkers out there who stereotype based on their impression of a small group.
By Ed
Jan 1, 2009 6:40 PM | Link to this
I agree with the other posts. The builders have been largely unregulated, and were free to make big profits during the boom times. I remember buying a new home, and the smug builder not budging on any prices for upgrades, etc. A prudent builder would not have built so many houses without contracts or strong prospects.
By trevor
Jan 1, 2009 5:49 PM | Link to this
I don't feel sorry for the builders, they have been escaping alort of regulations for years. The amount of corners that many of them cut is ridiculous when building, the mismanagement of funds etc. What goes around comes around.
By consumer
Jan 1, 2009 4:43 PM | Link to this
Maybe the state could include financial planning in the contractorsý licensing exam. Wait a minute; we don't require a builder to be licensed!!!
By JRob
Jan 1, 2009 3:36 PM | Link to this
Great problem description...anybody got asnwers? i mean will the reporter even search for answers? C'mon AJC be proactive!