Builders and banks, boggled and bewildered
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Lenders and home builders are increasingly at odds these days, as reported last week in the Wall Street Journal, as credit dries up even for companies able to sell homes and make their payments.
From the WSJ article:
Home builders from Florida to Texas are railing against the Federal Deposit Insurance Corp., saying the agency is cutting off construction financing from seized banks and demanding early repayment of current loans. The FDIC, which has become a leading advocate for modifying mortgages of financially strapped homeowners, isn’t extending that same tolerance to the housing industry, the builders said.
But just how bad is the situation for builders? By one measure, the Home Builder Implode-o-Meter lists 57 major builders that have suffered a significant ‘adverse change’ since 2006, 45 that have had mini-implosions and 18 on an ailing/watch list. When the Times ran an article about the site in August, the tally was at 35 ‘major’ implosions, 27 ‘tiny’ ones and 15 builders on the watch list.
The Building Industry Coalition for Economic Recovery paints a picture with a broader brush, including small builders in its statistics on its website. It claims:
During the first three quarters of 2008, a builder an hour of each business day has been going out of business. 1,400 builders went out of business in 2007.
The lobbying coalition contends: ‘Clearly, the U.S. banks have pulled out of the residential construction lending business.’
Just in case, anyone working with a builder might want to review the consumer safeguards referenced in that earlier article.
-- Lauren Beale
Thoughts? Comments?
