banks foreclose on “Good” Builders

[patb]

http://www.nytimes.com/2009/01/20/business/economy/20builders.html?pagewanted=1

EMPE, Ariz. — Dave Brown, one of this city’s best-known home builders, had kept his head above water through the housing downturn, not missing a single interest payment on his loans. So he was confounded a few months back when one of his banks, spooked by the decline in his company’s revenue, suddenly demanded millions of dollars in additional collateral to continue carrying loans on his projects.

if the pledged assets are losing value the banks are pusing the collaterilzation
rules, but what’s scary to me is the builders demanding 22K credits
per house and more loans, and cheap mortgages….

[davelj]

This article is so dumb and misleading I can hardly stand it. I’m 100% certain that Dave Brown had only “not missed a single payment” to his bank because of the “interest reserve” conventions for accounting for construction loan repayments, which I covered here at Piggington many moons ago. The only reason he was able to “make” his payments is because such payments were coming out of his interest reserve, in which the bank is in essence paying itself interest until the project is completed and the loan paid off in full. I’m sure the bank looked at his projects and the new market values and pulled the plug because they rightly saw a huge hole and determined it made no sense to forward this clown even more money – that is, they didn’t want to throw good money after bad. The problem is that so few folks understand construction lending that Dave Brown can misrepresent the situation – while being technically correct – for everyone in Readersville. No, I feel quite sure that Dave Brown’s projects were in the crapper and the bank was just cutting its losses. “I hadn’t missed a single payment” – classic!! Every banker in the country who read that article laughed his ass off at that statement.

[davelj]

This article is so dumb and misleading I can hardly stand it. I’m 100% certain that Dave Brown had only “not missed a single payment” to his bank because of the “interest reserve” conventions for accounting for construction loan repayments, which I covered here at Piggington many moons ago. The only reason he was able to “make” his payments is because such payments were coming out of his interest reserve, in which the bank is in essence paying itself interest until the project is completed and the loan paid off in full. I’m sure the bank looked at his projects and the new market values and pulled the plug because they rightly saw a huge hole and determined it made no sense to forward this clown even more money – that is, they didn’t want to throw good money after bad. The problem is that so few folks understand construction lending that Dave Brown can misrepresent the situation – while being technically correct – for everyone in Readersville. No, I feel quite sure that Dave Brown’s projects were in the crapper and the bank was just cutting its losses. “I hadn’t missed a single payment” – classic!! Every banker in the country who read that article laughed his ass off at that statement.

[davelj]

This article is so dumb and misleading I can hardly stand it. I’m 100% certain that Dave Brown had only “not missed a single payment” to his bank because of the “interest reserve” conventions for accounting for construction loan repayments, which I covered here at Piggington many moons ago. The only reason he was able to “make” his payments is because such payments were coming out of his interest reserve, in which the bank is in essence paying itself interest until the project is completed and the loan paid off in full. I’m sure the bank looked at his projects and the new market values and pulled the plug because they rightly saw a huge hole and determined it made no sense to forward this clown even more money – that is, they didn’t want to throw good money after bad. The problem is that so few folks understand construction lending that Dave Brown can misrepresent the situation – while being technically correct – for everyone in Readersville. No, I feel quite sure that Dave Brown’s projects were in the crapper and the bank was just cutting its losses. “I hadn’t missed a single payment” – classic!! Every banker in the country who read that article laughed his ass off at that statement.

[davelj]

This article is so dumb and misleading I can hardly stand it. I’m 100% certain that Dave Brown had only “not missed a single payment” to his bank because of the “interest reserve” conventions for accounting for construction loan repayments, which I covered here at Piggington many moons ago. The only reason he was able to “make” his payments is because such payments were coming out of his interest reserve, in which the bank is in essence paying itself interest until the project is completed and the loan paid off in full. I’m sure the bank looked at his projects and the new market values and pulled the plug because they rightly saw a huge hole and determined it made no sense to forward this clown even more money – that is, they didn’t want to throw good money after bad. The problem is that so few folks understand construction lending that Dave Brown can misrepresent the situation – while being technically correct – for everyone in Readersville. No, I feel quite sure that Dave Brown’s projects were in the crapper and the bank was just cutting its losses. “I hadn’t missed a single payment” – classic!! Every banker in the country who read that article laughed his ass off at that statement.

[davelj]

This article is so dumb and misleading I can hardly stand it. I’m 100% certain that Dave Brown had only “not missed a single payment” to his bank because of the “interest reserve” conventions for accounting for construction loan repayments, which I covered here at Piggington many moons ago. The only reason he was able to “make” his payments is because such payments were coming out of his interest reserve, in which the bank is in essence paying itself interest until the project is completed and the loan paid off in full. I’m sure the bank looked at his projects and the new market values and pulled the plug because they rightly saw a huge hole and determined it made no sense to forward this clown even more money – that is, they didn’t want to throw good money after bad. The problem is that so few folks understand construction lending that Dave Brown can misrepresent the situation – while being technically correct – for everyone in Readersville. No, I feel quite sure that Dave Brown’s projects were in the crapper and the bank was just cutting its losses. “I hadn’t missed a single payment” – classic!! Every banker in the country who read that article laughed his ass off at that statement.

[EconProf]

Amen, Davejl. Furthermore, that part of AZ is way overbuilt and should have halted most all construction two-three years ago. The house pictured is just past the framing stage, meaning they probably broke ground for it a few months ago. The spigot should have been turned off long ago by the bankers–that’s their job. Builders will build if you give them money–the bankers and their economists are supposed to take the punch bowl away.
Looks like a populist anti-bank skreed by a NY Times journalist who, predictably, knows nothing about the industry.

[EconProf]

Amen, Davejl. Furthermore, that part of AZ is way overbuilt and should have halted most all construction two-three years ago. The house pictured is just past the framing stage, meaning they probably broke ground for it a few months ago. The spigot should have been turned off long ago by the bankers–that’s their job. Builders will build if you give them money–the bankers and their economists are supposed to take the punch bowl away.
Looks like a populist anti-bank skreed by a NY Times journalist who, predictably, knows nothing about the industry.

[EconProf]

Amen, Davejl. Furthermore, that part of AZ is way overbuilt and should have halted most all construction two-three years ago. The house pictured is just past the framing stage, meaning they probably broke ground for it a few months ago. The spigot should have been turned off long ago by the bankers–that’s their job. Builders will build if you give them money–the bankers and their economists are supposed to take the punch bowl away.
Looks like a populist anti-bank skreed by a NY Times journalist who, predictably, knows nothing about the industry.

[EconProf]

Amen, Davejl. Furthermore, that part of AZ is way overbuilt and should have halted most all construction two-three years ago. The house pictured is just past the framing stage, meaning they probably broke ground for it a few months ago. The spigot should have been turned off long ago by the bankers–that’s their job. Builders will build if you give them money–the bankers and their economists are supposed to take the punch bowl away.
Looks like a populist anti-bank skreed by a NY Times journalist who, predictably, knows nothing about the industry.

[EconProf]

Amen, Davejl. Furthermore, that part of AZ is way overbuilt and should have halted most all construction two-three years ago. The house pictured is just past the framing stage, meaning they probably broke ground for it a few months ago. The spigot should have been turned off long ago by the bankers–that’s their job. Builders will build if you give them money–the bankers and their economists are supposed to take the punch bowl away.
Looks like a populist anti-bank skreed by a NY Times journalist who, predictably, knows nothing about the industry.

[patb]

hey there was a reason i said “Good”

my concern is the SOB is demanding a 22K line from
the taxpayers to sell houses

[patb]

hey there was a reason i said “Good”

my concern is the SOB is demanding a 22K line from
the taxpayers to sell houses

[patb]

hey there was a reason i said “Good”

my concern is the SOB is demanding a 22K line from
the taxpayers to sell houses

[patb]

hey there was a reason i said “Good”

my concern is the SOB is demanding a 22K line from
the taxpayers to sell houses

[Author]

Posts