Homebuilder Dave Brown Shuts Down (Phoenix, Tempe: real estate, mortgage, loans)

[azjack]

"Citing the toughest lending environment he has seen in his 33 years in the homebuilding business, Dave Brown said Monday he has closed his Tempe-based company, Brown Family Communities.

'The banks have called in all my loans,' he said, adding that after paying off most of his bills, 'I've been left with nothing.'

Brown said he has laid off about 55 employees. He also said he has been able to pay refunds to buyers who made down payments on houses that can't be completed because financing is no longer available.

Brown said there are 31 partially completed houses dotting his neighborhoods. He expects that they will be taken over by lenders and remain in an unfinished state until the value of the properties rises and lenders can sell them at a profit. . ."


Homebuilder Brown Family Communities closes | Arizona Business, personal finance, technology news for East Valley and Phoenix | eastvalleytribune.com (http://www.eastvalleytribune.com/story/129061 - broken link)

[garisonthebull]

For the love of god will it end?

I still cannot believe that despite the fault of the banking industry creating sub prime mortgages, fluctuating intrest rates, arms, bolloon payments and every other creative leanding practice they knew would fail, we are stuck with the $750,000,000 dollar bill. The banks still got their money from unethical practices and the American is left without a job and a huge tax defficet. Now an American business man goes belly up and 55 Anericans are without jobs while Mr. Monopoly drives off in his fat cat rolls royce.

Why did the legislation of this bill do nothing to hold the banks responsable for this crisis?

[ivanabacowboy]

Dave Brown's problem was the Bank's. The same banks that are buying into the "rescue me" package--->arent willing to help rescue their own clients. There seems to be a total oxymoron to that.

Brown was still delivering homes and doing fairly well under the circumstances. But these 2 other banks decided to play "hard ball" and gave them no outs, started sweeping every penny of Brown's cash. How on earth can they continue building houses with absolutely no cash flow???

All I have left to say is a lot of banks are peeving a lot of people off-if my institution who is going to any lengths to help our builder borrowers work things out can manage to limp thru this and stay in the construction lending business---->we are going to have a TON of clients (of the ones who survive) defecting from the other banks who screwed them over. I am in the industry and this makes me sooooo angry.

PS Not all Brown's banks have called in his loans. My bank hasnt.

[ITChick]

Originally Posted by garisonthebull

For the love of god will it end?

I still cannot believe that despite the fault of the banking industry creating sub prime mortgages, fluctuating intrest rates, arms, bolloon payments and every other creative leanding practice they knew would fail, we are stuck with the $750,000,000 dollar bill. The banks still got their money from unethical practices and the American is left without a job and a huge tax defficet. Now an American business man goes belly up and 55 Anericans are without jobs while Mr. Monopoly drives off in his fat cat rolls royce.

Why did the legislation of this bill do nothing to hold the banks responsable for this crisis?

Good point and a great link by the OP.
Did anyone see last Sunday's 60 Minutes segment where they talked about the cause of the failure? Very educational.

[Ponderosa]

Originally Posted by garisonthebull

For the love of god will it end?

I still cannot believe that despite the fault of the banking industry creating sub prime mortgages, fluctuating intrest rates, arms, bolloon payments and every other creative leanding practice they knew would fail, we are stuck with the $750,000,000 dollar bill. The banks still got their money from unethical practices and the American is left without a job and a huge tax defficet. Now an American business man goes belly up and 55 Anericans are without jobs while Mr. Monopoly drives off in his fat cat rolls royce.

Why did the legislation of this bill do nothing to hold the banks responsable for this crisis?

You left off a few zeros.

[HX_Guy]

Sad to hear, my current house was built by Dave Brown, and the house I grew up in (mostly) was also built by Dave Brown.

[garisonthebull]

Sorry hard to think about it in real figures.

$750,000,000,000.00

There is that better?

[Ponderosa]

Originally Posted by garisonthebull

Sorry hard to think about it in real figures.

$750,000,000,000.00

There is that better?

Yeah, without those zeros it would not even cover the bonuses the fat cats and overpaid investment bankers are planning on doling out to themselves this year.

[azjack]

"Brown was still delivering homes and doing fairly well under the circumstances. But these 2 other banks decided to play "hard ball" and gave them no outs, started sweeping every penny of Brown's cash."

That is interesting. I guess that the banks did not see any upside for a Phoenix-area based builder. If DB was at least treading water, they could have given it some leeway. Unless they figured that there would not be any cash to call back a year from now. Either way, interesting stuff.

[CSchnack]

The predatory lending and mortgage fraud that's a huge part of the problem was also being done by homebuilders. Many set up their own mortgage companies and got right in on the action. Some builders are being investigated, e.g. Beazer in NC and now CO for lending fraud, and many of the big ones as well as smaller ones fined by HUD. However these investigations often lead to a pittance of a fine "without admitting wrong doing," and the companies go on doing the same things.

Also many builders didn't count on a down turn which is to be expected in real estate. They made a ton of money during the bubble but didn't practice the same financial responsibility any consumer would be expected to. So when the crash inevitably came, they got caught w/their shorts down. They are not victims, they are in many cases part of the problem. There are still builders out there building, mostly small builders who make a good house and didn't get greedy or stupid and didn't get in on predatory lending as a side line. Check out: Construction Defect Help - Daily News and Current Events - Homeowners Against Deficient Dwellings (http://www.hadd.com/dailynews.php - broken link) There are new builder fraud cases posted every day it seems, and most of them revolve around mortgage fraud.