Banks Foreclose on Builders With Perfect Records
Source: New York Times
TEMPE, 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.
Though Dave Brown’s home-building firm had not missed a payment during the housing downturn, one of his banks suddenly demanded millions of dollars in additional collateral.
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.
He was unable to come up with the money, and in October, JPMorgan Chase foreclosed on five of his developments. Shortly thereafter, Brown Family Communities, 33 years in the business, decided to shut its doors.
“They treated me like a deadbeat who missed his car payment,” said an embittered Mr. Brown, 76. “They wanted their money now.”
After riding high on one of the greatest housing booms in American history, the nation’s home builders today face a devastating reversal of fortune.
Although the housing crisis is nearly two years old, many banks had refrained from cracking down on small home builders.