Banks Foreclose on Builders With Perfect Records

[Pale Blue Dot]

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.

Read more: http://www.nytimes.com/2009/01/20/business/economy/20builders.html?_r=1&partner=rss&emc=rss

[TomClash]

1. Remember what happened to a few bankers when

they forecloased on farms in the 80s?

[timtom]

52. No.

I wasn't paying attention then. What happened?

[TomClash]

55. They caught the wrong end of a 30-06 nt

[timtom]

56. Suicide? or Justice?

[TomClash]

65. I suppose it would be called justice nt

[MadMaddie]

2. You see there is an inherent problem with a society based on

credit....even those who have payed on time and have done all of the right things are punished and ruined.

I think the Credit Bureas should be mandated to erase every Americans credit history and start everyone off at a passing credible score and it's up to Americans to keep it or lose it. That's off the top of my head..

[Dreamer Tatum]

4. My credit score isn't subject to erasure, thank you

Credit policy will eventually have to revert to what it was like in Mexico in the late 90's, when almost everyone had major negs on file.

[DBoon]

21. reverting to Mexico in the 1990's is exactly where we are heading

in more ways than one

[Dreamer Tatum]

81. touche nt

[nebenaube]

57. Are you a banker? n/t

[Dreamer Tatum]

69. I'm a risk management executive nt

[BlueCaliDem]

73. Isn't risk management the same as debt collections? n/t

[Dreamer Tatum]

75. No, it's quite before that

It's credit policy.

But please, feel free to assume anything you like about me.

[BlueCaliDem]

83. Sure. I will, but I don't need your permission - just so we're clear on that. n/t

[BlueCaliDem]

5. I agree with you. In these times, credit reporting agencies are more harmful

than helpful. JPMorganChase was one of the many banks that got a huge billion-dollar TAXPAYER FUNDED bail out.

They're one of the corporations with huge offshore, tax-evading accounts, and used bail-out money to acquire Washington Mutual that got a billion-dollar bail out too. Washington Mutual had given its CEO, for three months worth of CEOing (whatever they do) a check for $16 million dollars. I guess JPMorganChase wanted to recoup their costs by foreclosing on this innocent, law-abiding, conscientious man's business.

Now can we plunder their tax-free havens in the Caymans, please??

[Dreamer Tatum]

22. Your message bears almost no relationship to your subject

Credit bureaus and credit providers do entirely different things.

[BlueCaliDem]

37. If you don't get it, tough. I know the difference between CRAs and credit issuers, btw.

I was pointing out the hypocrisy of JPMorganChase and how they treated this taxpaying business man while they make catastrophic decisions, evade paying taxes with offshore accounts, and then turn to government for taxpayer dollars - which this man most definitely helped pay into - for no-strings-attached billion dollar bail outs.

What are you? A JPMorganChase exec or something? A corporate worshiper?

[Dreamer Tatum]

42. I'm just someone who can distinguish between TransUnion and JPMChase

which is an insight that you lack. No harm done. I will explain.

The original suggestion was that all the credit bureaus (eg, TransUnion, Equifax, and Experian) should be compelled to forget consumer credit histories, probably including those that currently affect credit scores like FICO. Your post went bizarrely afield, and you did not or could not tie your message back to the issue at hand.

Wiping the slate clean at the bureaus would penalize people with clean credit histories, and would reward people who have behaved irresponsibly with credit. That's the only point. If anything in your posts contributes to or contradicts the original point, I can't see it.

And no, I'm not a "corporate worshipper," whatever that is, though I'm sure I'm an extremely evil person for having the temerity to point out your non sequitur.

[BlueCaliDem]

72. Your lack of comprehensive reading skills is glaring. It undercuts the validity of your argument.

I already tried to explain it to you, but let me try once more.

Reverting back to the original post you responded to, I clearly made a point that I agreed with the posted comment that credit reporting agencies are more harmful than helpful these days. Go back and reread my original post.

I clearly listed JPMorganChase as a bank. Go back and reread my original post.

How you came to the false conclusion I didn't know the difference between a credit bureau and JPMorganChase bank, while I clearly listed them as separate entities, is a mystery to me, but the error lies with you, not me.

Perhaps I should've hit "enter" after the first period. That's the only viable explanation why you got confused, but that's when comprehensive reading skills should've helped you out. However, your confusion doesn't entitle you to make ME out to be incoherent, and that's exactly what you tried to do in defending corrupt CRAs and banks vs the consumer.

"Wiping the slate clean at the bureaus would penalize people with clean credit histories, and would reward people who have behaved irresponsibly with credit. That's the only point."

WRONG. That's absolutely not the "only point". It wasn't even the point.

The original suggestion was to erase consumer credit histories and give consumers a second chance in these hard financial times, and to set a fair score on their credit reports. Nowhere did I or the other poster say we want to penalize those with good credit. You happily made that up all on your own.

No, you're not "extremely evil", just willfully obtuse in addition to having the unmitigated gall to point out a non sequitor of your own making, and trying to pass it off as mine.

Nice try, but you failed.

[Dreamer Tatum]

78. Whatever. You may have some logic, but it's spaghetti

so I won't apologize if I missed anything.

Still, you are making no sense whatsoever when you say, "The original suggestion was to erase consumer credit histories and give consumers a second chance in these hard financial times, and to set a fair score on their credit reports. Nowhere did I or the other poster say we want to penalize those with good credit."


Um, if you erase my history, you erase my record of good credit. If you erase histories, you CAN'T set a "fair" score because YOU JUST FORGOT ALL THE INFORMATION THAT YOU'D USE TO MAKE THE SCORE. Unless, of course, your "fair" score is utterly subjective. Things that are utterly subjective and willfully ignorant of actual facts go by another name: bullshit. I don't want a bullshit score. I want the one I earned.

[BlueCaliDem]

87. Some logic? All "spaghetti"? Oh puh-leease.

It's egg in your face, and you know it.

You assailed me for not being able to distinguish between a CRA and a bank. I proved you wrong backed by the original post you supposedly read and decided to respond to.

You claimed that Wiping the slate clean at the bureaus would penalize people with clean credit histories, and would reward people who have behaved irresponsibly with credit. was the only point. I challenged you showing it was YOUR point, not mine or the poster I'd originally responded to.

I can understand why you won't apologize for "something you've missed", because you missed the point entirely, and your whole uncharitable argument collapsed. I don't want or need your apology. I just wanted to prove you wrong. I did, and that's enough for me.

Um, fair scores, by the way, are only reported TWENTY PERCENT OF THE TIME. Eighty percent of all consumer reports have inaccuracies that adversely affect a consumer's creditworthiness and score. Ninety percent have overall inaccuracies that don't necessarily affect a person's credit rating. Google it. It's not hard to find.

Based on this premise, it's credit bureau reporting that's subjective here. Wake up and smell the coffee already. They decide how much or how little they report on you. You have NO say-so in the matter.

An FYI? Good or bad, items on credit reports are removed 7 years after the last payment made unless it's bankruptcy. You act as if you can hold on to your good credit forever. It's that belief that's bullshit.

[Andy823]

6. I disagree.

Why "erase" credit for those of us who have good credit and make us start over, and why erase "bad" credit for people who over extended themselves and lived high on the hog, but could pay their bills? I know people who have gotten into trouble with their credit cards numerous times, and had to borrow from others to pay off their credit cards, and then got right back into trouble by maxing out their cards, and having to borrow more before they paid off the first loan to once again pay off the credit cards. No, if a person has been working all their life and paying their bills they deserve to keep their good credit record, and those who can't pay their bills need to get some help, but not by letting them start all over again charging like crazy and not paying for what they charge.

[Dr.Phool]

36. One problem is that they're not waiting for people to turn bad.

My wife and I both have credit scores in the high 700's. Never miss a payment on anything. Never late. Ever.

Banks right now are slashing credit limits on credit cards and HELOC's like crazy. Lower limits lower your credit score. My wife had a credit card with a 18,000 limit. She carried a balance of about $2000 for a while. Out of nowhere, they slashed her limit to 3000. For no reason. That lowers your credit score.

I have 3 high limit, prime rate Chase cards (I never got a card through Chase, but over the last 10 years or so, they bought all three banks). Two with a balance of zero and a modest balance on one. I don't trust them for one fucking minute, and if they get cute, I'll sever all relations with them. But, just the same. If I cancel their cards, and pay off the balance, my score goes down.

Fuck all these financial parasites. Nationalize them.

[BlueCaliDem]

41. That's what these cc and bank apologists with self-proclaimed "good credit" don't get.

Credit reporting agencies use the FICO score and nobody, NOBODY knows how they calculate scores. There are so many variables that can reduce your score in a heartbeat, with no explanation.

Try calling FICO and ask how they calculate the scores, and they'll tell you it's a "trade secret" and are not at liberty to give you that info. All they are "at liberty" to do is, screw with your scores even if you pay all your bills two weeks early.

Even though everyone knows there's a credit crunch and banks and credit is being greedily horded, CRA's continue to report, and allow FICO to score you, as if we're in fine financial times.

As long as you pay your bills to give cc's and banks the most profits, the CRAs and lenders are good to go. Pay off your cc's too quickly, or off every month, and they lower your limits which automatically triggers a negative FICO mark and your score goes down.

No matter what, we're being royally screwed.

[Hannah Bell]

45. yes, it's *your* information, *your* life, you never gave permission for it to be

centrally collected, they won't tell you the criteria, & you have to *pay* to keep on top of the thing, to make sure you somehow haven't gotten a *bad* rating. Yet it wasn't so long ago that this kind of omnipresent credit score wasn't an element in most consumer transactions. Somehow, it just *appeared* without notice, without consent.

I was denied auto insurance from one company, supposedly because of my *bad* credit rating, which at the time I had no clue about. It turned out to be in the 700s, but when I pressed for more information, I couldn't get dick out of the insurance company or my own agent as to why that was so bad, or what element was triggering the refusal.

Credit ratings, as currently used, are out of Kafka's nightmares.

Like "K," accused of a crime, but you're not even allowed to know what it is, or what the evidence against you is, & standards can be changed arbitrarily without your permission or knowledge.

[Tyrone Slothrop]

67. I was recently denied an apartment based on my FICO

Which was around 700 the last time I checked.

I also wasn't ever to get any explanation as to why that score wasn't good enough or if/why it had been lowered since the last time I saw it. Just corporations fucking with the little guy...

Craziest part of it all -- I have no debt and actually have savings. The apartment holding company also had copies of my current bank statements and pretty much every piece of financial information about me; these statements showed that I had more than enough money in my accounts to pay the entire yearly sum of the rent in CASH right then and there. I offered to do so; they told me that that was irrelevant. My FICO didn't meet their standards.

Very Kafkaesque...I still can't believe that those people were refusing $12K up front IN CASH to let me move into their apartment -- and couldn't give me any sort of rational explanation as to why. Insanity...

[Dreamer Tatum]

80. That is very insane.

That is a stupid landlord.

[eilen]

89. That blows my mind

Why should you have to provide enough documentation -- stuff they require to get you a mortgage in order to rent an apartment? That's seriously fucked up. Is it made of gold that you need to be bonded?

[Dreamer Tatum]

79. I hate to disagree with you, but you're wrong

Yes, you DID give lenders the right to report your data. Read your mortgage docs/cardholder agreement/promissory note.

And you have every right to go over your credit with a fine-toothed comb. You mean you haven't heard the jingle?

[BlueCaliDem]

82. Add to that, there are over 2,200 credit bureaus. 90% of consumers' histories contain inaccuracies

with a whopping 80% containing inaccuracies that adversely affect consumer credit ratings.

Each credit bureau is a separate, for-profit corporation and competitor of the other. They fall over themselves in order to report as much negative information as they can. It makes them more attractive to companies seeking larger profits than they'd normally get.

The consumer always loses.

It's almost impossible to have credit reporting agencies cooperate with the removal of inaccurate, negative information which can take years per disputed item. It only takes them seconds to put it on your reports. In most cases, it's best to hire an attorney when you can prove credit reporting and debt collection abuses.

The inevitable (perhaps planned?) result is, creditors are allowed to issue credit with astronomically high interest rates, property management may demand three-four months rent upfront, and insurance companies may deny you or raise your premiums, just to name a few.

Perhaps there was a time when credit reporting agencies served an honorable purpose, but no more. According to consumer advocates and consumer attorneys, complaints filed with the Federal Trade Commission Consumer Affairs against credit reporting bureaus and debt collection agencies, abuses have mushroomed out of control.

The only people that still believe in defending credit reporting agencies are those that profit by them.

Certainly not the average consumer.

[Dreamer Tatum]

43. Your unused, open credit cards are placing your score at risk

The more OPEN credit you have at zero utilization, the greater risk to your FICO score. The
logic is that you COULD use those lines. In general, when people DID use inactive but open lines,
the incremental risk was very high. That is one of the problems with a static FICO score, no
doubt. You can reduce some of that risk by closing any open but inactive credits you may have.

Your score might go down if your credit utilization on an open account increases, so you
are correct that when they cut their exposure, it makes your utilization go up even though
your balance stays the same. Another hole in the FICO logic: it doesn't care who caused the
utilization to go up.

FICO has a ways to go to catch up to what's going on in the credit markets, no doubt.

[NeoConsSuck]

50. I have a few unused credit cards with zero balance

how do I get rid of them?

I only use one card, pay the balance off every month.

[nebenaube]

58. That's a good question

I have a bank of america account I haven't even had access to for four years, I wrote them on many occasions to close the damn thing and it's still there on my report.

[Dreamer Tatum]

63. You can close an account, but it will still have existed

It won't leave your bureau file, but the change in status should help
your credit score somewhat, all else equal.

[Tyrone Slothrop]

68. How do you know?

No one knows how they calculate the scores.

Where is your information coming from?

[Dreamer Tatum]

70. Some information about score creation always leaks out

Plus it's easy to infer what composes the scoring models when you get credit declines.

[BlueCaliDem]

88. You should check the status. It should say "Closed at consumer request".

Reported items may remain on your credit reports for seven years after the last date you made your last payment and closed your account.

Under the Fair Credit Reporting Act laws, all items, good or bad (excluding bankruptcies that may remain on your reports for ten years), must be removed after seven years when last payment is received, account is closed by either party, or the date of charge-off.

Closing your account is an adverse credit act, but less when the consumer does it than when a creditor does it. Still, it is an adverse mark that affects your score, according to consumer credit experts.

[Dreamer Tatum]

62. Caal the issuer and close them

And then verify through the bureaus.

[AnneD]

71. They need to use something that most landlords had...

a brain. A FICO is nothing more than an I love debt score. Any thinking person that saw you have enough in a savings account to pay for a years rent in advanced would also know they would be a fool to turn you down. That's just dumb with a capital D.

I'd keep looking, there are mortgage companies and rental companied that do it the old fashion way and use their brains.

[Dreamer Tatum]

76. Hate to break this to you

But there is an enormous database of rental properties that most landlords use; it's
owned by what is essentially the 4th credit bureau: a company called Innovis/CBC.

Not all landlords submit data to it, but very many do. It does not use the FICO score, per se;
in fact, the database might not contain it at all.

In the case of missing FICOs or thin files, bank account information is sometimes taken into consideration,
depending on the lender.

[AnneD]

90. Key word...

depending on the lender. One thing is certain-this latest downturn will be changing some attitudes about those that use cash over credit. If the landlords gets enough vacant apartments-he might look at alternatives other than Innovis/CBC.

Years ago I use to work as a leasing agent for an apartment. We looked at their last rental (how much and did they pay on time), and their salary. We also looked at the year of their car model. That was it and we were very accurate in our assessment. Now if a renter can pay a year in advance-that is not really a risk and FICO or any other means of measurement is not a reason to turn someone down. As I said-these are used by folks that have forgotten how to use their brains.

If you are a renter-it might take you a little more effort to find a landlord like that, but they are out there.

[xxqqqzme]

44. Wow, aren't you the fortunate one!

Never had to use your card for medication or health care? or help a parent w/ medical costs or to repair a damaged vehicle - damaged by a non-insured motorist. I hope your protected existence continues to shelter you.

Yea, ALL those lazy ass over extended credit hounds.

[proud2BlibKansan]

46. Some of us survive and do fine without credit cards

Haven't had a credit card in 25 years. I make payments to a savings account. Yet I am now penalized in this financial crisis with inflation and a crappy economy. The price of groceries is insane. But I still manage to eat and haven't used a credit card for groceries or medical costs or the deductible for a car accident when someone else hit me and his insurance company decided I was 50% responsible.

So am I bitter about over extended idiots with way too much credit card debt? You bet I am. You can take your poor pitiful me attitude and stuff it.

[Occulus]

59. You didn't give enough information in your post, though

There just isn't enough information there for me to believe it one way or the other.

:D

[NashVegas]

84. Did He? Are We Sure?

I think it's interesting that the first graph said, "not missing a single interest payment on his loans."

Consider that for a moment.

[Dreamer Tatum]

3. Pretty easy to rationalize this particular case

The money Dave Brown borrowed was based on valuation assumptions that are no longer true. The bank probably looked
at the project and guessed that if the properties did sell, they would have to discounted in a way that would weaken
the yield on the loan(s). Nothing contractual would prevent something this draconian, which is why it's so shocking.

Too bad someone else couldn't come in and rewrite the loan, or insure it, or something else that would keep Brown in business.

[robinlynne]

8. why wouldn't the contract stipulate the collateral and interest? That was what

jumped out at me. We are not allowed "out of" contracts. Why is the bank?

[Lucky Luciano]

13. Sort of like a ratings downgrade, but on a smaller scale.

The thing that crushed AIG was a ratings downgrade that forced huge amounts of collateral that they did not have to be posted - forcing government intervention to avert BK. Presumably something (like depreciating property values) made JPM think this guy needed to post more collateral to make up for negative marks in his property portfolio. The details I do not know of course.

[Dreamer Tatum]

15. Because it's the bank's money nt

[mrgerbik]

30. they really only lent only some 5-10% (maybe more?) of that

...the rest was leveraged...

[Mind_your_head]

35. It's not real "money"

It's only the ability to be able to loan further "money" (and earn interest off of THAT new loaned money ~ which the bank deemed wasn't there) that turned the bank off.

Isn't that kinda of a Ponzi scheme? :shrug:

[Dreamer Tatum]

39. No, it's not a Ponzi scheme

A Ponzi scheme is when money is taken from one investor to pay off another. No value is created; it is
merely transferred.

Banking, which is a federally regulated enterprise, consists of accepting deposits and lending a portion of those deposits.
Those loans are repaid by people and businesses who purchase and invest in things that make them better off. Interest
payments are used to fund bank operations and to compensate depositors for the use of their capital.

This has been a linchpin of economic growth throughout the Western world for generations. It is not a Ponzi scheme: you can
withdraw your money from your bank whenever you like. The bank's ability to pay interest on your deposits depends in part
upon its credit policy and capitalization, both of which are overseen by the government.

It's fashionable to call banks Ponzi schemes, but they aren't.

[Mind_your_head]

47. Gosh, reading your post sent me into a coughing fit!......

B E L I E V E. It's true, if you only BELIEVE!

The "linchpin" is FAULTY, for your information. UNLESS you are one of the "banking families".....then it's PUUUUUUUURFECT *meow*

[Dreamer Tatum]

49. Yeah, whatever

Centuries of real economic growth based on the expansion of capital is strictly an illusion.

The far right wing of "cynical" is known as "crazy," FYI

[Grinchie]

51. Now I know your Full of Crap Dreamer Tatum

You almost sounded reasonable until you spouted the Myth of Fractional Reserve Banking they want you to believe.

The banks are totally screwed now because they also used Credit Card Debt as a basic captital reserves, and they are white knuckling themselves to death trying to figure a way out of their predicament.

Banks are nothing more than a mechanism to create money out of thin air. It's up to you to figure out how to get the interest, which is never created in the first place. If you can't get the money for the interest, they take your property. It is built into the system.

[Dreamer Tatum]

64. Well *now* they're screwed

Ask a banker if they'd like to do business in the boring, low-margin world before
securitizations and such, or now, and they'd go back to being Milburn Drysdale in a second.

[Baby Snooks]

11. They did this in the 1980s

They did this in the 1980s but they did it to homeowners. When appraisals dropped below a certain percentage of the loan, they sent nice little letters to the homeowners informing them of how much they owed on the loan against the value and gave notice of their right of acceleration. Also known as foreclosure.

They may be doing this to other developers. They are definitely refusing funding on projects where "pre-sales" have not hit a "safe" level which is usually part of a "loan requirement package" issued to the developer.

Quite a few developers are stuck with loans on land they now cannot get funding to build on. And if the land value drops, well, this is an example of what a lender can do. Not sure that this has happened to any other developer. But it may be the first of many.

Everyone needs to realize that despite everything the "economists" are saying along with everyone else in Washington, our economic system is no longer solvent and is collapsing.

This is probably another indication that the worst is yet to come.

[MidwestTransplant]

18. Still stupid of them. He was making payments. I could see them not wanting to

advance him additional money to keep building, etc. but now they are stuck with the property and will invariably sell it for less than the builder could have.

[NashVegas]

85. He Was Making *Interest* Payments

Which is not quite the same thing - ask anyone with an IO mortgage.

This has been the game at all levels of economic society, from Wall St. businesses, to your next door neighbor: accounting for future, *theoretical earnings* as if it was money already in the bank, and spending away.

Remember the airlines that had to go into bankruptcy after 9/11? Just those few days out of the sky with their *theoretical earnings* a wash, they tipped right over. And when a business keeps too much cash on hand? Investors sue.

[customerserviceguy]

86. Yes, that's what it looks like to me

I would compare it to a situation where someone is buying a stock on margin, even though they're faithfully making their loan payments on that margin account, if the value of their equity in the shares that they pledged drops below a certain point, the lender will make a margin call. In an illiquid real estate market, this developer could not sell things fast enough to restore a proper debt-to-value ratio to the loan.

By the way, I see you've been posting a lot of good sense on this thread. Too bad it doesn't jibe with preconceived notions about what "outta" be with regards to finance.

[razors edge]

7. Calling in the loans.

Contracting the money supply is the squeeze that pumps the wealth upward. Expand, contract, lather rinse repeat.

I wounder what the credit rating is for the banks we loaned our tax dollars to?

[zeemike]

9. The bank just wants the real estate.

After all the value of money is variable but real estate is just that...the real estate.

[Greyhound]

24. Bingo! Somebody gets it, thank you. This is the same game they played last time.

Chase is even one of the same players as last time and they made out like the thieves they are then too.

Why can't most people get it through their heads that this is their game and there is no way to win. We have the means to stop it, but it will only happen if we demand it.

You read up thread, people talking about zeroing out credit ratings or keeping their credit ratings and I'd bet real money not one of them even understands how these magical credit ratings are even created.

[dysfunctional press]

74. that's how adm got all the good farmland in the '80's...

banks loaned farmers money to modernize equipment based on the value of their land- then they slashed the value of the land to the point that it was no longer enough collateral to cover the loans- so they called them in, and basically stole the farmer's land and new equipment for pennies on the dollar.

watch the movie "country" for a pretty coherent explanation.

[CoffeeCat]

10. This is one of those articles...

...that leaves you saturated with depression and fear after reading it.

Every sentence is a reminder of how bleak things are...and are going to get.

So, twenty percent of builders have gone belly up, and one of the sources in the
article expects that around 50 percent will fail, when all is said and done.

There are so many housing developments in my area that are half finished. Giant fields
that builders intended to populate with hundreds of houses--are dotted with just a few
houses.

There is a huge development in our suburb that was supposed to be the wave of the future--a
community within itself, with it's own shopping, police station, parks, waterways. It
reminded me of the Disney city--Celebration. Most of the homes start at $450k and go up
to $1.5 million. It's a vast area that was supposed to be developed. Right now, there
are about 15 houses out there. The houses were the site of a major home show. I think
maybe half of those 15 are occupied. The rest of the land sits undeveloped. Construction
is at a standstill. It looks very odd.

I'm sure stories like this are common.

[FarCenter]

14. How far is the commute for jobs that bring money into the community?

Jobs other than things like restaurants and other retail establishments?

A lot of these green field developments were too far out to be attractive last summer when gas went to $4.50 / gallon.

[CoffeeCat]

16. I'm in a suburb of Des Moines...

Most people in my 'burb work in Des Moines or West Des Moines.

The commute to Des Moines is probably 15-20 minutes for most people. To West Des Moines,
it's probably 20-25 minutes.

This development is smack dab in the center of the suburb. The green area was owned by
a university that held onto it for years. It's really a great location with 5 minute
access to I-80, which takes you right into downtown Des Moines.

[arikara]

25. Very common

There are half built, derelict developments all over the place around here. What bothers me worse is that on the outskirts of the city there are even now moron "developers" that are tearing down the trees and bulldozing the land for no reason then just leaving it. The bastards should be thrown in jail for that.

[Lorien]

28. I agree. I don't know why the fuck they do that

a friend of mine in a Cleveland suburb watched sadly last year as the last remaining forest in his area-home to deer, fox, raccoons and other wildlife-was bulldozed for a new development of 400k+ homes. Now there's just a giant vacant plot of land with a few unsold McMansions on it. That kind of crap SHOULD be a criminal offense!

[Tansy_Gold]

31. What Dave Brown and his fellow land pirates did to the desert

in Arizona is beyond criminal -- it's obscene.

And out here, it's ALL on spec. All of it. 30,000 homes in Buckeye, AZ in less than 10 years. And now something like 1 in 4 is in foreclosure. Or already foreclosed. Or never sold.

Insane. Obscene.




TG

[illuminaughty]

38. Criminal offense absolutely

Urban sprawl here in K.C. has been horrific over the last 10 years, but what really has me pissed off are two projects. They destroyed an entire area to put in a mall on a hill with massive fake stone walls that ascend up the spiraling streets to it. Guess what the entire building (mall) is housing. A Circuit City. Yep, a Circuit City that will never open. GRRRR.

Then, Schlitterbahn came into a very forest like area of KCK, used eminent domain to get people out of their 50 yr. old homes. Tore up the eco-system for a waterpark that will probably never open now. Plans were to build tree house/hotel rooms in fake trees, a fake lake with "touch pools" (whatever that is). They even managed to tear down a historic building in the process. It is CRIMINAL.

[Lorien]

26. Personally I'm sick of spec homes

developers knocked down loads of small to moderate sized craftsman bungalows and 200 year old live oaks in my area and built stucco McMansions in their place. The McMansions have just been sitting there for the past 1-2 years because no one is buying homes that size-they want the small to medium sized historic bungalows! WHY, when so many people are struggling to sell their homes, are builders still building on spec? Maybe the government should offer tax breaks to renovate existing homes while putting a moratorium on spec houses so that existing homes have a chance of selling, and builders can still find employment. Something needs to be done to stop the madness!

[Greyhound]

27. Don't be afraid, that's what they want. Get angry, really angry.

Be angry enough to stand up and demand action, and if our "representatives" won't take action, get together with those you know and take action yourselves, we have the power.

If we keep playing the game we think we're playing, we are guaranteed to lose. It is their game and there is no way to win it. This is our country, these are our lives and they are stealing them right out from under us. Is this what you want for your kids?

Will you wait until it is you, before you decide it is time to do something?

[FarCenter]

12. It appears that Brown Family Communities was way over extended on credit

From the article:

In 2005 and 2006, with loans from JPMorgan Chase and the big finance company GMAC, Brown Family Communities bought hundreds of acres of land on the far outskirts of Phoenix, in towns like Goodyear and Buckeye, where development was rapidly transforming cotton and alfalfa fields into malls and upscale subdivisions.

The company was emerging from a record year in 2005, selling an average of 85 homes a month and booking revenues of $352 million.

Each succeeding year brought a decline in sales, and by 2008, the company was on pace to sell fewer than 300 homes. A glut of foreclosures on the market drove down prices, forcing Mr. Brown’s company to discount homes by as much as $100,000.


also

Some builders are now demanding federal relief. They want a tax credit of up to $22,000 for new-home purchases and they want the government to buy down interest rates on new mortgages, to 3 to 4 percent.

---

Chase currently offers a 4.65% interest rate on a 30 year fixed, 25% down, 2 points on a $400,000 house. So the interest rates are getting there.

[Tansy_Gold]

19. Someone should take a look at the foreclosure rates in some of

the Brown Family developments.

How many of those homes in Buckeye and Tolleson and Surprise and El Mirage were sold at inflated prices on sub-prime and Alt-A mortgages to people who really couldn't afford them? How many millions did Mr. Brown and his family make off those developments over the last, oh, say eight years? How many millions did the mortgage brokers make?

Sorry, Mr. Brown, but I have a very difficult time mustering any sympathy for you at all. Very difficult.


Tansy Gold, who has seen Buckeye and Tolleson and El Mirage and Surprise. . . . . .

[closeupready]

23. Yup.

n/t

[snot]

17. The docs on most commercial loans provide that the lender can

require immediate repayment of the entire outstanding amount if the lender deems itself insecure because of change in the borrower's credit condition, the value of the collateral, or a variety of other reasons.

[depakid]

20. That's a risk that developers and McMansion builders take

The financing terms are written right into their contracts.

We're not talking about some poor homeowners here- but people who've been making BIG money exploiting the housing bubble.

[mrgerbik]

29. this is a microcosm of the world

as we live in today... ie- every nation/government of the world being in massive debt to its central banking system. maybe soon to be global debt?

[.... callchet ....]

32. I was for him until I read this part, maybe we are all dead beats to him

“They treated me like a deadbeat who missed his car payment,” said an embittered Mr. Brown, 76. “They wanted their money now.

[DissedByBush]

33. Unfortunately probably legal

Next time you get credit notice that the contract usually says the bank has the right to demand repayment at any time. Bad business is legal.

[NMDemDist2]

34. dang, he built the home I lived in for 9 years in PHX

and it was a nice place

wow

[mackerel]

40. It's not totally the builders fault but they do bare some of the

blame, they did what ever they could to push these projects through planning commissions and city councils. Everyone benefited from the housing boom. The banks most of all.

[McCamy Taylor]

48. Taxpayers have given Morgan BILLIONS and now they are snatching up businesses

so that a few mega rich people will own everything when this is all over. This ought to be illegal.

[Zhade]

53. EXTORTION.

NT!

[Belial]

54. Here is a thought... MAYBE the bank did what it should have done

in the first place.. by getting the proper collateral for the loan. I think you will see a lot more of this down the road as banks review their loan portfolios.. Extortion?? Not hardly.. this is the sort of bullshit that got us into this mess.

[FarCenter]

60. This type of loan is subject to annual renewal

Note that the story says that GMAC pulled their loan first (most likely their ResCap operation?).

His original relationship was probably with Bank One, or even with The Valley National Bank of Arizona, which Bank One in Columbus OH, acquired in 1993 to enter the Arizona market.

Since the 2004 acquisition of Bank One, JPMC has been tightening credit requirements and getting out of the riskier Bank One lending.

[lovuian]

61. this is the banks taking control

Its mess

[Zorra]

66. Chase got a lot of taxpayer bailout cash. We should call in our loan and bankrupt

these thieving snakes.

[Doremus]

77. Although I think its rotten what they did to this man, in general I have little sympathy

for developers.

Green space? Where you and I see lovely trees and foliage, developers can only see greenbacks. Often they and their cohorts in city government build for the sake of building (and the money of course), leaving the townspeople with unsustainable, expensive eyesores in future decades.

So cry me a river, guy. No one forced you to jump on the gravy train. You can only blame yourself now that it's mowed you down.