“The American Banker's Association senior economist Keith Leggett confirmed that, yes, the banking industry does indeed have loanable funds, and that no, it won't be dispersing many of them into the industry anytime soon. Translation: There is more pain ahead.”

-Lisa Marquis Jackson, Big Builder News, May 15th 2008

The Current Situation

Most banks have decided to pull out of construction lending. Small banks are in this position because of the downturn in the market however, large banks still have choices and many are not doing the right thing for their shareholders or the economy.

Instead of a mutually beneficial “work-out” situation with the builder, some banks appear to be forcing the builders into “contrived default”. In many cases, banks are encouraging builders to make cash payments, with the hope that the bank will provide new funding shortly. The banks seek to drain the homebuilders of cash at the expense of the builder’s subcontractors. When the builder’s cash is gone, the bank informs the builder there will be no new funding. At this point the bank takes possession of any assets the builder has put up as collateral, they are bundled and sold for pennies on the dollar. Most builders are forced into bankruptcy and their subcontractors and consultants remained unpaid, many of them will face bankruptcy and closure as well.

HCRBB Goals

1. Raise the Consciousness of both the banks & homebuilders to show how a vital industry’s survival is threatened.



2. Encourage Homebuilders and Developers to fight banking abuse.



3. Enlist the help of media to tell of banking abuse.



4. Contact State & Federal Agencies and inform them of the situation.



5. Document & Determine the common pattern of bad bank behavior

Membership

If you are a homebuilder, developer, subcontractor, or consultant who is or has been affected by these recent bank tactics we encourage you to join us .
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