Since forming in early June in an effort to coerce some lenders to stop the reported practice of forcing builders into technical default, the Homebuilder's Coalition for Responsible Bank Behavior has quickly grown into a national force with over 80 member companies. Although I'm planning to tackle this subject for my October column in Builder & Developer magazine, for now Builder magazine has a piece:
Mick Pattinson, the embattled executive of Barratt American Inc., has joined forces with more than 30 fellow contractors from as far away as Medford, Ore., to convince banks to restore lending lines that have been shut down as the housing crisis has worsened.
He's the driving force behind Homebuilder's Coalition for Responsible Bank Behavior, which got its start in early June.
Two of Pattinson's credit lines set at $125 million were suddenly shut off after the housing crisis struck with full force in August 2007 when regulators were pressuring banks to retreat from financing new construction.
The pressure has continued as the credit crisis has deepened in 2008...
Coalition members, mostly small- to medium-size builders, include such high-profile individuals as Sherm Harmer, principal of San Diego-based Urban Housing Partners Inc., Rich Gustafson, president of San Diego-based City Mark Development and Horace Hogan, CEO of Carlsbad-based Brehm Communities.
Coalition members have been pressuring lawmakers and high-level bureaucrats in Sacramento and Washington to talk to banks about the issue of lending, or not lending, as the case may be...
Pattinson said his struggles began in the summer of 2007, when Charlotte, N.C.-based Bank of America Corp. froze his credit on two major projects...
Pattinson said BofA asked him to pay down the amount owing on the lines with the expectation that they would be unfrozen and renewed.
Nevertheless, over the next several months, he said he reduced his indebtedness to $70 million from $100 million, half of which was taken from $15 million that should have been paid to his subcontractors.
He said he stopped paying interest on the two lines in March when he realized the lender would probably not unfreeze, or renew, his credit under any terms or conditions.
Those loans are now in default, and his subcontractors still have not been paid.
At that point, he said he was forced to lay off more than 100 employees and greatly retrench operations...
Meanwhile, his group has launched a Web site, pathtodefault.com to publicize the plight of builders such as Barratt American.
Pattinson said he's trying to find new sources of money so he can re-capitalize operations and prepare for what he believes will be the inevitable up-tick in new housing construction...
Sherm Harmer, who serves as the president of the local chapter of the Building Industry Association, emphasized that not all banks are at fault. "There's a disparity between lenders and lending practices," he said.
He noted some banks have been willing to work with contractors. And he said he understands the enormity of the crisis facing the banking industry.
"It's a liquidity crisis," said Harmer.
Still, home builders are struggling, and in many cases, can't finish existing projects. "It's in slow times like these you need credit," Harmer said.
2 comments:
Mick Patterson is a bully and most of the communities that he is building are rejoicing at his business failure. Go B of A.
How easy for you to say Go B of A without flinching. Regardless of your opinion of his personal character, this problem goes farther than just those few communities. This is a national problem for builders everywhere which if goes un-fixed could be catastrophic for the housing market all together. Don't be fooled, B of A intends only to protect their own interests like utilizing bailout money to purchase shares in a foreign Chinese bank. Forgive me, but I fail to see how such an action helps the people here in the US.
Post a Comment