Here’s one of those stories where nobody wins.
Brown Family Communities (if you’ve lived around here long enough you’ll remember the days when it was simply Dave Brown) was forced to close this week after more than 30 years in the business.
Why? Short story is Brown’s lender re-appraised the builders’ land value at a lower amount and issues what amounts to a margin call – bring in the difference or else.
Brown Communities couldn’t do it. And so this week, Brown laid off it’s 60 employees.
Worst of all, those buyers who were purchasing a Brown Family home now will not be allowed to close because the bank’s holding the homes as collateral.
From the Arizona Republic:
Brown said he had been trying to negotiate a compromise for months, and in the meantime the bank began keeping all of the proceeds from every home sale, cutting off Brown’s ability to generate revenue.
“They sucked every nickel out of the company,” he said. “I went through the company’s money and my own money.”
Valley real-estate analyst RL Brown, publisher of the Phoenix Housing Market Letter, said he was surprised by the way Dave Brown’s (no relation) lender handled the credit issue.
“I think that particular bank’s technique was pretty short-sighted,” he said. “This is a company that, at least on the surface, one would think was as solid as any builder in town.”
Dave Brown, the company’s founder, said he’ll be refunding everyone’s earnest deposit. So at least the buyers are held harmless financially, even if they’re unable to close on the home that they had purchased.
From here, it looks like another situation where fear’s dictating actions that make little to no sense. I could be wrong, but it just seems like there had to be a better situation that could have been worked out.[tags]Phoenix real estate[/tags]