Put up or shut up

By Megan McArdle

It's bad enough to be an individual struggling to make payments on an underwater mortgage.  Apparently, some builders are finding that sending that check on time isn't enough for their bankers:

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.

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.

Perhaps the details are other than described in the article, but whatever the circumstances, it's hard to see how a bank benefits from foreclosing on a performing loan in this housing market.


This article available online at:

http://www.theatlantic.com/business/archive/2009/01/put-up-or-shut-up/85/