# Builders in bind on loans



## Stormy_Ny (Jun 13, 2009)

Here comes the retail commercial defaults ..... Thought the housing crash was bad ......Wait .....

http://www.news-press.com/article/2...west-Florida-banks--builders-in-bind-on-loans
*Southwest Florida banks, builders in bind on loans*

*As values drop, risks increase*

By **** HOGAN • [email protected] • January 10, 201 

*1:10 A.M.* — Lloyd Mandel says he fulfilled his part of a bargain with SunTrust Bank: He built a strip mall in south Fort Myers, and leased out most of it.
Now Mandel, of Mandel & Simms Real Estate, wants to convert his construction loan to a mortgage at the rate agreed upon two years ago when the project got started. But, he says, SunTrust won't honor the deal, citing various "outs" in the contract such as a drop in the value of the property.

*"We're not going to comment on a particular client," said SunTrust spokesman Mike McCoy. But, he noted, "we obviously are in the business to make loans to creditworthy borrowers."*

If banks start exercising their rights on a large scale to get out of agreements to lend, Mandel said, "no piece of commercial property in Lee County is safe if it's got a mortgage on it."
Whatever the future holds, experts say, it's clear in the past few months more builders are facing a troublesome combination of plummeting commercial values and cash-strapped bankers who can't — or won't — make the loans.
Now, with their back to the wall, some builders are fighting back. Tactics include filing to reorganize in bankruptcy court in an
Get in-depth coverage of the Southwest Florida real estate scene.
attempt to get a judge's intervention.
Mandel said he's considering taking that course, noting the bankruptcy judge has power to write down a commercial loan or otherwise change the terms.
"Since mid-November, I bet I've had a dozen people call recounting similar fact patterns across the Southeast," said Jack Williams, resident scholar at the American Bankruptcy Institute and a bankruptcy professor at Georgia State University. "The story unfortunately isn't new to me. I think it's an indication of things to come."


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## [email protected] (Dec 23, 2008)

Also hearing even the regional banks have gotten miserly with established builders.... The latest tactics:

Approve a construction loan at say 80% of the job. The builder gets started, gets about 60+% done, turns in the draw. Banker calls him in to tell him some bankster BS about "the board has decided to only fund this job to 60%, so no more money."

They then apply pressure to get the job done, while the buildr and owner have tied up all available monies to cover the original 20%, now wondering how they'll fund this additional 20%. The bank then moves to force the owner into and end loan with crdit life and credit disability included, adding a few hundred to they payment. Their mo is to renig on the original agreement and raise the % 2-3 points without the insurance. One banker even admitted this tactic is illiegal in theory but they're getting away with it.

The result is that the bank winds up foreclosing on nearly finished, top quality custom homes. Their buddies buy on the cheap, and self fund the completion.


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## taper71 (Dec 9, 2007)

Isn 't capitaism great !!!


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## Ron Franck (Jan 3, 2010)

When we decided to build a new house we saved and saved. I NEVER want to have to borrow money again in my life. If our government really wants to help everyone then bank regulators need to move in and shut down these greedy, underhanded banks. Where are the investigative reporters who need to uncover the banks misdeeds? Oh, that's right. they are still stalking Tiger to see how often he plays his favorite hole. What was I thinking......:whistling2:


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## Stormy_Ny (Jun 13, 2009)

taper71 said:


> Isn 't capitaism great !!!


Greatest system the world has known ..... It is when Government gets involved that the problems start.


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