They said what?
Perhaps, only a few people expected the downturn in the industry. Who would have thought real estate would come crashing down and drag these men, and their companies, down together?
“… Our vision is to create a town-like community that truly respects and enhances the beauty of the land, and also is rich with outdoor gathering places, art and gardens.” – Stephen Macauley, President, Macaulay Companies, Inc., describes during the launch of his plans to develop Cherokee County by building 12,000 houses on 4,000 acres of property back in 2006.
The Atlanta developer, who commanded numerous residential projects, thought he had the world in his hands. It never occurred to him he’d be filing Chapter 11 soon. Last year, Macauley declared he incurred debts amounting to $131 million. Aside from a large number of disgruntled creditors, he also left a ghost town in Fayette County, not a town-like community that he envisioned in the other county.
“… I tried to read Alan Greenspan’s book but couldn’t finish it… Too big of a vocabulary for me.” – Lee Farkas, Chairman, Taylor, Bean & Whitaker Mortgage Corporation, replies when asked if he read anything lately by Ocala Magazine in its July issue.
Well, it seems Farkas should be reading more about corporate ethics. Last week, Ginnie Mae restricted his firm from issuing mortgage-backed loans in light of the risk it was taking. Apparently, many of the loans didn’t contain the right income of borrowers; and the company itself was accused of fraud in its transactions. Fred Hiers of Ocala.com writes, “… Homebuyers were lying about their income or trying to buy homes claiming them as primary residences when in reality they were second homes which they intended to flip for a profit.”
“… And let’s not forget the incredible wealth that new homes create for existing homeowners by boosting the comparable value of their properties.” – Michael D. Pattinson, President, Barratt American, writes in his column at North County Times in 2006.
The San Diego homebuilder sure thought new homes could influence such a rise in prices. But why did he file for Chapter 7 bankruptcy liquidation last week? He only has this to say to the Union-Tribune “… Here’s the mistake we builders made — we went on building when we should have put our tools down and stopped work and said these land prices are ridiculous, the time to get entitlements is stupid and $100,000 per house in fees is unconscionable.”
Apparently, it was too much homebuilding that cost his company’s future, not to mention Bank of America’s stake in their investment.