Tuesday, November 25, 2008

Florida Homebuilders Upset with Federal Bailout Plan

Florida home builders are upset with the way lending institutions are handling the cash from the $700 billion federal bailout.

Home builders are accusing banks of misusing their federal assistance. They say lenders are hoarding the bailout money while demanding repayment of good loans from customers with top credit scores.

Builders also contend banks are eliminating lines of credit and doing away with construction financing.

The Florida Home Builders Association says the situation is driving builders to ruin.

Valrico builder Chuck Fowke says he and other builders have been meeting with members of Congress to seek a “time out” until they can reach a solution with lenders.

Home Builders President Jay Carlson says the business practices are forcing solvent, creditworthy home builders to the brink of financial disaster.

One example cited by builders involves a development in Pensacola where many owners of pre-sold lots are ready to close on their homes, but the deals are falling apart because banks are requiring down payments of up to 50 percent.

Florida Chief Financial Officer Alex Sink met with builders on Monday and promised to work on a solution, but her authority is limited to smaller, state-chartered lending institutions.

The chief economist for the American Bankers Association responds to the builders’ charges, saying banks have not received all the bailout cash yet from the federal government.

James Chessen says one of the most important factors in securing credit is to have a longstanding relationship with a bank.

Chessen says the credit situation in Florida may be among the worst in the country because of the overbuilding in the state.

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