Builders Get Work—if Not Loans—From Banks – WSJ.com
LAS VEGAS—Home builders in some of the nation’s hardest-hit housing markets are going to work directly for banks, in a little-used arrangement that is helping to ameliorate conditions in some battered local economies.The builders traditionally got loans from banks to build homes, but that credit has largely dried up. The contract work builders are getting is welcome as many of them struggle to stay afloat.
Typically builders do not work for lenders. So it’s nice to see both lenders and builders finding creative solutions to move the economy forward. The money flow has usually gone from lender to developer to builder. But with many developers facing financial problems and focusing on their own business survival, lenders are turning to builders to help complete new communities. This allows lenders to make a small return on their original investment, while helping local builders stay in business keep their employees paid.
Although the housing crisis didn’t hit the Colorado Springs homes for sale quite as hard as other parts of the country, we still have our fair share of hurting communities….especially in newer areas. This new trend in lenders acting as developers leads me to question the paradigm we have all built in our minds of what a “bank-owned” home really looks like.
