They say when you ride the big waves, you sometimes get slammed into the beach. That seems to be the case for some of the big mega-builders / developers. Business Week is reporting that some of the big, publicly-traded builders / developers decided to get into the mortgage business at the height of the home building frenzy in an effort to “streamline” the sometimes lengthy process of getting buyers into their homes. There’s a reason why everyone isn’t in the mortgage business (or any other business, for that matter.) When you’re just dabbling in something as complex as the mortgage industry, you run a real risk of getting hurt.
I think the problem is magnified for these publicly traded companies. If you’re a small town builder (or even a big city builder, for that matter) and are not part of a publicly traded company, you make your business decisions based on what’s best for the business. Nobody knows if you are building 50 houses or 51 or 151. So you have no pressure to build “just one more” to “make the numbers for this quarter.” Publicly traded companies, on the other hand, are scrutinized each quarter. They have to do whatever they have to do to “make the numbers.” Therein lies part of the problem.
This is a good article that shows what at least part of the collateral damage from this whole situation will be. There is undoubtedly more to come. To read the whole story, click here.
This is flat out scary
Great insight!