Not even Thanksgiving leftovers could bring much comfort to builders this week.
In addition to today’s news that the economy shed more than a half-million jobs in November alone, the leadership of Kimball Hill Homes said on Tuesday that the longtime private builder would stop building homes and close its doors after 40 years.
That is sobering news, not just to the remaining Kimball Hill employees who just lost their jobs, but to the industry at large. Who will be left when this economic downturn is finally over? We wonder.
On a more positive (but also more sarcastic) note, the government is finally realizing that foreclosures are a real problem. “More needs to be done,” Federal Reserve Chairman Ben Bernanke said this week.
Gee, Ben, ya think? Homeowners in financial difficulty have been telling newspaper reporters around the country for the past year how they have been trying to renegotiate their mortgage, but that no one—not banks, not loan servicers, and certainly not mortgage-backed securities investors—would respond.
Now families are losing their homes left and right as their loans reset to payments that would have been unmanageable even before Mom or Dad lost a job. (Yes, they should have known better than to apply for a mortgage that seemed too good to be true. But who among us hasn’t ever made a decision that we’ve come to regret?)
Builders are going bankrupt around the country because, among other factors, their product can’t compete with the bargain prices available on foreclosures, even if the former owners have ripped out the appliances in a fit of bad behavior.
Yeah, Ben, I think more needs to be done too. And you can start by giving some tough love to the mortgage-backed securities holders who seem to think that their precious returns on investment trump the interests of everyone else in the country, because their resistance to taking a financial haircut is cutting the rest of the economy off at its knees. —Alison Rice
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