Housing Company's Bankruptcy Leaves Homebuyers Homeless
The national housing market slump and foreclosure crisis have claimed another victim, this one a sizable homebuilding corporation. According to reports from the Columbus Dispatch, Levitt & Sons, a division of Levitt Corporation, has left many of its customers in the lurch.
The original Levitt homebuilding company flourished in the 1950s by building thousands of small, affordable family homes in New York, New Jersey and Pennsylvania. Sources indicate that the company was responsible for creating the modern suburb and bringing homeownership to the masses.
After the 1970s, the company's importance in the housing market declined, but the baby boomer generation - the children of original Levitt homeowners - apparently remembered the Levitt name and reputation.
When Levitt & Sons marketed their retirement communities to the baby boomer demographic, reports indicated that the company met enthusiastic responses. Evidently, almost $3.5 million dollars had been collected in deposits for one such South Carolina development when the company was forced to declare bankruptcy this November.
Of the investors who channeled money into the now-bankrupt project, some have homes that are nearly finished, while others have "houses" that are little more than vacant land, according to sources. And even the lucky few who are currently living in the unfinished development have reportedly expressed dissatisfaction, since the development is a far cry from the well-rounded community they signed up for.
Perhaps the most interesting and important part of this story is how Levitt & Sons suffered from ripple effects of the housing market bust.
Most of Levitt's customers reportedly had strong credit scores and were offered traditional, fixed-rate mortgage loans. The company’s biggest mistake might have been its decision to buy land and expand nationally at the wrong time.
Sources note that Levitt & Sons began investing in significant tracts of land in 2004, when property prices were already falsely inflated. The company likely paid too much for the land and ended up in more debt than it could afford to pay off.
Since the company's bankruptcy declaration, though, those who bought homes from Levitt have had some reason for hope.
Earlier this week, the New York Times reported that Levitt's bankruptcy judge has granted the company permission to borrow $3.5 million from Wachovia bank in order to finish building some of the homes it promised its customers.
Depending on how business progresses in the coming months, that amount could reportedly be increased to as much as $10 million.
The effects of the collapse of the U.S. housing market are likely just beginning to be felt by Americans. For the latest information on foreclosures and bankruptcy, visit the News section at Total Bankruptcy.