Wednesday, June 4, 2008

Legend Homes Denies Bankruptcy Rumors

Oregon’s largest lender continues to back away from the struggling housing market; the latest victim is Legend Homes.

From the Oregonian:

Legend Homes Corp., one of Oregon's oldest and biggest homebuilders, has survived three recessions with a reputation for paying subcontractors on schedule on the 10th day of each month.
But Tualatin-based Legend last month stopped paying about 60 subcontractors after its biggest lender, KeyBank, cut off funding. Legend's outstanding bills total less than $1 million, President Jim Chapman said.
Legend has retained a turnaround specialist and now finds itself having to downplay worries about a potential bankruptcy.
"We're not in danger of bankruptcy," said David Oringdulph, Legend Homes' chief executive officer. "What we are doing is reorganizing for a smaller market for the next year."
Along with other builders across the country, the 42-year-old company has been squeezed by declining sales, falling land and home values and lenders becoming more aggressive to recover their investments.
In general, builders say slower than expected home sales have forced them to ask banks for more time to pay back construction loans. Local banks, they say, have been willing to renegotiate.
"KeyBank has not been willing to renegotiate," Chapman said. "They're playing hardball."
In January, KeyBank capped all three credit lines and forced Legend to use all sales revenues from those projects to pay off the credit line balances, Chapman said.
"We've had lines of credit with KeyBank for 17 years,"
Oringdulph said. "It's a big squeeze from our best lender."
KeyBank said it has halted home construction lending in California and any other market where it does not have branches.
Sebastian and Oringdulph said KeyBank has shuttered its home construction lending program in Oregon.
"Not a bit of truth to it," Fuhr responded. "We value our clients. We at this time are selective."