From the Chicago Sun-Times:
The crash in the Chicago area market for new homes has claimed its biggest casualty. Suburban builder Neumann Homes Inc. said Monday it will file for bankruptcy and has laid off most of its employees.
Warrenville-based Neumann, the Chicago area's ninth largest builder, blamed its predicament on a drop of more than 50 percent in annual sales within the Chicago and Denver markets. It also pointed to a decision in 2005 to invest in the Detroit market, a move it said cost the company more than $60 million.
Neumann said it will file for Chapter 11 bankruptcy and that its lenders have agreed to provide limited additional funding so that its assets can be evaluated and sold.
It also said the earnest money of customers whose new homes haven't started construction is safe in escrow. Neumann said it will ask a bankruptcy judge to approve refunds from those accounts.
It also said it will work with lenders to ensure that homes will be completed if construction has started.
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This is a huge problem. The fed's have no idea how big of a problem interest rates have become. Not only has it affected people with homes but now this shows that it has gone into the psyche of potential home buyers. The feds need to restore confidence in the lending industry and better do it fast. One way to do that is to help those with loans that are about to reset and drop interest rates down to post 9-11 numbers.
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