# Housing Industry

Regency executives try to get out of repaying personal debt

Nice try. Two top executives from Regency Homes sought to avoid repaying about $2.7 million plus interest owed to Wells Fargo on personal lines of credit:

A Polk County district judge rejected arguments from Richard Moffitt, Regency’s chief executive, and John Gamble, Regency’s former chief financial officer, that Wells Fargo & Co. exerted “undue influence and economic duress” against the executives and prevented them from repaying the debt.

The men – along with Regency executives Jamie Myers and Rob Myers – say Wells Fargo put a chokehold on the leaders’ income in December 2007, when it demanded all net proceeds from Regency’s property sales. The leaders claim Wells Fargo’s actions denied them their ability to repay their personal lines of credit.

Moffitt had a $2 million line of credit with Wells Fargo; Jamie Myers, Regency vice president, has $1.5 million; part owner Rob Myers had $1 million; and Gamble had $750,000. Leaders said the lines were used to invest in residential and commercial developments.

The sound you don’t hear is the world’s saddest song being played on the world’s smallest violin.

Give me a break. These guys had a pretty good run during the housing bubble. I am sure that they accumulated plenty of securities and other assets that could be liquidated in order to repay personal lines of credit.

Too many Americans are happy with “high risk, high reward” investments as long as they are reaping the rewards. When they get burned by the risks, they try to weasel out of paying the price.

Meanwhile, “Iowa banks with ties to Regency Homes or other real estate-related businesses continue to report troubles with loans to that industry.” It will be a while before we know the full extent of the fallout from Regency’s suspension of operations last month.

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Iowa's largest home-builder lays off entire staff

If you aren’t already convinced that the housing market is in big trouble, maybe this article from Saturday’s Des Moines Register will change your mind:

Iowa’s largest home builder, Regency Cos. of Des Moines, has laid off the entire staff of its home building business and left behind 300 homes that lenders and buyers will now have to sell or finish.

Jamie Myers, president of Regency, told 103 people working at Regency Homes offices in West Des Moines and Cedar Rapids on Friday afternoon that their jobs had been eliminated and that construction would halt. Myers said it became impossible for the company to continue after a lending agreement with Wells Fargo & Co. ended in December without a renewal.

“We don’t have the cash flow to pay them,” he said of employees.

Myers said it’s hoped that enough money will be generated from the sale of homes already built to pay lenders and contractors.

Myers didn’t rule out a bankruptcy for the company, which concentrates in the Ames, Cedar Falls, Cedar Rapids, Des Moines and Iowa City areas.

The prize for the most absurd spin of the week has to go to Rich Krier of Krier Homes Inc. in Indianola, who

didn’t see Regency’s troubles as a particularly bad omen for the Iowa home building industry. “It’s like a borrower having a problem with a bank,” he said.

He cannot be serious. Regency is not just like any old borrower. We are talking about the giant among home-building firms in Iowa. If Wells Fargo pulled the plug on their loan arrangement, they must be pretty sure that the housing market is in a severe downturn.

The archives of the Bonddad Blog have plenty of material explaining the housing bubble and subsequent downturn.

I wish we could get back some of that prime farmland that home-builders turned into suburban housing. Clearly the new housing that has been built in recent years exceeds market demand in Iowa.

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