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Here’s a story from Monday’s New York Times focusing on the effect of the downturn on homebuilders, especially as banks have frozen funding for previously high-flying businesses.

The story illuminates builders like Mick Pattinson, president and CEO of Barratt American here. I wrote about Pattinson and his efforts to disparage bank practices in a story last week.

Some context from the Times story:

The convergence of these problems is bringing many small and medium-size builders — who account for about 70 percent of new-home construction in the United States — to their knees. …

No hard count exists of precisely how many builders have gone out of business since the downturn began. According to an estimate by the National Association of Home Builders, at least 20,000 builders — about a fifth of the total nationwide — have closed up shop in the last two years.

The Times talked to some builders in Arizona, and quoted Pattinson:

With the pullback accelerating, complaints among builders of hardball tactics and shoddy treatment by banks are mounting, as is a general sense of betrayal.

“The behavior of the banks is unprecedented,” said Mick Pattinson, a home builder from Carlsbad, Calif. who has organized a national coalition of builders to draw attention to what they regard as unreasonable treatment. “Yes, there was overleveraging in the industry. But the aftermath doesn’t need to have been as brutal as it has been.” …

Some builders are now demanding federal relief. They want a tax credit of up to $22,000 for new-home purchases and they want the government to buy down interest rates on new mortgages, to 3 to 4 percent.

But there’s another side to this argument:

Some analysts, however, believe such a bailout would artificially re-inflate home prices and encourage further building in a saturated market. “What is the public good for that?” asked Thomas Lawler, a housing analyst and former vice president for risk analysis at Fannie Mae.

KELLY BENNETT

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