Homebuilder Brown Family Communities closes

Citing the toughest lending environment he has seen in his 33 years in the homebuilding business, Dave Brown said Monday he has closed his Tempe-based company, Brown Family Communities.

"The banks have called in all my loans," he said, adding that after paying off most of his bills, "I've been left with nothing."

Brown said he has laid off about 55 employees. He also said he has been able to pay refunds to buyers who made down payments on houses that can't be completed because financing is no longer available.

Brown said there are 31 partially completed houses dotting his neighborhoods. He expects that they will be taken over by lenders and remain in an unfinished state until the value of the properties rises and lenders can sell them at a profit.

The situation shows that the massive bailout of the financial industry engineered by the Bush administration has not yet filtered down to borrowers, he said.

Federal officials "are giving $700 billion to the banks, but nothing is coming out," he said.

Brown expressed bitterness that his lenders will no longer support him, even though he has survived several market downturns in the past. The difference this time is "the lending environment," he said.

"I'm sick over the whole thing, obviously. It's a tragedy. Washington and the financial community have no ethical response. They have just told (borrowers) to go to hell."

Brown said one of his lenders was GMAC Financial Services. He declined to identify others.

The Tribune could not reach GMAC representatives for comment late Monday.

Brown, 75, said he built about 18,000 houses in Arizona during the company's three decades in business. He started the company as Homes by Dave Brown in 1975.

He said he never thought of retiring, nor did he ever consider selling his business, although he received frequent offers when times were good. And he does not want to retire now.

"I want to come back," he said. "I taught college for years, and I might do that again, but you can't really do that for a living. ... We'll wait out the market and see what happens."

Housing analysts said Brown was one of the largest and best-capitalized of the privately owned homebuilders in the Valley, and the collapse indicates how difficult times are for the industry.

"They had slimmed back considerably over the last several months," said R.L. Brown, a housing-market consultant who is unrelated to Dave Brown. "It's a sign of the times."

Jay Butler, director of the Arizona Real Estate Center at Arizona State University, said the shutdown came as a surprise because the company had weathered past market storms.

"I thought he would be one who would make it through," Butler said.