"We are not going to treat them any differently than any other customer."

Yeah right. And pigs fly.

A bit more detail:

Excerpt:

"Luxury home builder Toll Bros. Inc. has had hundreds of canceled orders in the last few months, but one struck especially close to home.
Bruce E. Toll's daughter, Wendy Topkis, and her husband told the company last month that they would not go through with the purchase of a $2.47 million condominium in Florida, Toll Bros. said yesterday in the proxy statement filed for its annual meeting on March 12.

"They were thinking about moving to Florida, but they changed their mind," Toll, the company's cofounder and vice chairman, told Bloomberg News. "She canceled it because she had another child" and the condominium would have been too small, he said..."

Here is a link that might be useful: A Toll Bros. problem strikes close to home

Is it just me or is this kind of "walking away" not at all the same thing? The builder still retains the property, and assuming the builder was selling for a fair price in the first place, they can still go ahead and sell it for a fair price to someone else. Plus the builder gets to keep the deposit.

mfbenson: "Is it just me or is this kind of "walking away" not at all the same thing?"

It's not; I was hoping someone would notice.

definitely NOT the same, yikes, Logic and i agree...pigs do fly :)

What exactly is this type of "walking away" different from?

Do you actually buy that "we have a child now and it would be too small" BS? Do you think if the price of the condo went up 20% since they signed the contract that they would be walking away instead of flipping it?

How is that different from someone who bought an existing house and walked away. The Bank now owns the house and all of the interest payments made by the "owner". They should just sell it for what is owed and get their money back.

It all works nicely when home prices go up 5-10%/yr.

"How is that different from someone who bought an existing house and walked away."

In this type of walking away, the buyers are walking away before closing on the purchase of the house.

...and, in most cases such as this, buyers forfeit whatever their downpayment may have been..although in this case, since it is among relatives, it is not clear if she will have to forfeit..or not.

My guess is not...

Loved this letter on www.Inman.com today. You have to click on a news article to see the letters, which run off to the side, but they are never up for more than a few hours, at least not for non-subscribers.

Dear Editor:
Inman, where's the article about the walk-away builders, developers and Wall Street MBA securitization specialists? When a Trump, a Levitt, a Lennar or a Technical Olympic walk away from commitments made to customers, employees and suppliers by rolling to a Chapter 11, it's a "titan" of business making a good "business decision."
Wall Street is in the process of receiving the biggest easy-money bailout in history from the Fed with no other consequence than having to drive a 2005 Bentley for an extra year or two. The Merrill Lynch CEO got fired with a severance package that equals the GDP of some small countries.
When a homeowner walks away from a bad decision, it is some kind of failure of the moral fabric of society. These unfortunate homeowners are making a business decision for which there are consequences that they will have to bear for years. Wall Street gets a blemish on the quarterly earnings report and a tsunami of cheap capital with which to rebuild their balance sheets and to reimburse pension funds and municipalities for unsuitable CDO/SIV investments.
A more interesting report would be to tally all the announced Wall Street bonuses and reported earnings from 2002 to 2006 and see how much of all this negative equity was sucked into Wall Street's coffers.
Also see how billions of dollars have been lost out of pension fund and local government treasuries, which the taxpayers will be forced to replace. How many pension funds have been forced into underfunded status?
Thomas Johnson
Houston, Texas

It is far easier and in the end more profitable for Inman as well as other media outlets to attempt to place the blame on the average person Âas opposed to the hugely powerful RE/finance community.

AndÂsince they have a certain percentage of the population eating out of their hands in actually falling for the party line that it is all because of the borrowers, one canÂt really blame them for continuing to pretend that the emperor really is wearing clothes.

Which begs the real questionÂwho is the most "stupid"? Those who did not know better, and got themselves into a pickleÂÂ.or those who continue to remain in denial in terms of the fact that those who caused the problem, have made millions and more doing soÂand, are rewarded for their "accomplishment"?

Once againÂfollow the $$$$$$$$$$$$$$$

Here is another story about just how far reaching this game has become..with a whole new twist...lengthy, yes...but worth reading...

Excerpt:

"....The Mahers claim Lehman's money managers were negligent and violated federal securities regulations when they placed more than half of the $600 million in so-called auction rate securities allegedly tied to two now-troubled bond insurance companies, MBIA and Ambac Financial.

The outcome of the dispute, experts said, may hinge on whether the Mahers can prove the choice of investments was a deliberate attempt by Lehman Brothers to dump securities on an unwitting client as the sub-prime mortgage crisis boiled over last summer.

For years, auction-rate securities were considered good investments for institutions and wealthy individuals who wanted to park their money for a short time and still earn an attractive interest rate. They were seen as alternatives to money market funds and short-term commercial paper.

They were also considered safe.

Auction-rate securities are debt instruments -- issued by entities such as municipalities, hospitals and housing finance agencies, as a way of generating money. While they are rated as long-term bonds, they are sold as short-term securities at periodic auctions, hence their name.

The auctions occur as frequently as every seven days when the interest rate is reset. Every time an auction is held, investors are able to pull out their original investment plus interest as other buyers replace them.

While the high yield and ability to access the money are benefits, the single biggest risk is that an auction will fail -- that there won't be buyers to replace the original ones. When that happens, the value of the security can plunge. But it's so rare as to be almost inconceivable.

That's why no one was prepared for what happened last summer when subprime mortgage market collapse.

THE AUCTIONS FAIL

The lion's share of the Mahers money, according to the claim, was invested in auction-rate securities tied to the bond insurers MBIA and Ambac Financial.

Bond insurers write policies ensuring lenders will be reimbursed if the borrower can't pay back the money, and they play a critical role in the debt market. State governments, for instance, cannot raise money by selling bonds without insurance.

But over the last few years, the insurers entered into riskier investments such as subprime mortgage securities. Now, they're under fire from debt rating agencies, who fear they don't have the cash to cover claims.

In early August, the Mahers claim Lehman used nearly $168 million of their money to buy auction-rate securities despite an earlier failed auction, which prevented a set of similar corporate securities from being sold, according to the Mahers claim.

Around Aug. 14, Lehman tried to sell a security held by the Mahers. That auction also failed. Four days later, the Mahers allege Lehman reinvested more than $57 million despite three more failed auctions.

Lehman declined to comment on specific allegations.

By late August, roughly a month after the account was opened, John Liu, the Mahers advisor-friend, received a monthly portfolio statement from Lehman detailing some of the investments. In two e-mails to Will Gourd, one of Lehman's money managers, Liu complained about the firm's choices.

In the claim, the Mahers said Lehman liquidated a small portion of securities in their portfolio, but "either did not or could not liquidate a majority of them, as the auctions associated with them failed and continue to fail."

At least one of the securities that could not be sold, dubbed Double Oak Trust Series 2007-1, was insured by MBIA.

What that means for the Mahers is this: $286 million remains tied up in securities that cannot be sold because no one wants to buy them. But what's worse, no one is certain what the securities will be worth once the credit crisis passes.

Typically, brokerage firms require investors to sign an agreement saying they will arbitrate any problems. So, it will be left to the arbitrators to decide whether Lehman did something wrong or whether the Mahers were swept up in a set of circumstances that turned what would be an ordinarily safe bet into a bad one.

"It's likely Lehman is going to tell a different story," said Thel, the Fordham professor, before adding, "If the facts are as they allege, they (the Mahers) have a substantial chance of prevailing."

Charles Jones, a finance professor at Columbia's Graduate School of Business, said arbitrators will take into account what was promised by Lehman and the sophistication of the Mahers.

"They could be sophisticated businessmen, but that does not always translate to sophistication about investments," he said. "It will depend on a whole set of factors that are impossible for us to see as outsiders." "

Wow.

I guess in a small way, it's reassuring to see that people w/ $300 million to invest can get duped just like the rest of us.

Altho, I'd never ever put all my eggs in one basket like that. It's currently highly annoying that all the baskets seem to be crumbling at the same time, however.

housenewbie: "Altho, I'd never ever put all my eggs in one basket like that. It's currently highly annoying that all the baskets seem to be crumbling at the same time, however."

In the full article, it explains that another portion of the money was invested with UBS...and they followed all instructions......and are therefore not involved in the above matter.

That said...stashing the cash in the mattress is starting to look like the only sure way to go in at least keeping what you have...either that, or continue to allow Wall St. to gamble with our money...and also reap the benefit of a win..regardless of much we lose.