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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: mishedlo who wrote (57575)7/12/2006 2:56:18 PM
From: jpk1Read Replies (2) of 306849
 
Usually one of the bigger progress payments you receive from the lender is when framing is complete. These amounts are typically in excess of what you owe your framing subs and can give you cash flow to keep operating. Often the lender will review your financials and if they see a large drop in orders they may have cut back on future financing. In other words get the money will you still can and hope the market improves.
That would be my guess as to whats happening.
At the same time by paying the workers directly they are saving the markup by the framing sub. Pay them directly by 1099 in hopes of avoiding insurance and unemployment taxes.

If the above scenario is right, the builder must be in big trouble.
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