The New York Times takes on Dunmore Homes

In a detailed expose set to run in Friday's paper, The New York Times tells the story of now-bankrupt Dunmore Homes, which built throughout California's Central Valley for decades. Before selling his company to an investor last year, Sidney Dunmore was also one of the state's most respected homebuilders, who built a solid home and was active in building industry associations. But as the market slowed, over-leveraged bets began to unravel, uncovering what the story says "have come to symbolize the real estate crisis not just for Dunmore Homes, but for an entire industry:"

When George P. Dunmore started his business in Sacramento in the early 1950s, World War II was over and the building boom was on. Over the next several decades his company, Dunmore Construction, along with other respected builders, took the tabula rasa that was California’s Central Valley and etched it with entire neighborhoods filled with well-built ranch houses on trim lawns...

But by the time Mr. Dunmore died last October, at age 89, his son Sidney found himself caught in the middle of a real estate collapse. Overextended and pursued by a long line of creditors, the company bearing the family name, Dunmore Homes, was sold to a New York corporation owned by a Sacramento-area mortgage broker for $500, including the assumption of liabilities totaling more than $250 million. Two months later, the new owner filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code...

The story of the Dunmores is the story of the nation’s housing crisis writ small, familial and mean: three generations of home builders who got rich from the go-go years of the California real estate boom, only to fall victim to the housing bust. And it is a tale of greed, hubris and denial of economic reality...

Throughout the 1980s and 1990s, Dunmore Homes expanded. The company formed more than a dozen subsidiaries throughout the state, with more than two dozen developments, many of them catering to first-time home buyers in need of subprime and nonconventional loans. The company eventually built a total of 22,000 homes....

Then, in late 2005, the housing slowdown hit the region, falling squarely on the corridor south of Sacramento, from Modesto to Merced, where the Dunmores had once been so successful. Builders began offering incentives to move homes as if they were cars on a dealer’s lot: low-interest financing, free appliances, anything to make a sale. By last year, the subprime mortgage industry was in crisis, credit had dried up and the younger Mr. Dunmore became no less reflective of an era than his father was of his...

John Slaughter, a spokesman for Dunmore Homes who left the company this week, recalled how “so much happened with the mortgage industry, and prices dropping, and all the foreclosures.”

“It got to where we were a private company, competing with the large billion-dollar companies that could continue to reduce prices, and we just couldn’t compete with that,” he said.

In September, Dunmore Homes changed its name to DHI Development and sold its assets for $500 to a New York entity called Dunmore Homes Inc. The new Dunmore Homes is owned by Michael Kane, a Sacramento mortgage broker. He declined to comment.

Mr. Kane got not just the assets, but debts amounting to more than $250 million owed to a lengthy list of creditors that includes banks, contractors, landscapers, electricians, plumbers and paving companies.