Battered small developers face collapse 

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As home sales slow around the country, many small builders on are on
the brink of bankruptcy as inventory and land remains unsold. As they
fall behind on interest payments, they face foreclosure on
developments. Some are financing developments with “recourse debt,”
meaning that if a default would lead to banks seizing homes and
personal assets. Smaller regional banks also face losses, after they
turned to construction lending when large national lenders muscled them
out of the mortgage business. Federal regulators’ decision on Wednesday
to allow Fannie Mae and Freddie Mac to inject up to $200 billion into
the mortgage market could alleviate the credit crunch and boost sales.  

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