Time Tunnelling
The mistake we make, to listen to one of the more trusted individuals in American business today–the Oracle of Omaha–is to look back too much. Maybe because we’re out of practice, or maybe because there’s no such thing as being in practice, America and Americans aren’t getting it when it comes to reckoning that we’re in an economic state of war.
Warren Buffett may sit for hours on CNBC, and he may articulate in sweeping affirmatives what two million of the suddenly unemployed have been living–that the economy fell off a cliff since September 2008.
Our collective minds may gravitate back to the 1930s, or they may draw back to when this or that political party threw its weight behind policy that has come back to haunt us, or they drift back to when home prices de-coupled from the anchor economic trends that kept them sane until the early years of this millennium.
Importantly, and you can read it in the transcripts as well as to view it on video, it’s Buffett’s belief that it’s a moment that we have little choice but to get along together better than we’ve got a history of doing.
People–when you have a Pearl Harbor, you have to know the nation is going to be united on December 8th to take care of whatever comes up. And we have little squabbles, otherwise we put them aside and everybody goes to work on defense plans, we start building planes, we start building ships, even though they’re not going to be ready tomorrow, people join. The Army doesn’t blame the Navy because there were too many ships in Pearl Harbor, and it shouldn’t have happened. The Army doesn’t say, `Well, it was your fault, so we’re not going to send our troops.’ None of that sort of thing. We got united, and we really need that now.
It would be almost comical were it not so distressing, we have three forces at incredible odds with one another right now, locked in a no-win, no-win, no-win situation. Wall Street in one corner, Washington in another and Main Street in a third, with a cacaphony of economists trying to be heard in the din of it all.
If the housing crisis were but a housing correction, it would be a simpler world. But it’s not. As Michael Shedlock, a k a, Mish, says, we need to prepare to time tunnel backwards to an ear or a year when house prices were obedient asset values that never strayed from their mean relationships to incomes and rents.
Here’s the look and outlook posted on Mish’s site, an analysis of S&P Cash-Shiller data.
Click on image for enlarged view.
Here’s the commentary from Mish.
My take is unemployment is going to soar in 2009 along with foreclosures, credit card writeoffs, and bankruptcies. That will add to the inventory problems. Thus it is extremely unlikely that housing bottoms anytime soon.
And as much as housing prices have declined, take another look at the second chart in the news release above. Imagine where prices will be if they fall back to 2002 levels or worse yet 2000 levels. Moreover, why shouldn’t prices fall back that far? Finally, how many are prepared for it, if indeed that were that to happen?
Clearly, if you care to heed the Oracle of Omaha, being “prepared” is not simply an issue of “sizing” or “capacitizing” business to the level of some year in the earliest dawning of the 2000s. Being prepared will draw on resourcefulness and the opposite of “business-as-usual” behavior. It will involve working together creatively to get out of this thing, sometimes with the people one tends to want to trust the least. That’s what being at war means.
New Household Product Idea: Debt B’ Gone
The New York Times’ editorial published yesterday, “Helping the House Poor,” echoes in more ways than not the observations of Wall Street and Maine‘s bureau manager and chief bottle washer Bill Gloede, who wrote about the Obama housing plan immediately after the President unveiled it.
The key conclusion of the Times’ editorial:
A better way to lower the monthly payments for these people is to reduce the principal remaining on the loan. That way, the payments become affordable and, as equity is rebuilt, the borrower has both an incentive and the means to keep current. The Obama plan provides subsidies for lenders to reduce principal balances, but the option is not promoted as prominently as simply reducing the interest rate. That’s a shame. It is a better way to go, but lenders prefer interest-rate reduction to principal reduction, in part, because it appears to minimize the loss they have to recognize upfront.
This is where Congress can make a difference. On Thursday, the House passed a bill that would allow bankrupt homeowners to have their loans modified in bankruptcy court, where the most common solution is to reduce the principal. The bill is overly restrictive, but if passed — and if the Senate doesn’t weaken it any further from the House’s version — it could give underwater homeowners another way to keep their homes.
Perhaps more important, lenders are more likely to pursue sound modifications if the alternative is to face the borrower in court. Best of all, modifying loans via bankruptcy proceedings costs the taxpayer nothing. The costs are borne by the borrowers and the lenders.
Homeowners — like the banks, much of corporate America and the government itself — are suffering under the weight of excessive debt. The Obama plan will make mortgage indebtedness more manageable, but ultimately the debt itself needs to be greatly reduced. The sooner we as a nation move in that direction, the better.
Hence, we need a consumable packaged good product–”Are You Listening Procter & Gamble and Unilever?–Debt ‘B Gone.
Cramdown Jamming Part III
Ok, we’ve hit triple-sticks on the mortgage cramdown theme. Here’s a CNBC update on the House’s having voted yea to a legislative measure that would allow bankruptcy judges to lower the principal on mortgages for homeowners who are going through bankruptcy proceedings.
Seen by Democratic supporters as vital to stabilizing the crumbling U.S. real estate market, the so-called “cramdown” bill has been opposed by bankers, despite amendments to limit its scope, including one restricting it to existing mortgages.
The Senate was expected to consider its own version of the House bill soon, but chances of passage are uncertain.
The Wall Street Journal adds this piece of analysis, which gets at a fast-emerging phenomenon in Congressional debate–the rise of centrist Democrats’ influence in voting outcomes. This may take some of the more extreme liberal edge out of the policy agenda, and make for a more politically dynamic debate on issues.
Supporters of the move say the proposal to give courts cram-down authority could spur mortgage servicers to move aggressively to help borrowers, in order to avoid having modified loans forced on them by a judge.
Much of the financial-services industry opposes the proposal, saying it would create uncertainty in an already troubled market and force them to raise the cost of lending. Nodding to those business arguments, a coalition of moderate Democrats blocked an earlier version of the bill. The moderates argued that greater efforts were needed to ensure that homeowners make good-faith attempts to work with their lenders, before going into bankruptcy.
Please have a look at an earlier post on cramdowns for a best-explanation of how they work and what they can impact.
Cram Down Legislation: If Only Ty Pennington Could Get At It
To suggest that housing crisis problems we’re dealing with on March 4, 2009 are semantic in nature wouldn’t be fair.
Still, “cram down,” whether you hyphenate it, make it two words, or one, is just plain unsavory as a term. Which is probably why it stirs eruptions of vitriol about who’s getting stuck with what as conversation about whether it’s an appropriate tactic to bring to bear as smart people try to come up with smart strategy to battle the fact that people are losing their livelihoods by the 700ks every time we turnaround thanks to housing’s free-fall.
Whoever made up the term cram down is probably the same kind of person who’d invent that kind of plastic packaging that winds you up in the emergency room when you try to get at the electronic device you bought and want to open. Those people should go to a dark, fiery place for all eternity.
Two events gave us an idea about all this. The idea is basically this. Hire an ad agency, like R/GA in New York, and stop calling things names that sound vaguely like sticking a finger down your throat to get the desired effect. I.E. Brand the bugger!
Now that we’ve tipped you off to the idea, we’ll tell you about the two events that led to it. One was this. Did you notice something weird this week? U.S. Treasury Secretary Tim Geithner talked–a lot, and under a lot of pressure–and the stock market didn’t go into a WWI-style air casualty. Why? Branding. If Tim Geithner can be media trained into greater proficiency in selling in his genius to America’s elected representatives and to white-knuckled Wall Street investors, then, by all means, let’s fully explore the possibilities here.
For instance, look here. It’s New Deal 2.0, a promise of big government value on your taxpayer dollar.
Click image to original Wall Street Journal coverage on Obama's branding of the recovery in "Real Time Economics."
Who, after all, will be our protracted downturn’s Diego Rivera?
Now, back to cram downs. Here’s a prophetic Calculated Risk post from 2007 that’s about the best explanation and rationalization for the procedure that we’ve seen to date. In other words, it’s not about being overly generous to those homeowners who might be undeserving. It’s about making lenders pay the price for their greedy, unscrupulous practices and setting up a standard by which they’d never do it again.
I have some sympathy with the view that mortgage lenders “perform a valuable social service through their loans.” That’s why, when they stop doing that and become predators, equity strippers, and bubble-blowers instead of valuable social service providers, I like seeing BK judges slap them around. Everybody talks a lot about moral hazard, and the reality is that you’re a lot less likely to put a borrower with a weak credit history, whose income you did not verify and whose debt ratios are absurd, into a 100% financed home purchase loan on terms that are “affordable” only for a year or two, if you face having that loan restructured in Chapter 13. If you are aware that your mortgage loan can be crammed down, I’m here to tell you that you will certainly not “forget” to model negative HPA in your ratings models, and will probably pay more than a few seconds’ attention to your appraisals. You might even decide that, if a loan does get into trouble, you’re better off working it out yourself, via forbearance or modification or short sale, rather than hanging tough and letting the BK judge tell you what you’ll accept. That would be a major bummer, right?
Fast-forward to the present for a more updated take, posted on The Huffington Post, from David Abromowitz, senior fellow at the Center for American Progress, which probably has an ideological bent we’re not entirely supportive of. Still, we’re behind the philosophy of the assertion here.
Congress needs to finally enact a bankruptcy reform bill that includes one of the few real tools for breaking the grip of the devastating downward foreclosure spiral. There are many sound economic and policy reasons for Congress to provide a judicially approved “cram down” possibility for homeowners. Yet one basic reason gets less mention — it is simply a matter of fairness.
Few Americans realize that single family homeowners living in their own primary residence are the only real estate owners without cram down protections in bankruptcy. As U.S. Bankruptcy Court Judge Louise DeCarl Adler has aptly captured it, “we could always rewrite the loans on John McCain’s second through ninth homes but not on his first.” Donald Trump wouldn’t — and couldn’t — sign away his right to have a bankruptcy judge reduce the principal mortgage balance of a loan on one of his properties, but a homeowner starts out with Congress having previously taken that option away. Maybe with 1 in 5 families with a mortgage owing more than their house is worth — most of whom borrowed within their means when they first took out their loan — and 8 or 9 million households still potentially facing foreclosure, Congress will put homeowners back on equal footing with real estate moguls.
The measure is said to be due for vote in the House of Representatives Thursday. That’s probably enough time for a good advertising agency to turn around a campaign to rebrand the issue, and give it an entirely more asethetically compelling value proposition.
Move that bus!
California Housing Crisis Takes a Star Turn
The Los Angeles Times reports today: As projects grind to a halt, home sites turn to wasteland (HT Calculated Risk). A key source of insight into the story is HousingCrisis.com sister company Hanley Wood Market Intelligence.
Click on image for access to LA Times article.
It’s a scene not uncommon throughout California, as residential construction grinds to a halt under the dual weight of the credit crunch and the housing crisis: a rusty chain the only barrier between the community and a half-built structure in Hollywood; a bare dirt lot in Pasadena; old stoves amid the trash at the site in Oakland.
“I hear hacking and see scary bonfires in the middle of the night,” said Don Johnson, a retired Coast Guard employee who lives near the defunct Oak Knoll Naval Medical Center in Oakland.
Nearly 250 residential developments with a combined total of 9,389 houses and condominiums have been halted in California, according to research firm Hanley Wood Market Intelligence. The units, worth close to $3.5 billion, were in various stages of development.
Now, many are in bankruptcy or have been foreclosed by lenders. Developers have halted sales on an additional 370 new-home developments — about 30,000 units worth $11.9 billion.
“It’s a sad state of affairs,” said Greg Doyle, regional director of Hanley Wood.
The ramifications of the paralysis–similar to the cost of health problems that are ignored–are that the costs of inertia redouble in direct opposition to the upside multipliers of new residential construction.
Here’s an observation on the issue from a more operational perspective, from Patrick Duffy, who writes the HousingChronicles blog.
One primary reason I’ve been banging the drum that there just wasn’t enough proper due diligence done on new home projects during the boom (or what was done could be considered fraudulent due to the manipulating of data leading to patently false conclusions) was the impact on these half-finished projects to surrounding neighborhoods.
Whether in Hollywood, Oakland or out the suburbs of the Inland Empire, everyone suffers for the actions of relatively few people. And while many projects were ceased simply because of a lack of funding, some should never have been built in the first place due to lack of demand at the price points required to buy the land.
Reset Reminder–Ryness Rolls a One-One
Outsourcing. Remember in-house resources were not enough to keep up with demand?
As the volume home building model re-sizes to battle 2001 or 2002 prices, questionable demand, and no access to operating funds from bank lenders, third party sales support is the last thing most operators need these days.
So, companies such as Ryness–which helped on the overheads, and flanked the internal sales resources with sales reps who looked and acted like one of the gang–are on the bubble of the real estate correction of the latter part of this decade.
Big Builder executive editor Sarah Yaussi has reported on the bankruptcy filing, with some intriguing extra detail into how tenuous Ryness’s capital structure had become during its go-go swansong years.
Click image for more info on Gary Ryness
We’re not surprised they’re going through this because it has been a difficult year,” said Steve Kaller, CEO of Ultimate New Home Sales and Marketing, a Ryness competitor in California. “You have to get people through the fear of buying, and then there are financing issues. Getting financing for anything that’s a jumbo is tough.”
However, other sources familiar with the company point to some untimely acquisitions and business partnerships. In 2004, the company expanded into Arizona, Nevada, and the Pacific Northwest. A year later, the company launched Sullivan Group Real Estate Advisors, a national market research and advisory firm. And then in 2006 came the acquisition of The Marketing Directors.
But of late, many of the partnerships have crumbled. Sources at the Sullivan Group have stated that the two firms parted ways two years ago. And other local sources stated that the parent corporation has turned some regional operations, particularly in California, back over to the original owners. Not to mention growing strains with key financial sources, leading to legal issues in 2008.
However, some of Ryness’ builder clients appear to be unfrazzled by the news of the company’s bankruptcy. One company’s Northern California group that uses Ryness for its sales staffing, indicated that it has been business as usual since the filing. In fact, management indicated that because many of the issues stem from the company’s East Coast acquisition of The Marketing Directors, it expected little fallout in California. Management also added that that it is pleased with its relationship with the Ryness team and looks forward to continuing to do business with them.
Gary Ryness, company founder and president, could not be reached for comment at press time. The industry has widely regarded Ryness as a sales and marketing expert. His leadership in the industry includes, but is not limited to, serving as an advisory board member for the University of Southern California’s Lusk Center for Real Estate, founding trustee of the national Builder Marketing Society, recipient of the Northern California home builder association’s sales and marketing council’s Lifetime Legend Award, and a 2002 inductee into the California Building Industry Hall of Fame.
Cramdown Jam Part Deux
Solutions often cause new problems. Economics solutions invariably create dismal science side-effect issues. Economic policy solutions cobbled together by Capitol Hill concessioneering engender issues with attitude. Bad attitude.
There are only two kinds of criticisms of President Barack Obama’s multi-pronged aspirations to “stop the downward spiral” of home prices, keep people in homes they can pay for [with a little help from their friends, the U.S. taxpayer], and restore some balance to housing’s convulsing economy. One is that he’s not doing enough. The other is that he’s doing too much.
Among housing economy experts, the key deficiency of the Obama Housing Affordability and Stabilization Plan is that it did not get at mortgage principal reductions–thereby obviating the potential effectiveness of mortgage rate buydowns contained in the strategy.
Debate about the consequence of principal reductions–the side-effects or estuarial run-off of the economic solution that they’d offer–focuses on their immediate economic efficacy and their related psycho-behavioral ramifications.
Importantly, we’re faced with urgency in understanding economics — both the math of it and the social implications of it — to a greater degree than most of us thought we’d ever have to. It’s fortunate, then, that there are places to turn for clear, accessible explanations and insight on a series of complex issues and events.
One such resource is Macroblog–done by the Atlanta Fed–which has a recent post that opens up and illuminates the mysteries of loan modifications’ impacts for those who are economically dumb as a doorknob, which includes us.
Here’s part of a Macroblog Kristopher Gerardi, research economist and assistant policy adviser at the Atlanta Fed, did on ” Foreclosure Mitigation: What We Think We know.”
Many borrowers might have been able to afford their mortgages while employed but can no longer do so after they have lost their jobs. When housing prices are rising and homeowners enjoy positive equity, then distressed borrowers are able to sell their homes to pay off their mortgages. Alternatively, such borrowers can undertake cash-out refinances to gain some much-needed liquidity. Note that problems can occur for people in this situation even when positive future equity is a realistic hope. If the borrower is unemployed and liquidity constrained, the cost of waiting to default is very high and potential future price gains are of little value. Default in this case is much more likely, even though future prospects might be reasonably good. In this case, foreclosure-prevention policy could simply be used to eliminate the financial friction. In this case a lender would offer “forbearance,” in which the borrower pays significantly lower payments for some period, with the arrears made up (with interest) later on. In this light, it is notable that the administration’s key payment reduction plan has a five-year window.
However, one important concern regarding the plan is that servicers/investors don’t have enough incentives to substantially decrease current DTI ratios. For example, if a household has a DTI of 60 or 70 because of a job loss, the servicer is responsible for modifying the loan to get DTI down to 38 and then still has to kick in a 50 percent match to further reduce it to 31. The costs borne by the servicer/investor are much larger than those borne by the government, which may not be such a bad thing in principal but in practice may result in low participation rates.
Now, about giving bankruptcy judges license to modify loans for homeowners who file for Chapter 13 protection, you can now give the matter more thought and with the insight of the Macroblog, you can weigh in more knowledgeably about which side-effects of the cramdown issue you want to throw your support behind.
Here’s an update from The Wall Street Journal on the status of Congress’s debate about cramdowns.
The legislation’s fate remains up in the air after Democratic leaders last week postponed a vote on the measure until Tuesday after support softened among some of the rank-and-file. That vote is now likely to happen no earlier than Wednesday due to a snowstorm that disrupted the House schedule.
According to one person familiar with the matter, Democrats may push consideration of the measure until later in the week in order to allow time to hash out a compromise with the measure’s Senate sponsor, Sen. Richard Durbin (D., Ill.)
Led by Rep. Ellen Tauscher, (D., Calif.), a group of centrist pushed last week to lengthen from 15 to 30 days the advance warning borrowers must give to lenders before seeking a judicial modification. Borrowers would also have to prove they provided the lender with statements of income, expenses and debt.
But many Democrats still have misgivings about the bill, with 26 voting Thursday against a related procedural motion, which has spurred the fresh talks.
Lawmakers from conservative districts remain wary of supporting legislation they fear will be watered down by the Senate. Republicans, who largely oppose the measure, hold considerable sway in the upper chamber.
Stay tuned.
Cramdown Jam — Monday Critical
If weather doesn’t shut down the government on Monday, it’ll be an important day on Capitol Hill for housing. Debate over a measure that would give bankruptcy judges jurisdiction to modify the principal on home mortgages of home buyers who’ve hit a wall hit an impasse last week and Monday’s the moment for it to come to the fore for resolution.
The Huffington Post picked up this analysis of the issue on mortgage cramdowns from CNN.
The so-called cramdown provision could put pressure on loan servicers to modify mortgages before borrowers file for bankruptcy.
A major critique of the voluntary modification programs is that servicers aren’t doing enough to help struggling borrowers. But servicers will likely be more aggressive in working with homeowners if they know that the borrowers can turn to judges for relief.
“Reforming mortgage bankruptcy laws is the only remedy available that will provide the stick to go with the carrots that we have offered lenders to modify mortgages voluntarily,” said Rep. Brad Miller, D-N.C., who worked on the legislation.
But congressional Democrats, who first introduced a bill broadening judges’ power two years ago, are running into trouble gathering the support needed to pass the legislation. The House postponed a vote on the measure until early this week after a group of centrist Democrats voiced concerns. And its future in the Senate remains in doubt with many powerful Republicans strongly opposed to the legislation.
The House bill would allow judges to modify loans originated before the legislation’s enactment. It would let the courts change mortgage terms to make a loan more affordable, permitting judges to reduce the principal to the property’s market value, a step servicers loathe.
If it snows 12 inches in DC Sunday night, the deadline may get pushed back and more deliberation could illuminate the complexities of the issue for members of Congress.
We Ask Why Not?
RGE Monitor, an economics intelligence piece led by New York University econ guru Nouriel Roubini, maps out the math of mortgage stop-loss modification. The piece is entitled “The Housing Crisis and Bankruptcy Reform: The Prepackaged Chapter 13 Approach.”
Since about 10% of the $10 trillion mortgages are currently delinquent or in the foreclosure process, the expected deadweight loss for the delinquency started so far will be at least $300 billion or $1,000 per American. Avoiding this loss should be a top legislative priority. A major puzzle is why the market does not avoid these losses. Lenders can do better if they renegotiate loans rather than foreclose on them. To see why, suppose that the outstanding debt on a house is $200,000, the market value of the house is now $150,000, and the foreclosure value of the house is $100,000. If the lender forecloses, it obtains $100,000 at best. Alternatively, it could renegotiate the loan with the homeowner for, say, $140,000. The homeowner now owns a house worth $150,000, and the bank owns a loan worth $140,000. The homeowner could resell the house and obtain a profit for $10,000, or keep the house—in either case, the foreclosure inefficiency of $50,000 is avoided, as are the negative effects on neighboring houses. With millions of houses currently in foreclosure or close to it, the cost savings from loan renegotiations could be enormous. However, if loan renegotiation is desirable from an ex post perspective, it can nonetheless create problems for banks, which must take into account the effect of loan renegotiations for future credit transactions. If borrowers with outstanding mortgages observe that other borrowers benefit from loan renegotiations, then they will realize that they, too, may be able to renegotiate their mortgage if otherwise they would default. If homeowners anticipate the possibility of renegotiation, they might deliberately maintain thin equity margins so that they can credibly bargain for a loan renegotiation if the value of the house declines. As a result, many banks appear to have a policy of either not renegotiating loans or doing so only in unusual circumstances.
What would become of the Stress Test if a bank adopts this approach? It’s certainly worth exploring. Rescue policy fatigue is setting in big time.
C.P. Morgan — Any Takers?
The Indianapolis Business Journal reports: C.P. Morgan shutting down. Big Builder has the story.
C.P. Morgan Communities, the most prolific builder in the Indianapolis area for a decade, plans to shut down for good tomorrow, another victim of the worst housing slump in a generation.
“This is one of the most difficult decisions I’ve ever had to make,” owner Charles P. Morgan said in a statement. “With home prices dropping precipitously, resulting in millions of foreclosures, we believe our industry will be in trouble for many months to come. Unfortunately, I believe it’s a crisis that will swallow up many companies like ours all across the nation.”
More square feet. Less money. This was the company mantra, and it made them a living in Indianapolis of all places–ground zero of foreclosures before foreclosures were everywhere. C.P. Morgan made every go of it they could, going from zero to No. 1 in the Charlotte marketplace in a 12-month period from 2006 to 2007.
Here’s their press statement:
HOMEBUILDER C. P. MORGAN GOING OUT OF BUSINESS
INDIANAPOLIS – Citing untenable market conditions, homebuilder C. P. Morgan Homes Inc. announced today that it is closing its doors and ceasing operations effective Friday, February 27.
One of Central Indiana’s most dominant builders of single-family homes for more than two decades, the Morgan firm said the collapse of the real estate industry “makes it impossible for us to serve our customers effectively and remain viable.”
“This is one of the most difficult decisions I’ve ever had to make,” said Charles P. (Chuck) Morgan, the company’s founder and chairman. “With home prices dropping precipitously, resulting in millions of foreclosures, we believe our industry will be in trouble for many months to come,” said Morgan. “Unfortunately, I believe it’s a crisis that will swallow up many companies like ours all across the nation.”
Morgan said all homes under construction have been completed. Applicable warranties on all Morgan homes will continue to be honored by a residential warranty company as outlined in each homeowner’s warranty manual.
“This definitely is not what I contemplated when I started the company in 1983,” said Morgan, “but this is the worst catastrophe I’ve seen in our industry in my lifetime. I could never have imagined this outcome, even as recently as six months ago. We have done everything possible to prevent this from happening. From the very beginning, our goal was to provide more people with more home than they ever dreamed possible. I believe we achieved that goal.”
In its 26-year-existence, the company has built more than 25,000 homes in some 200 Indianapolis and Lafayette, Ind., neighborhoods, plus the Charlotte and Piedmont Triad areas of North Carolina. The firm marketed mostly to first-time homebuyers, with homes ranging in size from 1,000 square feet to 4,000 square feet and ranging in price from $80,000 to $200,000.
Honored many times, the company most recently received the 2007 Innovation in Workforce Housing Award from the National Association of Home Builders. That same year it was selected among thousands of homebuilding companies for an APEX Award for innovation in homebuilding practices.
The company was given the National Housing Quality Silver Award in 2006, the industry’s highest recognition for quality achievement and world class business practices.
Morgan said he is especially proud the company has been recognized by Indianapolis Monthly magazine for good employee relations, being named one of the Top 12 businesses to work for the Indianapolis metropolitan area.
“The hardest part of this decision for me has been our associates who have worked tirelessly over the last several months to prevent this from happening,” said Morgan. “I’m extremely grateful for their exceptional commitment to our company, which only adds to the sadness I feel about closing our doors.”