The Horsham, Pa., homebuilder made $26 million, or 16 cents a share, for the quarter ended July 31, down from the year-ago $175 million, or $1.07 a share. The latest quarter included $147 million worth of pretax writedowns. Before those costs, latest-quarter earnings were 70 cents a share.
Toll said net orders fell 23% from a year ago, while cancellations were 24% of current-quarter contracts and 6% of quarter-beginning backlog.
``We, along with many others, are concerned about the dislocation in the secondary mortgage market," said CEO Bob Toll. "We maintain relationships with a widely diversified variety of mortgage providers, most of which are among the largest and, we believe, most reliable in our industry. With few exceptions, the investors who provide our customers with mortgages continue to issue new commitments. Through our third-quarter-end, our buyers generally were able to obtain both conforming and jumbo loans (loans over $417,000).
``Nevertheless, tightening credit standards will likely shrink the pool of potential home buyers: Mortgage market liquidity issues and higher borrowing rates may impede some customers from closing, while others may find it more difficult to sell their existing homes. However, we believe that our buyers generally should be able to continue to secure mortgages, due to their typically lower loan-to-value ratios and attractive credit profiles."
The news comes as the mortgage-lending industry has been decimated by rising defaults and delinquencies on recent loans to homebuyers with poor credit histories. The spike in bad loans has chased investors from the once-hot secondary market for mortgage securities, sending lenders from
scampering to find new sources of funding loans.
The report comes just a day after a Bank of America analyst downgraded Toll, citing rising rates and reduced availability for so-called jumbo mortgages, those bigger than the $417,000 conforming-loan limit set by government-sponsored mortgage investors.
Toll declined to offer guidance for the fourth quarter.