David Kirkpatrick

December 13, 2009

Banks v. homeowners

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 2:56 pm

I’ve already blogged about what banks are doing to small business, and the overall economy as a result. Here’s more of the same tight-fisted lending practices (with those tight fists wrapped around taxpayer’s money via the various bailouts) geared toward homeowners looking to refinance during this time of ultra low interest rates courtesy of the government.

From the second link:

Mortgage rates in the United States have dropped to their lowest levels since the 1940s, thanks to a trillion-dollar intervention by the federal government. Yet the banks that once handed out home loans freely are imposing such stringent requirements that many homeowners who might want to refinance are effectively locked out.

The scarcity of credit not only hurts homeowners but also has broad economic repercussions at a time when consumer spending and employment are showing modest signs of improvement, hinting at a recovery after two years of recession.

September 16, 2009

Averting a blow to the economy

Maybe. It’s rarely discussed, but there is a major economic crisis coming down the pipe in 2012 or so in the form of commercial real estate paper.

Essentially in the years right before last year’s meltdown most everyone in large-scale commercial real estate was doing what I’ve heard described by a player in the field as “bad deals.” That person said everyone knew the deals were bad (as in not economically feasible unless conditions remained optimal — we all know that’s no longer the case), but did them anyway because that was the only way to continue doing business in the mid- to late-2000s.

Looks like the IRS is making proactive moves to try and take some of the brunt out of this looming economic event.

From the link:

The IRS issued new rules Tuesday designed to make it easier to refinance somecommercial real estate loans in an effort to curb the number of defaults.

The rules would allow commercial loans that are part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without triggering tax penalties for investors.

The investment pools were designed to encourage mortgage-backed securities by offering tax benefits not typically available through other investment vehicles. However, under the old rules, investors could have lost those benefits if loans in the portfolio were restructured.

The new regulations come as Wall Street braces for a wave of defaults on commercial real estate loans. More than 90 U.S. banks have already failed this year. Hundreds more banks are expected to fail in the next few years largely because of souring loans for commercial real estate.

“These changes will affect lenders, borrowers, servicers, and sponsors of securitizations of mortgages in REMICs,” the new regulation says.