My question is do you think this is a good idea and if not, what’s wrong with it?

http://www.ritholtz.com/blog/2011/07/you-want-to-fix-the-u-s-economy-heres-a-start/

Here is the text of the link:

Charles Hugh Smith publishes Foreclosure Crisis Weekly, dedicated to documenting the often-amazing foreclosure crisis.

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A simple 8-point plan would restore both the banking and the real estate sectors, and end the political dominance of the parasitic “too big to fail” banks.

Craven politicos and clueless Federal Reserve economists are always bleating about how they want to fix the U.S. economy and restore “aggregate demand.” OK, here’s how to start:

1. Force all banks to mark all their assets to market at the end of each trading day, including all derivatives of all types, including over-the-counter instruments.

2. Allow citizens to discharge all mortgage and student loan debt in bankruptcy court, just like any other debt.

3. Banks must mark all their real estate to market weekly as defined by “last sales of nearby properties” adjusted for square footage and other quantifiable measures (i.e. like Zillow.com).

4. Require mortgage servicers and all owners of mortgage-backed securities to mark every asset within each pool to market weekly.

5. Any mortgage, loan or note which was fraudulently originated, packaged and sold, including the misrepresentation of risk, the manipulation of risk ratings, fraudulent documentation by any party, etc., will be discharged as uncollectable and the full value wiped off the books and title records without recourse by any of the parties.

If a bank fraudulently originated a mortgage and the buyer misrepresented material facts on the mortgage documents, then both parties lose all claim to the note and the underlying asset, the house, which reverts to the FDIC for liquidation, with the proceeds going towards creditors’ claims against the bank.

6. Any bank which misrepresents marked-to-market asset values will be fined million per incident.

7. Any bank which is insolvent at the end of a trading day will be closed and taken over by the FDIC the following day, and liquidated in an orderly manner via open-market auctions of all assets, including REO (real estate owned).

8. All derivative positions held by the insolvent bank will be unwound immediately, and counterparties who fail to make good on their claims will also be closed, given to the FDIC and liquidated.

You know what this is, of course: a return to trustworthy, transparent accounting. And you know what the consequences would be, too: all five “too big to fail” banks would instantly be declared insolvent, and most of the other top-25 big banks would also be closed and liquidated.

At least trillion in impaired residential mortgage debt would be written off, maybe more, and trillion in impaired commercial real estate would also be written down. Derivative losses are unknown, but let’s estimate it’s at least trillion and maybe much more.

If .8 trillion of fantasy “value” is wiped off the nation’s books, that’s only a 10% reduction in net household and non-profit assets, which total trillion. Even an trillion hit would only knock off 20%. If that’s reality, if that’s what the assets are really worth in the real world, then let’s get it over with. Once we’ve restored truthful accounting and stopped living a grand series of debilitating lies, then the path will finally be clear for renewed growth.

The net result would be the destruction of the political power of the “too big to fail” banks, the clearing of the nation’s bloated, diseased real estate market, and the restoration of trust in institutions which have been completely discredited.

Bank credit would flow again, and we could insist on a healthy competitive system of 250 small banks instead of a corrupting system of 5 insolvent parasitic monsters and 20 other bloated but equally insolvent financial parasites.

Those who lied would finally get fried. At long last, those who misprepresented income, risk, etc. would actually pay some price for their malfeasance. Criminal proceedings would be a nice icing on the cake, but simply ending the pretence of solvency would go a long way to restoring banking and real estate and ending regulatory capture by TBTF banks.

What’s the downside to such a simple action plan? Oh boo-hoo, the craven politicos would lose their key campaign contributors. On the plus side, the politicos could finally wipe that brown stuff off their noses.

Location:
East Bethel, Minnesota

Summary:
The property in question was purchased about 10 years ago and split into 2 parcels of land; with separate financing. The commercial property is all along the highway with the residential behind it. The driveway first leads to the commercial property, with the residential property land locked behind it; no other entrances to it. The loan on the residential, sorry to say, has gone into foreclosure. They are taking my house at the end of the month.

Question:
Do I have to let the owners of that land go through the driveway in my business? Someone told me today that Minnesota law says that I cannot land lock a piece of land like that, and will be forced to allow them through my commercial property. Do they have to pay me for this right of way? I do not know how this all works and would really appreciate a knowledgeable answer. I do not have the financial resources to bring these questions to a lawyer. Anyone know where I could find out for free if nobody here knows the answers?

Daniel

Location:
East Bethel, Minnesota

Summary:
The property in question was purchased about 10 years ago and split into 2 parcels of land; with separate financing. The commercial property is all along the highway with the residential behind it. The driveway first leads to the commercial property, with the residential property land locked behind it; no other entrances to it. The loan on the residential, sorry to say, has gone into foreclosure. They are taking my house at the end of the month.

Question:
Do I have to let the owners of that land go through the driveway in my business? Someone told me today that Minnesota law says that I cannot land lock a piece of land like that, and will be forced to allow them through my commercial property. Do they have to pay me for this right of way? I do not know how this all works and would really appreciate a knowledgeable answer. I do not have the financial resources to bring these questions to a lawyer. Anyone know where I could find out for free if nobody here knows the answers?

Daniel
When I originally purchased the property I was going to have a frontage road put in, so their was an easement on the commercial property for the house to use land going to the side road when the frontage road was installed. However, my finances fell through and the road never got built. The easement was put into place, however it was specified for the frontage road usage. Is this transferable now to the driveway going through the commercial property?

1. The following three one -year "discount" loans are available to you:
Loan A: 0,000 at a 7% discount rate
Loan B: 0,000 at a 6% discount rate
Loan C: 0,000 at a 6.5% discount rate

a. Determine the dollar amount of interest you would pay on each loan and indicate the amount of net proceeds each loan would provide.Which loan would provide you with the most upfront money when the loan takes place?

b. Calculate the percent interest rate or effective cost of each loan. Which one has the lowest cost?

2. Assume that you can borrow 5,000 for one year from a local commercial bank.

a. The bank loan officer offers you the loan if you agree to pay ,000 in interest plus repay the 5,000 at the end of one year. What is the percent interest rate or effective cost?

b. As an alternative you could get a one-year, 5,000 discount loan at 9% interest. What is the percent interest rate or effective cost?

c.Which one of the two loans would you prefer?

3.At what discount loan interest rate would you be indifferent between the two loans?

3. Rearrange the following accounts to construct a bank balance sheet for Second National Bank. What are the total amounts that make the bank’s balance sheet balance? (m=million$)

Demand deposits :million
Cash assets: 5 m
Loan secured by real estate: 30m
Commercial intdustrial loans : 18m
Owner’s capital:6m
Government Securiies owned: 7m
Bank fixed assets:14m
Time and saving depos: 40m
Federal funds purchased: 6m
Other long term liabilites: 2m

Thank you!!!!

We are 30 years old and have a little over 200,000. mortgage. Even in this economy we have over 100,000. in equity because my husband built our home. We have no investments other than our home and my husbands display lot (he is a carpenter and building garages and storage sheds, this lot is a commercial piece of property and we owe about 35,000. it would sell right now for about 70,000. with some time on the market.) These two real estate investments are it for us. We have been making extra payments on the commercial lot and hope to pay it off int he next 5 years. We usually pay about 0.00 extra on our home each month. We are a corporation so we choose not to pay into S.S. We do qualify for it though because we have paid in for enough years. We need to think about our future and we just aren’t sure where we need to focus our attention….Pay the mortgage off asap or invest in a IRA or what? I will really look forward to some intelligent advice!!!! Thanks so so much!
P.S. We have very small car loans totaling about 10,000. for both vehicles. We have a very low interest rate on a school loan.

Now that the crooks are trying to liquidate them? "The Daily Capitalist Blog" said It is different at the regional and local banking level. Most of them held on to their bad loans as long as they could to avoid recognizing losses, which would require them to either raise more capital or fail. The banking regulators have largely facilitated this approach by suspending mark-to-market rules, requiring them to take TARP money, plus other accounting rules.

See the rest of this post if interested

http://feedproxy.google.com/~r/TheDailyCapitalist/~3/OxKJFw3TBnk/

But these lenders cannot hold back the flood. Both commercial and residential real estate continues to decline in value. There was so much overproduction (malinvestment) that four years after the crash the problem still festers. The result was that these banks tightened up lending standards, were wary of committing to new loans, and kept bad projects on life support hoping that things would turn around. Thus the credit crunch. They are the lenders that one-half of American businesses rely on for credit.

But now is there a growing trend to liquidate these investments

I am looking to purchase commercial real estate for private use with a loan. I want the property in my name and not a business name. Do I need to get a commercial property loan or can I get a standard mortgage through my bank? I’m curious to know what my options are.

if you went to an institution that specialized in real estate mortgage loans to request a first mortgage loan for your new house, you would probably be at a
1. Commercial Bank
2. Real estate broker
3. Saving and loan
4. brokerage company

All these options seems right to me… PLZ HELP here Guys!

The business I own is considering a Commercial Loan. I would like to know if I default on this loan are any of my personal assets at risk for being taken such as Social Security, pension benefits, Real Estate, Insurance policies, Annunities, bonds, or Stocks

Trying to understand this statement "permanent loans on commercial real estate with amortizations ranging from 15-25 years and maturities of 5-7 years". How can a loan have a 5 year maturity and a 25 year amortization? If it matures at five years, I would’ve thought that is when the loan is due so there would be no further amortization, on the other hand if it is amortized over 25 years, it couldn’t possibly be "mature" at five years.

Clearly I’m not understanding something here.

Thanx for your help,

how did real estate loans at commercial banks affect the economy
and how did adjustable rates and subprime mortgages rather than long-term fixed mortgages contribute to the financial crisis?

I need a hard money loan or a asset based loan. Lenders from the nyc area please. I don’t want any other type of loan(conventional loan).

terms desired are non recourse

I can’t believe how misinformed and easily manipulated people are. Some people still think the Dems were solely responsible for the mortgage blowout because they FORCED banks to give bad loans.

What a crock of crap–the banks freely and willingly peddled trillions in bad loans because they were making truckloads of $$$$$$$$$$$$$$.

The sub-primes for minorities were a minuscule portion. Think about it, the are MINORITIES and many of those mortgage had LOW balances because much minority real estate is valued way less than the rest of the nation.

Also, Fannie and Freddie only do RESIDENTIAL mortgages. What about all the commercial mortgages that went belly up.

My partner bought his first house in January and we havent had any trouble making the repayments on his wages alone. I recently graduated with my BHSc but even so my nett income is only around 2500p/month at the moment. I’m thinking about buying a small (tiny!) office in a trendy area for 92K and to start consulting from there 2 days per week and keep my current part time jobs as well. I’ve never had any credit besides my HEX and don’t have a deposit. Is it even possible for me to get a loan? What do you think? I have a feeling that the room might be difficult to rent so if the consulting doesn’t work out I’d have to sell or hold as an investment. I’m in Australia so I’d love to hear replies from people who have a good knowledge of the commercial real estate situation here. Would I qualify for any first home buyer or stamp duty benefits? What would the total loan amount need to be to cover all the fees, charges, taxes etc? I would also need 5-7K for equipment. Is it a mortgage , a business loan or what? It may be relevant that my name is not on the mortgage for our house and I have no debt whatsoever, but no deposit – what are my options? Thanks.
I completely understand what you’re saying. In my consideration of that situation (my partner being unable to work), I have placed a lot of emphasis on the potential capital growth of the properties. I think I need to do far more local research of this topic. I just personally know several people who rent out office spaces and they end up losing most of their profit to it. And when they move they lose a huge chunk of client base. If I were to buy a cheaper space that I can currently afford to pay off using my wages from my permanent and overhead free jobs; at least I have a chance of recouping my money through sales of the properties and/or income from the business. Whereas if I rent it is lost forever. But I also concede that I need some more experience before I dive off by myself. It’s frustrating.

FDIC weighs extraordinary steps, including loans from banks, to shore up insurance fund

* By Daniel Wagner, APey Business Writer
* On Tuesday September 22, 2009, 5:09 pm EDT

WASHINGTON (AP) — The Federal Deposit Insurance Corp. is weighing several costly — and never-before-used — options as it struggles to shore up the dwindling fund that insures bank deposits.

The agency is considering borrowing billions from healthy banks. Alternatively, it may impose a special fee on the banking industry.

Each option carries risk: Drawing money from healthy banks would take dollars out of the private sector, making that money unavailable for investment in the weak economy. But charging the whole industry a fee to replenish the fund could push weaker banks toward failure.

A third option — borrowing from the Treasury — is politically unpalatable, since it would resemble another taxpayer-financed bailout.

A fourth option would be to have banks pay their regular insurance premiums early. But this idea wouldn’t solve the fund’s long-term cash needs.

"The bottom line is, there’s no good solution," said Jaret Seiberg, an analyst with the research firm Concept Capital. "This is a fight over which option is least bad."

The FDIC is expected to propose a solution, possibly combining two or more of the options, at a board meeting next week.

Bank failures since the financial crisis struck have drained the fund to its lowest level since 1992, at the peak of the savings-and-loan crisis. The fund insures deposit bank accounts of up to 0,000.

Officials have approached big, healthy banks about making loans to the agency, said two industry officials familiar with the conversations, who requested anonymity because the plans are still evolving. Doing so would help the agency avoid tapping a 0 billion credit line with the Treasury — something FDIC Chairman Sheila Bair is reluctant to do.

But taking billions from large, healthy banks would remove that money from the private sector and prevent it from being invested. That could slow an economic recovery, analysts said.

Industry and government officials said Tuesday that plan was still on the table. But FDIC spokesman Andrew Gray downplayed its likelihood, saying, "It’s an option, but it’s not being given serious consideration."

The FDIC also could levy a special emergency fee on the industry. That would allow the healthiest banks to keep more capital for investment. But it could drive shakier banks toward failure — further depleting the fund. Losses on commercial real estate and other loans are causing multiple bank failures each week.

Banks already have paid one extra fee this year. And Comptroller of the Currency John Dugan, who holds one of the FDIC board’s five votes, has cautioned against saddling them with another.

Discussing the option last week, Bair acknowledged, "We don’t want to stress the industry too much at this time, when they’re still in the process of recovery."

Bair also said then that the agency might collect banks’ regular insurance premiums early to infuse the fund with cash. An exemption would likely be provided for banks that are too weak to pay in advance.

This plan would solve the fund’s immediate cash needs. But Seiberg called it "a one-time gimmick" that would merely delay another special assessment.

Because the FDIC expects bank failures to cost the fund around billion through 2013, a short-term boost may not be the answer, Seiberg said.

The banking industry and lobbyists oppose another fee. They also want Bair to avoid tapping the Treasury credit line, because it would lead to higher insurance premiums for banks as the FDIC repays the money.

In a letter Monday to Bair, American Bankers Association CEO Ed Yingling endorsed borrowing from the banks or collecting regular premiums early as alternatives to charging another fee.

The special fee imposed earlier this year is hurting banks, already stressed from depressed income and increased loan losses, Yingling said. Another one "may do more harm than good," he said.

One advantage of having big banks lend to the insurance fund would be to give healthy banks a safe harbor for their money and limit their risk-taking, said Daniel Alpert, managing director of the investment bank Westwood Capital LLC in New York.

It also would let the industry’s strongest players — which still rely on FDIC loan guarantees and other emergency subsidies — help weaker banks avoid paying another fee, he said.

"Lots of banks are going to require more capital, and (Bair is) trying to rob from the rich and give to the poor," said Alpert, who supports the plan as a creative way to avoid another bailout.

Bair’s priorities for the industry are different from the Treasury’s, analysts said. She is focused on stabilizing the many banks still at risk of failure. Such collapses could further deplete the insurance fund.

Treasury Secretary Timothy Geith

Now Im buying a commercial building.The deal is owner carries contract, or finance the amount with his/her own interest. Is it best if we include the real estate taxes (which are about less than ,000.00) with the principal payment and interest or just pay the principal payment and interest without real estate taxes?Is it true that adding the real estate taxes can increase the interest on the loan?I would like advice on this.thanks.

I have searched and talked with so many different organizations about getting a business loan including SBA, commercial banks, and state funded organizations set up for funding small business owners. I have the business plan, the statistics for future sales and I have the collateral. What I don’t have is money for a down payment even if it’s only 10%. My other questions is regarding real estate. Do you need a down payment if you are buying a business already set up? Thanks in advance for any advice and/or encouragement.

I have heard that there is a sliding scale involved from 1-10. Is this true?

My husband and I are at a financial crossroads in our lives. I recently finished my medical residency, he is about to get his MBA in two weeks. I ran a "debt snowball" calculator adjusted for my new attending physician earnings and we’ll payoff our debts (primary home mortgage, mortgages for 3 investment properties, a credit card and small student loan) in 5 years. This doesn’t include the increase in salary that my husband will hopefully receive, so complete payoff may come sooner than 5 years. We would also save tons in interest saved from early pay off.

On the other hand, we also set the goal of building a real estate property company, eventually transitioning from residential rental to medical commercial rental properties. In aid of this goal, we could capitalize on the weak housing market and continue to purchase residential rental property. This would make us lots of money because our major South Texas city has inexpensive housing that is now even cheaper in this depressed market, but will undoubtedly be worth considerable more in the next five years or so.

My husband and I have discussed this at length, we’ve gone back and forth. Both routes are very attractive. So my question is this– If you were in a similar position, would you just go into "payoff mode" and erase your debt in 5 years or would you continue to build real estate holdings?
Lavista– Totally missed the point. First of all, my degree is worth more than paper. To me and most any country in the world, it gives me license to do what I’ve always wanted to do which is heal people. Additionally, I try to make sure that I’m not caught up by the superficial world (although I admit that this is a constant conscious thing I struggle with) My husband and I live in a neighborhood where the average salary is 1/3 of what our yearly salary is, my car is 10 years old, I still wear clothes that I’ve had since middle school, we seldom shop for any consumer goods and in general try to be good stewards of the earth’s resources. Having said this, I do like to be stable. I like knowing that come what may, I will be able to provide for myself and my family. There is nothing superficial or wrong about this desire especially since I donate more in time and money than the average US citizen. Thanks for the link, though. I’ll check it out. -M

"2008 Nobel Prize in Economics winner Paul Krugman states that the notion "has been refuted up, down, and sideways."[104] He also noted in November 2009 that 55% of commercial real estate loans were currently underwater, despite being completely unaffected by the CRA.[105] According to San Francisco Federal Reserve Bank Governor Randall Kroszner, the claim that "the law pushed banking institutions to undertake high-risk mortgage lending" was contrary to their experience, and that no empirical evidence had been presented to support the claim.[100] In a Bank for International Settlements (BIS) working paper, economist Luci Ellis concluded that "there is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust", relying partly on evidence that the housing bust has been a largely exurban event.[106] Others have also concluded that the CRA did not contribute to the financial crisis, for example, FDIC Chairman Sheila Bair,[101] Comptroller of the Currency John C. Dugan,[107] Tim Westrich of the Center for American Progress,[108] Robert Gordon of the American Prospect,[109] Ellen Seidman of the New America Foundation,[110] Daniel Gross of Slate,[111] and Aaron Pressman from BusinessWeek.[112]"

Furthermore, if any conservative can actually explain how fannie mae caused it, be my guest.
Ashley Jade: Explain
@conservacunt: Then care to explain why milton friedman got a nobel prize?

To a commercial lender, would the attractions at a family entertainment center be considered real property? Can the cost of the construction of each of those be added to the purchase price of the land, and be paid for with a commercial mortgage? I personally would say yes, because they are "improvements" put on the land. And just to clarify, I am talking about go-kart tracks, mini-golf courses, bumper boat ponds, etc.

Could these be purchased with a mortgage, or would they have to be purchased under a regular commercial loan similar to one you would get for working capital?

My fiance and I are trying to get a commercial loan for a rental property. He has a credit score of about 680, and I have a score of 554, what are our chances of getting this loan? I have the worst score, but I make the most money.

I am not sure if it is saying the owner owns the majority except for so and so piece of property which is a joint venture with a bank???

Well I know banks aren’t in the real estate business which is why this part doesn’t make sense to me. Is it because someone else had bought a certain plot from the owner with a loan and it got reposessed or what? Please help me clarify as I am interested in the piece of land that it is saying (I think) that the bank owns. This is the ad:

+/- 27.29 Acres of Land Owner Financing / Joint Venture Opportunity Bank owned property +/- 1780 Linear Feet of Frontage on I-10 +/- 750 Linear Feet of Frontage on N Caldwell St

Thank you for your feedback!

The bank repeatedly doubled up the amount of interest reserve used each month and also doubled up the amounts of each construction draw. When the constuction funds and interest reserve ran out, the bank foreclosed and refused to correct their accounting even though we brought it to the attention of their construction specialist and the CEO. Are there any federal remedies like truth in lending for commercial loans ?

I am a mechanical engineer and to date I have been an employee so small business ownership is new to me. I am at the very beginning stages of starting my first franchise. It is a small sandwich shop which will be about a 0-400k investment. My application to the Franchisor is still is in the approval process and I starting to put together a team of people to do this. So far I have: Attourney, Accountant (for both book keeping and taxes), A Commercial Real Estate Agent, Insurance Agent, Credit Union Loan Officer. Does anyone have any recommendations of other ‘must have’ people whom I should inlude?

Thanks in advance.

Lets assume I want to get into the business of buying and leasing commercial real estate. Can I just start an LLC or Incorporation, identify a property (ie: Office Complex for 0,000), then go to the Bank and say, My XYZ Corporation needs a loan to purchase a 0,000 complex that will be leased out for ,000/yr.

Would the Bank Grant the Loan, knowing the property secures the loan? Or will the bank demand that my XYZ Company have 0,000 in assets that will secure the loan outside of the property being purchased?

I’m looking to purchase a 13 unit investment property. This will be my first property. A friend suggested getting a HUD commercial loan since I don’t own any real estate. What do you guys think about that? What would be the best way to go for a loan?

Thanks.

A large amount of the commercial loans start coming to term this year (lasting three years). None of them are worth what’s owed and will be defaulted on.