Going From Mark-To-Market to Mark-To-Make Believe!

By Robert Pliska

Have we gone from "mark-to-market" to "mark-to-make believe"? The FDIC just released its policy statement - Prudent Commercial Real Estate Loan Workouts. The FDIC's purpose is provide transparency and consistency to commercial real estate workout transactions and not curtail the availability of credit to sound borrowers. While the FDIC's intentions are honorable, the policy may provide the opposite effect - lack of transparency and consistency and extending the lack of credit to sound borrowers.

The key point of this policy statement is - loan workouts need to be designed to help ensure that the institution maximizes its recovery potential. Renewed or restructured loans to borrowers who have the ability to pay their debts under reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than the loan balance. So if the borrower and/or its guarantors can still make the payment and the financial institution would prefer to extend the loan rather than take a loss, the fact that the property is worth less is not the determining factor.

The loan can be in good standing if the borrower/guarantor can show that they can still make payments. New appraisals need not be ordered if an internal review by the institution appropriately updates the original appraisal assumptions to reflect the current market and provides an estimate of the fair value for impairment analysis. Documentation should demonstrate a full understanding of the property's current "as is" condition. However, if the institution intends to work with the borrower to get a property to "as stabilized" market value, then the institution can consider the "as stabilized value" in its collateral assessment for credit risk rating. This seems to be heading far to the "make believe" area. Just present a "good story" and the institution can buy a lot of time.

This "good story" accounting will provide more of a lack of transparency and consistency. Two people, for example, can tell a "good story" much differently. It will probably make the FDIC's job more difficult. In the 1990's, for example, banks in Japan were allowed to avoid taking losses and write-downs. The result was an entire decade of stagnation. The steps by the FDIC could create a parallel situation. This may extend the time of lack of credit to borrowers. Let's get back to reality rather than "make believe". Hopefully, our commercial real estate problems may be resolved sooner. For further discuss ion of this topic, feel free to contact the author Robert Pliska, CRE, CPA.

Great news for all of you Buyers & Sellers!!! The Home Buyer Tax Credit is out and looks great.

Buyers:

• Starts December 1st 2009 to April 30th 2010
• $8000 for 1st time home buyers
• $6500 for current homeowners
  • Current homeowners "Must have used the home sold or being sold as a principal residence consecutively for 5 of the 8 previous years."
• Must have contract to purchase by 4/3/2010
• Must close by 7/1/2010
• Income limits:
  
  • $125,000 single income
  • $225,000 married

Sellers:

• More buyers are going to be in the market to buy your home.
  
• Reduced inventories will raise sale prices
• less foreclosures

Read below for more details below from NAR

Mike Sher, CDPE: http://hosted.cdpe.com/MikeRealtor/ Office: (248) 644-4700x242 Fax :(248) 499-1020

4120 Telegraph Rd, Bloomfield Hills, MI 48302

E-mail:mike@mikerealtor.com

CDPE (Certified Distress Property Expert) MCAR,

Short Sale Trainer Max Brook and Real Estate One Short Sale Specialist.

The Mike Realtor Team Blog - Metro Detroit/Oakland County Servicing in Southeast Oakland County, Auburn Hills, Birmingham, Bloomfield, Berkley, Beverly Hills, Canton, Clawson, Farmington Hills, Ferndale, Huntington Woods, Northville, Novi, Pleasant Ridge, Plymouth, Royal Oak, Rochester Hills, West Bloomfield, Troy, etc.

Be Positive and Opportunistic!

In commercial and residential real estate like other areas of business, there are many reasons to be negative. Yet, there are ways which we can be positive and opportunistic! This short short 2 minute video may be of assistance to brighten your day! Have a little faith! Be Positive and Opportunistic

Wonderful Birmingham Cape Cod had offer two weeks after listing.

This Birmingham home was staged by Virginia Tatseos and Stage-Show-Sell

Birmingham Cape Cod

328 George, Birmingham, MI 48009 View Map

This Traditionally Styled Cape Cod Home Has Been Updated Beyond Belief. The Kitchen Is State-Of-The-Art With Dark Cabinetry, Granite Counters, Top Of The Line Stainless Appliances, Water Filtration System And Ceramic Floors.
Upstairs, The Master Suite Has A Large Walk-In Closet With Built-ins, A Sitting Room, And A Bathroom That Must Be Seen. Glass Shower, Jetted Tub, Granite Counter Top, Skylight And Granite Floors.
The Third Bedroom Is Located On The Lower Level And Has Been Professionally Finished and Includes An Egress Window For Safety.
Additionally, There Is A Natural Fireplace In The Living Room, Central Air, Two Fifty Gallon (Newer) Water Heaters And A Large Deck Off The Kitchen That Is Perfect For Entertaining.
Call Today To Schedule A Showing Appointment, You Will Be Amazed At What You See!

This Home Was Successfully Prepared for Sale by
www.Stage-Show-Sell.com

Details

Asking Price:

$249,000.00

MLS:

29043099

Bedrooms:

3

Bathrooms:

2

Contact Info

Bill Bouscher
ABR, CRS, GRI, Associate Broker

Cell 248-225-9175
Dir 248-360-6800
Email | Website

Location is Priceless on one of the Nicest Streets in Birmingham!

• 3 Bedrooms
• 3 Full Baths
• 1 Half Bath
• 1,888 Square Feet
• Built in 2001
• Birmingham School District
• Purchased 7 years ago for $589,500
• True walking distance to Downntown
• Barely lived in
• Cherry wood floors throughout entire home
• Cherry cabinets
• Granite counters
• Double stacked crown molding throughout
• Custom window treatments
• Master bedroom with walk-in-closet
• Updated bath
• 3 fireplaces (Master, Living Room and Family Room)
• Professionally finished basement with full bath

For more information on this property including Michigan Virtual Tours or to search Birmingham Homes for sale visit our website. You can also get the latest news on our Metro Detroit Real Estate Blog.