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Banks Get New Rules on Property (allow underwater loans to be marked as performing)
WSJ ^ | 10/31/09 | LINGLING WEI

Posted on 10/31/2009 4:10:00 AM PDT by TigerLikesRooster

Banks Get New Rules on Property

By LINGLING WEI

Federal bank regulators issued guidelines allowing banks to keep loans on their books as "performing" even if the value of the underlying properties have fallen below the loan amount.

The volume of troubled commercial real-estate loans is skyrocketing. Regulators said that the rules were designed to encourage banks to restructure problem commercial mortgages with borrowers rather than foreclose on them. But the move has prompted criticism that regulators are simply prolonging the financial crisis by not forcing borrowers and lenders to confront, rather than delay, inevitable problems.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: bank; loan; newrule; underwater
Little lie here, little lie there, Each lie will compound the distortion geometrically. Any analysis based on them will be completely off the mark.
1 posted on 10/31/2009 4:10:01 AM PDT by TigerLikesRooster
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To: TigerLikesRooster; PAR35; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; happygrl; ...
To see the entire article, click the following.

http://news.google.co.kr/news/url?sa=t&ct2=kr%2F0_0_s_0_0_t&usg=AFQjCNGucGX6_JPIvi-te9mwbPeY4Y7rNA&cid=1461355496&ei=qRfsSqDdFYjmlASRyvXFAQ&rt=SEARCH&vm=STANDARD&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB125694507086819833.html%3Fmod%3DWSJ_hpp_MIDDLTopStories

2 posted on 10/31/2009 4:11:18 AM PDT by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: TigerLikesRooster
Sorry, the above is not working. Do the google search with the exact title in the above and click the link. That should work.
3 posted on 10/31/2009 4:13:33 AM PDT by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: TigerLikesRooster

The banks were insolvent then and they’re insolvent now.
Casino accounting still applies in this country and watching the dollar’s slide confirms that at least the rest of world is in on the fact the US Empire has no clothes.


4 posted on 10/31/2009 4:21:06 AM PDT by ninonitti
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To: TigerLikesRooster
Federal bank regulators issued guidelines allowing banks to keep loans on their books as "performing" even if the value of the underlying properties have fallen below the loan amount.

I'm not sure I see the problem here... The bank doesn't own the property, you (or the buyer) does. The bank owns a payment schedule, and can enforce a lien on the property if you fall behind, but the fact you bought an item for more than it's worth isn't a hit on the bank. So I'm not sure I see the problem...

5 posted on 10/31/2009 4:23:17 AM PDT by PugetSoundSoldier (Indignation over the sting of truth is the defense of the indefensible.)
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To: TigerLikesRooster

yep.


6 posted on 10/31/2009 4:23:45 AM PDT by sauropod (People who do things are people that get things done.)
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To: TigerLikesRooster

This was all created and executed for one end: social engineering. Devalue homes and sell back to lower class people to socially integrate affluent areas.


7 posted on 10/31/2009 4:23:51 AM PDT by rintense (You do not advance conservatism by becoming more liberal. ~ rintense, 2006)
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To: TigerLikesRooster

Myself, I don’t see a problem with calling a loan “performing” if it’s underwater, as long as the payments are being made per the loan agreement, and the publicly-available portion of the article gives no indication otherwise.

If “underwater” becomes synonymous with “non-performing”, then most car loans would have to be considered “non-performing” for the first several years of their existence.


8 posted on 10/31/2009 4:25:52 AM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: TigerLikesRooster

Fail to see how this will change the behavior of a holder of real estate that is worth significantly less than what’s owed on the property. It will still be “under water” until the value rises. This will only be delayed by this policy.


9 posted on 10/31/2009 4:26:43 AM PDT by RU88 (Bow to no man)
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To: TigerLikesRooster

Most Freepers know that the commercial real estate market is going to crash just like the housing market.

There are lots of loans against inflated values. Businesses are also having difficulty making payments because of the current economic conditions.

This is a means of kicking the ball (collapse) down the road.....hopefully after 2012, so it does not affect Obama’s majority.


10 posted on 10/31/2009 4:31:12 AM PDT by Erik Latranyi (Too many conservatives urge retreat when the war of politics doesn't go their way.)
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To: DuncanWaring
as long as the payments are being made per the loan agreement

Well, that is no longer guaranteed and banks may have to foreclose on the properties. Hence, this new rule to put off the disaster.

11 posted on 10/31/2009 4:46:18 AM PDT by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: TigerLikesRooster

It’s a postponement of what is to come, anyway.

But if they can hold it off until after the congressional elections.........they will.


12 posted on 10/31/2009 4:48:31 AM PDT by Freddd (CNN is not credible.)
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To: PugetSoundSoldier
the fact you bought an item for more than it's worth isn't a hit on the bank. So I'm not sure I see the problem...

*************************************************

Commercial real estate isn't like residential... typically you can only borrow for 3-7 years ... most often it is a interest only balloon ... the property owners (think of a mall) are not really ever interested in eventually owning the property ,, they just want low payments and bank the difference in cash flow from rents.

So what we are seeing here is that every policy from Obama is working to prolong the economic crisis ,, that bad loans are NOT being cleaned up on the residential side (because there are too many and the banks can't afford for real pricing on their assetts,, it'll shut them down) and now they are left hanging on the commercial side... The property owners and banks will renew and extend the existing leases/mortgages while pretending that the property isn't upside down.. Many properties are cash flow negative and have been for 1 or 2 years now... I see a government program (read OWNERSHIP) in the near future...

13 posted on 10/31/2009 4:50:36 AM PDT by Neidermeyer
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To: TigerLikesRooster
Any analysis based on them will be completely off the mark.

But will the remaining G-20 members drink this Kool-Aid?

14 posted on 10/31/2009 4:53:36 AM PDT by Glenn (Free Venezuela!)
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To: TigerLikesRooster
Little lie here, little lie there, Each lie will compound the distortion geometrically.

This is already the case and we are living on the vapors of lies past, long past.

The number one thing I hear from both business owners, investors and individuals is that they lack trust in anything. Obama is not restoring trust, nor will any politician.

This will take a statesman or a revolution to repair.

15 posted on 10/31/2009 4:56:34 AM PDT by 1010RD (First Do No Harm)
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To: Glenn
Each of them makes its own Kool-aids and demand others to drink it. So everybody will drink the cocktail of everybody else's Kool-aids. I think that is what is likely to happen.
16 posted on 10/31/2009 5:08:51 AM PDT by TigerLikesRooster (LUV DIC -- L,U,V-shaped recession, Depression, Inflation, Collapse)
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To: Neidermeyer

I’m with you, Neidermeyer. You nailed it.


17 posted on 10/31/2009 5:14:37 AM PDT by Diana in Wisconsin (Save The Earth. It's The Only Planet With Chocolate.)
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To: TigerLikesRooster
It's bad economically, getting worse and will continue to. The SRM and the goobermint are backing peddling, spinning and bold face lying, not withstanding the complete destruction of the dollar all on purpose.

The$550 trillion global derivative Ponzi scheme is prof pudding and now the goobermint and the fed are publicaly telling the banks to lie on their books........the shoe has dropped and the hammer has fell.

18 posted on 10/31/2009 5:35:43 AM PDT by RSmithOpt (Liberalism: Highway to Hell)
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To: RSmithOpt

prof=proof


19 posted on 10/31/2009 5:36:38 AM PDT by RSmithOpt (Liberalism: Highway to Hell)
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To: Freddd

There ya go! Nailed it.
The old “extend and pretend” policy that allows the pols to kick the can down the road, once again.

9 more bank closings on Friday (10/30) for a total of 115 y.t.d. and only about 400 more to go. The MSM and most of the sheeple that elect these bums seem to be whistling through the graveyard.


20 posted on 10/31/2009 5:41:54 AM PDT by WeldonsRight (Right and (apparently) wrong at the same time)
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To: TigerLikesRooster
A difference with out a difference, a performing loan is one that people are paying on as agreed.

Just about all mortgage loans, made in the last ten years are under water, if the down payment was less than 30%.

This is just more accounting voodoo, in not writing down the assets of the bank.

21 posted on 10/31/2009 7:30:25 AM PDT by org.whodat (Vote: Chuck De Vore in 2012.)
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To: TigerLikesRooster

Karl Denninger on the topic:

http://market-ticker.org/archives/1562-You-Cant-Possibly-Be-Serious-CRE.html


22 posted on 10/31/2009 7:35:43 AM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: DuncanWaring
Many pertinent points there, but I like this one [underline mine]:

One of the definitions of "prudent lending" is not to lend beyond the current value of a given asset, with any such "excess amount" requiring a dollar-for-dollar reserve of the bank's own capital.

23 posted on 10/31/2009 9:18:14 AM PDT by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
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To: TigerLikesRooster; M. Espinola; stephenjohnbanker
This is MASSIVE FRAUD on Americans committed by Zero's appointees and infamous banking czars. Just wait until the bankrupt FDIC starts collecting premiums in advance. At least 900 more banks will go BK. 'Nuff said by me on FR.
24 posted on 10/31/2009 10:14:39 AM PDT by ex-Texan (Ecclesiastes 5:10 - 20)
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To: ex-Texan

Are you surprised? They have been doing this all along ;-)


25 posted on 10/31/2009 10:56:19 AM PDT by stephenjohnbanker (Pray for, and support our troops(heroes) !! And vote out the RINO's!!)
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To: ex-Texan
Just wait until the bankrupt FDIC starts collecting premiums in advance.

Didn't they say a few months ago they were going to try to do that?

26 posted on 10/31/2009 11:02:47 AM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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