All is Fair Game

February 20th, 2009 12:59 PM


In an effort to curb the developing crisis mentioned in the above article, the U.S. Treasury announced on February 12 that commercial mortgage-backed securities are now eligible collateral for the Term Asset-Backed Loan Facility, better known as TALF.

TALF was created last November by the Federal Reserve Board in an effort to stimulate the credit flow following the economic downturn. At the time of creation, TALF authorized the Federal Reserve Bank of New York to lend up to $200 billion to holders of AAA-rated asset-backed securities collateralized by credit card loans, automobile loans, student loans and loans guaranteed by the Small Business Administration. The National Association of Realtors (NAR), through its subsidiary, Realtors Commercial Alliance (RCA), has been advocating the inclusion of commercial mortgage-backed securities in the group of loan securities backed by TALF.

“Expanding the TALF and opening it up to commercial mortgage-backed securities is a movement in the right direction and welcome news for the American economy,” said NAR President Charles McMillan.

“Though much still remains to be done, this policy decision will help reassure investors in the vital commercial real estate sector,” added RCA Chairman Robert Toothaker. “NAR will continue to work with Congress and the regulatory agencies as further options are considered to address the crisis in the credit market and ensure overall economic recovery.”


The U.S. Department of Housing and Urban Development (HUD) is raising the standards it requires for an appraiser to be qualified to perform appraisals on FHA home loans. In the past, FHA-approved appraisers had to be state licensed appraisers, but they did not have to be state certified.

That is beginning to change. Last October HUD stopped accepting FHA-approval applications from appraisers who did not have state certification. Non-certified appraisers who are currently FHA approved have until October 1 of this year to obtain state certification. If they fail to do so, they will be dropped from the FHA-approved appraiser roster. On that same date, all FHA-approved lenders will be required to use state certified appraisers on loans involving FHA-insured mortgages. The appraisers must be certified in the state where the property involved in the mortgage is appraised.


Most members of the Association of Foreign Investors in Real Estate (AFIRE) rank real estate in the United States No. 1 in secure property investment. An AFIRE membership survey, conducted late last year revealed that 53% of its members listed the USA as the “2008 Country providing the most stable and secure real estate investments."

“Our investor members have expressed a growing confidence and interest in U.S. real estate,” said AFIRE CEO James Fetgatter. “Their investment plans for 2009 for the U.S. resemble the flight to quality that is creating the demand for U.S. Treasuries."

Although AFIRE has less than 200 members, they collectively own about $1 trillion worth of real estate, over a third of which is in the United States. The survey also indicated that foreign lenders plan to increase lending by 58% in the USA during 2009.

“During the past year, AFIRE members generally took a measured stance towards new acquisitions,” said AFIRE Chairman MacLaine Kenan. “As they expect more favorable investment fundamentals to return in 2009, our members are posed to move more aggressively on acquisitions.”


Despite the difficult economic climate for commercial real estate, as well as other facets of the economy, the medical office business appears to be weathering the storm.

“There certainly are investors who want this type of property in their portfolio,” Dan Fasulo, managing director of Real Capital Analytics, said of medical offices. "It’s kind of a recession-proof bet.”

Sources, including the National Association of Realtors and the New York Times, indicate that real estate investors who deal in such property tend to have better access to credit than their non-medical counterparts. Doctors are, on the whole, considered less likely to move than other commercial tenants. Health care is also an industry where jobs are increasing, even during this period of economic downturn.

“There is still real leverage out there,” Neil Shapiro, who heads the health-care finance group of the New York law firm, Herrick Feinstein. “There is still the ability to get these deals done, versus a standard office building or shopping center.”

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Posted by Greg Shelley Phd on February 20th, 2009 12:59 PMPost a Comment

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