|
Spring 2010
Making Modifications
Work
Lew Ranieri, often credited with creating the mortgage-backed securities industry when he was at Salomon Brothers in the early 1980s, has returned to
try to save America from the worst effects
of that accomplishment. In 2008, Ranieri
established the Selene Residential Mortgage
Opportunity Fund, raising money primarily
from foundations and pension funds, to buy
and restructure failed mortgages created to
feed the securitization process. In doing so,
he is showing how mortgage modifications
can work--and why the federal Home Affordable
Modification Program (HAMP) has done so
poorly by comparison. Read more...
CMBS:
Special Servicers
Special servicers are the firms trying to
correct mortgage loans in the later
stages of delinquency or in actual
default. Their role has become increasingly
important as a result of the tremendous
number of troubled loans. According to a
report by Standard & Poor’s (S&P), servicers
have been training their staffs to address
the unique aspects of these loans, packaged
as commercial mortgage-backed securities
(CMBS). Almost 50 percent of these
unresolved assets are loans originated in
2006 and 2007. Many of the loans are more
complex than older ones, which mean it
takes longer to resolve them, either by a full
workout, a discounted payoff or foreclosure
sale. Because of the time period in which they
originated, many of the newer loans lack some
of the safeguards present in the commercial
loans originated before 2004. Read more...
Securitization:
Covered Bonds
The use of covered bonds as a source
of home-mortgage funds is being
encouraged by the U.S. Treasury
Department and the Federal Deposit
Insurance Corporation (FDIC)
because they offer much greater
certainty for the bondholders with
respect to damages and rights. Read more...
Leases:
Subordination Clause
Could Harm Tenants
Commercial lease agreements often are long and complex, with clauses neither party may expect will ever be triggered by events. But sometimes they are. One such is the lease subordination clause, by which the tenant agrees the lease is subordinate to any present or future mortgage that the landlord may put on the property. Accordingly, foreclosure of a mortgage (depending on the law of the state involved) either will automatically terminate the lease or entitle the lender, at its option, to terminate the lease.
Read more...
Legal View:
Second Circuit Rejects
Champerty Defense
Champerty is not a word often heard
these days, even though it is a living
doctrine in modern law and on
occasion has real bite. In a recent case, the
Second Circuit Court of Appeals reversed
a trial court ruling that had dismissed a
mortgage trust’s suit for indemnification
for loan losses from the originator. Trust for
Certificate Holders of Merrill Lynch Mortgage
Investors v. Love Funding Corp., 391 F.3d 116
(C.A.2, N.Y.). However, the reasoning of the
decision leaves some room for the distressed
debt markets to be concerned.
Read more...
Migration:
Major Shifts
Every type of real estate--housing, business, retail and office--is impacted by population movements across the U.S. and across its borders. In its most recent report, based on new Census numbers, the Brookings Institution says the past ten years saw the greatest migration slowdown since the end of World War II. Significant events were the housing bubble and the worst recession in more than half a century, as well as major storms and terrorist attacks.
Read more...
Somerset Real Estate Team News
 Our Real Estate Team will be an exhibitor at the BOMA Indianapolis Annual Trade Show and Casino Party on April 22 at The Fountains in Carmel, IN. Please come visit with us and enter our Victory Field drawing! Details...
 We are proudly celebrating our 50th anniversary in 2010! Somerset’s roots began in 1960 with the founding of Whipple & Company, a certified public accounting firm. We are planning a celebration on the afternoon of Thursday, September 30--please save the date. Read more about Somerset's history...
 Somerset Practical MBA Program--Attend in Person or Via Webinar. Our popular MBA program is scheduled through 2011. The next one is on Wednesday, April 28, when Larry Dykes will present "Classifying Customers and Team Members Using an A-B-C Ranking." Click here for details. Also visit our Seminars page to see the many additional educational opportunities we are offering.
 Tell Us How We Are Doing and You May Win Victory Field Suite Tickets. If you are a Somerset client, please take our Client Satisfaction Survey by April 30, and you will be entered into a drawing for four tickets to the Indians vs. Buffalo Bisons on Sunday, May 9, at 2:00 p.m. Take our survey now.
 Spring is here, which means baseball season is about to begin. We are looking forward to cheering on the Indianapolis Indians from our suite at Victory Field again this year. If you are interested in renting it for a game, please let us know. It's a great way to enjoy the game with 15 of your staff, family and friends.
 2010 Best Places to Work in Indiana - Somerset CPAs has been selected as one of the 2010 Best Places to Work in Indiana by the Indiana Chamber of Commerce. We are proud to again be on the list of small to medium-sized companies. We thank our employees for making us one of the best!
 Real Estate Focus is
provided by Somerset’s
Real Estate
Team for our clients and other interested persons upon request.
For additional information on the issues discussed, please contact
Michael Fritton, CPA. Since technical information is presented in generalized fashion, no
final conclusion on these topics should be made without further review.
These articles were written by and
published herein with the permission from professionals of BDO Seidman, LLP.
Somerset is a member of the BDO Seidman Alliance, a nationwide association
of independently owned accounting and consulting firms.
|
