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Kathleen Sindell - The handbook of real estate lending

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The Handbook of Real Estate Lending covers the unique needs of real estate and mortgage lending, highlighting the opportunities and the potential problems typically faced in the field. An excellent overview of the real estate side of the loan portfolio, this start-to-finish guide covers everything from basic background to hands-on strategies and procedures. This comprehensive review of real estate lending includes a thorough look at problem loans, from early warning signs to the aftermath of defaults. The guide contains key strategies for prevention and avoidance of potentially bad loans and the means to ensure protection from loss. Topics covered include: The real estate lending environment; Forecast and assessment of loan quality; Legal and business problems with loan modification and workouts; Construction loan quality and performance; Standard credit analysis for specific projects.

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The Handbook Of Real Estate Lending

title:The Handbook of Real Estate Lending
author:Sindell, Kathleen.
publisher:Irwin Professional Publishing
isbn10 | asin:078630880X
print isbn13:9780786308804
ebook isbn13:9780071399036
language:English
subjectMortgage loans--United States--Handbooks, manuals, etc.
publication date:1996
lcc:HG2040.5.U5S55 1996eb
ddc:332.1/753
subject:Mortgage loans--United States--Handbooks, manuals, etc.
Preface
The Handbook of Real Estate Lending is a guide intended for use in regulated financial institutions. The book begins with a discussion of the basic credit evaluation concepts for construction and permanent income-producing property loans. Subsequent chapters explain how real estate lenders can help maximize their bank's lending profits by improving decisions in such areas as identifying the early warning signs of troubled loans, assessing and demonstrating real estate loan quality, forecasting future loan performance, and developing proactive risk mitigation procedures and strategies using a new methodology. This organization has three important advantages:
1. Explaining early in the book how traditional credit evaluation methodologies are used, the impact of national and regional economics on the loan, and how project liquidity and solvency are determined to help real estate professionals understand how diverse elements can affect the successful repayment of the loan. Also, early coverage of such key concepts as the lender evaluation of property appraisals, project analysis, and the analysis of permanent project financing permits their application and reinforcement throughout the later chapters of this book.
2. Structuring the book around identifying real estate loan threats, quantitatively assessing loan quality, and using two methodologies for forecasting loan performance assists real estate lenders in seeing how these various loan elements relate to each other.
3. Most real estate professionals--even those who are not directly employed by financial institutions--are generally interested in successful project completion and loan repayment. Therefore the book suggests workout strategies and presents a new approach for developing the best workout plan for a distressed loan.
Intended Market and Use
The Handbook of Real Estate Lending is intended for use as a sophisticated guide for real estate professionals. The first part is an introductory or refresher course for the credit evaluation of real estate loans. Later chapters include more advanced but practical examples of real estate loan evaluation and mitigation techniques. A case study is used to illustrate how traditional and newly developed methodologies can be used to assess and forecast behavior of an income-producing property loan. Also, the book includes a new decision support program called Lending Solutions. This program is useful in assisting lenders in quantitatively determining the exact degree of risk in each loan. Moreover, use of the program monitors loans with an early warning system that alerts bank management to potential loan problems. The book concludes with a way to determine if the new program is working for you.
Conclusion
Risk management is the cornerstone of all real estate lending. Good risk management is vitally important to the financial health of regulated financial institutions. The cost of the savings and loan crisis to individuals, organizations, and the nation shows how important it is for risk management to be widely understood. Real estate lending is complex and subject to constant change due to new legislation, shifts in the economy, and changes in the real estate market. This makes working in this area exciting and challenging. I sincerely hope that The Handbook of Real Estate Lending meets its challenge and guides lenders to higher profits and a better understanding of the risks and complexities of real estate lending.
Picture 1Kathleen Sindell
Acknowledgments
This book reflects the efforts of many people over the last six years. It would not be possible to recognize and thank each person separately. However, I am particularly indebted to the following individuals.
First, I would like to thank the following real estate professionals for their help in an extensive study of the Lending Solutions decision support program: Doug Adams, Jennifer Bush, Mike Bynum, Margaret Dunsmore, Sonya Faivre, and Mike Ramires.
Special thanks to Doug Adams, Gail Pasternack, Dave Peterson, and Michael Frank, Ph.D., for participation in focus group research, and to Divyata Ashiya, Charles Hurt, Ph.D., Lawrence Brekka, Ph.D., and Iain Johnstone, Ph.D., for assisting me in testing and fine-tuning the Lending Solutions program. I also extend my gratitude to Arlene and Abe Meilich, Ph.D., for reviewing the manuscript.
I am particularly indebted to Mildred Davidson, Carl Lanham, Richard Bernardi, and my special friend Hyman Meyers for their insight and suggestions. Without their support this text could not have been completed.
I also wish to thank the following people at Irwin Professional Publishing: Jim Keefe, Senior Acquisitions Editor; Mark Butler, Acquisitions Editor; Brian Hayes, Marketing Manager; Bob Lange, Production Supervisor; Pat Muller, Developmental Editor; Dan Stivers, Marketing Editor; Kevin Thornton, Production Manager; and Especially Karen Smith, Project Supervisor.
Every effort has been made to make this text as comprehensive and error-free as possible but, inevitably, some errors go undetected. I wish to thank the reviewers and other readers without any incrimination; the remaining errors are the sole responsibility of the author. Finders are invited to send their troves to me with my genuine thanks.
K. S.

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Contents
PART ONE
Overview of Real Estate Loan Management
CHAPTER 1
Critical Factors That Make Real Estate Loan Analysis Difficult
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