What value are Banks lending on?

[Steve Taylor]

As I understand it, the "as is" value as of the date of the appraisal which is referred to in the regulatory guidelines is simply the value of the land which the appraiser gave us also. This is an acquisition and construction loan of a spec office building so we have an "as is" value as of 8/07 (the land), an "as completed" value as of 2/08 (the shell office building) and an "as stabilized" value as of 2/10 (95% leased office building).

 

[murray stroupe]

Re; Long live the difference

Steven,

While there may not be a direct commision on bonus, clearly all bank lenders get compensated in some, way shape or form based on the deposits and/or the loans made. So clearly, there's still an agenda there.


I think your decision to lend on the 'as completed' figure knowing the market may be showing signs of declining is a sound one.

P.S. Lending and banking regulations are often ambiguious for a reason, IMO. If they were effective, would we being seeing the losses we're seeing in this market?

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Clearly MB have helped make a mess;
clearly commercial/retail/savings/FDIC banks have done well.Whatever bonusus they get seem deserved, most honorably earned/effective.

Not that many forclosures/losses in the markets i record

Dont know what they do in FLA or CA;
except mass merchandimng /BPO seems common in CA, foreclosures higher , in CA also.

 

[Joker]

Here's the simple answer:
Currently, loan based on the land value. As construction progresses (with inspections/input from the appraiser), extend money as appropriate up to the acceptable ltv of the "as completed" value. For your immediate purposes, forget the "as stablized" value.