In the early months of the 2007-08 financial crisis, the credit manager is faced with a real estate finance solutions. If he approves the structure of a three-year bullet loan for long-time client, the legendary Texas developer? A developer who is approaching retirement age reduced their business, is seeking funding for a single project: residential or commercial development on an attractive piece of land in the suburbs of Houston. Credit Manager believes that the decision in light of the turmoil of the mortgage market, seeing commercial projects, such as security, but also factoring, that the housing market could bring more profit if the market will stabilize in the near future. Manager collects the data and asks the analyst to assess the risks that ultimately requires assessment of the economy of both projects from both the banks and the developer perspective. The bank may change the interest rate on the loan to obtain adequate compensation for the risk it carries, but the loan manager knows that this will change their long-term customer willingness to take the credit. "Hide
by Anton Ovchinnikov Source: Darden School of Business 10 pages. Publication Date: December 31, 2008. Prod. #: UV1094-PDF-ENG
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