http://realpropertyalpha.disqus.com/Investment Real Estate, Incremental Innovation, and A Spreadsheet for EverythingenFri, 16 Oct 2009 14:03:11 -0000http://realpropertyalpha.com/2009/10/14/distressed-real-estate-continues-to-be-a-growth-industry/#comment-20209696I am not sure what might encourage movement, but I am sure ready to see it - <br>thanks <br> <br>--------------------------------------------------michaelmcgoeyFri, 16 Oct 2009 14:03:11 -0000http://realpropertyalpha.com/2009/10/14/distressed-real-estate-continues-to-be-a-growth-industry/#comment-20209538Michael - Thanks for taking the time to comment. I will say that this comment is similar to one that I am hearing in private.ReederFri, 16 Oct 2009 13:59:59 -0000http://realpropertyalpha.com/2009/10/14/distressed-real-estate-continues-to-be-a-growth-industry/#comment-20193681I am told that the regulators are directly and agressively telling lenders NOT to report or detail to authorities loans that can be made to appear to be performing. So long as the borrower is doing the best job that can be expected under the circumstances and the loan can cover interest only at some level (LIBOR + 100 ???), then the regulators do not want to hear about it. If the borrower is crooked or incompetent and the loan cannot cover an interest only payment, then the bank needs to focus on it. Even then, for loans over $5 million, there is more value in a free and clear REO property than in a defaulted loan, so banks will go though the slow process of getting control before putting the bigger properties out to bid. I can only assume the regulatory approach is to allow banks to report the fantasy that the loans they have can be refinanced at par or amortized down, with the expectation that their capital bases will be enhanced over time by a zero cost of funds and reduced competition - "they are feeling Japanese, I really think so..." as the song goes.michaelmcgoeyFri, 16 Oct 2009 09:24:57 -0000