Posted Jan 11, 2012
Written By:
By Stuart Saft
As we continue to struggle with the consequences of the Great Recession, we need to examine the lessons learned from this experience.
The Need For Legal Consistency
One of the biggest challenges for commercial real estate finance is the effect of constantly changing legislation and regulations, which alter the rules after the loans have been made. For decades Congress’ enactment of legislation attempting to solve a specific problem has repeatedly triggered the law of unintended consequences, creating uncertainty and risk for lenders.
An antecedent to the Great Recession was The Tax Reform Act of 1986, which was retroactively applied to real estate, resulting in a disincentive for investors to continue paying for real estate investments, thereby leaving the savings and loan associations (S&Ls) that financed much of the real estate development, on the hook for the loans they had already committed to make.
The S&L ....
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