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WHITE HOUSE HEEDS REAL ESTATE SOS; FINANCE EXPERT SAYS GOVERNMENT ACTION WILL FUEL HOUSING REBOUND IN LATE 1992

 WHITE HOUSE HEEDS REAL ESTATE SOS; FINANCE EXPERT SAYS
 GOVERNMENT ACTION WILL FUEL HOUSING REBOUND IN LATE 1992
 LOS ANGELES, Dec. 26 /PRNewswire/ -- The real estate industry will finally benefit from government action this year spurring a rebound in single family home sales in the third quarter of 1992, according to an annual forecast by the real estate accounting firm of Kenneth Leventhal & Co.
 Stan Ross, managing partner of the firm, sees the recent banking legislation, a new proposal from the Office of Thrift Supervision, proposed tax changes, increased spending on infrastructure and lower interest rates as positive signs that the federal government is finally addressing the depressed condition of the nation's real estate industry.
 "There is finally some good news coming from Washington," Ross said. "Traditionally, the real estate industry has led the nation's economy out of every recession, so I am delighted that the administration and Congress are finally working together to keep that tradition alive," he added.
 "The new banking bill, signed last week by President Bush, contains an explicit instruction to regulators that they have the legislative clout to support more realistic treatment of loans," he explained. Ross said Section 304 of the banking bill now gives clear-cut direction to regulators by stating: No appropriate federal banking agency shall adversely evaluate an investment or a loan made by an insured depository institution or consider such a loan to be nonperforming, solely because the loan is made to or the investment is in commercial, residential, or industrial property, unless such investment or loan may affect the institution's safety and soundness.
 Ross pointed to an early Christmas present from the Office of Thrift Supervision (OTS) as another move to help the real estate industry recover. "On Dec. 23, 1991, the OTS proposed that if an insured institution makes loans to a real estate developer to build houses, and if such houses are 'pre-sold' to home buyers, that the insured institution can categorize such loans in a 50 percent capital risk segment slot, rather than the 100 percent capital risk segment slot under current rules." This would allow banks and savings and loan associations to drastically reduce the amount of capital that they have been required to carry against residential real estate construction loans and permit lenders to view the lucrative residential real estate construction loan marketplace as a viable source of potential earnings for their institution, Ross explained.
 "The real estate industry is no longer viewed as the scapegoat of the savings and loan bailout, but as a contributor to the ongoing vitality of the banking and savings and loan industries," he said.
 Although the new OTS proposal is not as yet a part of the formal regulations, Ross is hopeful that the regulators will embrace it as a required stimuli to get the U.S. economy back on a firm footing and permit affordable housing to become a realty.
 "These new moves to stimulate real estate lending reinforce the November 1991 policy statement from the federal bank and thrift regulators that encouraged the availability of credit to sound borrowers," Ross added.
 He also said proposed tax legislation could have a positive impact on the real estate industry, placing it on par with other businesses, by allowing the use of passive real estate losses to offset real estate gains.
 And Ross added that the President's plans to budget more spending on highways, airports and sewer systems will spur the growth in housing while getting the construction industry back on track.
 Kenneth Leventhal is the country's eighth largest accounting firm known for its expertise in real estate and financial services. It has offices in 13 cities and is affiliated internationally with Clark Kenneth Leventhal.
 -0- 12/26/91
 /CONTACT: Francie Murphy of Casey & Sayre, 310-457-3676, for Kenneth Leventhal and Co./ CO: Kenneth Leventhal ST: California IN: SU:


EH-AL -- LA002 -- 5359 12/26/91 16:40 EST
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Date:Dec 26, 1991
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