In the early months of the 2007-08 financial crisis, a loan supervisor confronts a real estate funding decision. The programmer, who near retirement downsized his company, is seeking financing for his only endeavor: residential or commercial development on an appealing piece of land in suburban Houston. The loan supervisor considers the verdict in light of the mortgage market chaos, factoring that the residential marketplace could bring higher returns if the market stabilizes soon, but also seeing commercial endeavors as safer.
The manager requests an analyst to evaluate the risks and gathers the data; that ultimately needs evaluating the economics of both jobs from both the bank's and the programmer's outlooks. The bank could still adjust the interest rate on the loan to get sufficient compensation for the risk it carries, but the loan supervisor knows that doing so will alter their long-term client readiness to take on the loan.
PUBLICATION DATE: December 31, 2008 PRODUCT #: UV1094-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
Related Case Solutions & Analyses:
Cultivating Social Enterprise in Peru: Portfolio Approach
Global Fabricators Inc.
Corporate Solutions at Jones Lang LaSalle (2001)
Molycorp: Morgan Brothers’ Reverse Convertible Notes (C)
California Choppers
Regulation: A Transaction Cost Perspective
Williamson’s Contribution and Its Relevance to 21st Century Capitalism
The CAPM, the Cost of Capital, and Project Evaluation
Airbus A3XX: Developing the World’s Largest Commercial Jet (A), Portuguese Version
The Business Case for Integrated Reporting: Insights from Leading Practitioners, Regulators, and Academics
