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Summer 2012

Mortgage Guarantors Guidelines

In a weak and uncertain economy, a buyer seeking a mortgage or an owner seeking to refinance a maturing loan who lacks strong financials may be required to provide some form of credit enhancements – most oft en a guaranty – to assure the borrower's prompt payment of debt service and compliance with other requirements set forth in the mortgage. When a guaranty is given, the guarantor often will be the parent corporation or an officer, director or major shareholder of the corporate borrower, or a high-credit individual partner of a partnership. Read more...

Financing: Carve-Out Provision

There was a time when loan documents rarely "carved out" exceptions to a lender's willingness to waive any personal liability of the borrower in the event of a default. This meant the lender could look solely to the property in the event of a default. From the lender's point of view, this appears satisfactory during times when real estate values are rising. But during a period of recession, lenders risk incurring significant losses when properties are foreclosed or taken in lieu of foreclosure. Lenders then also can incur losses because of the failure of the borrower to pay real estate taxes or insurance premiums. Read more...

Financing: The Purchase Money Mortgage

The purchase money mortgage (PMM) continues to be a staple of real est ate financing because it can satisfy a variety of needs for both buyer and seller.For the buyer, a PMM can be a primary source of financing (eliminating the need to negotiate for a mortgage with a third party) or a secondary source of financing (enabling the buyer to take advantage of an assumable first mortgage on the property). For the seller of real estate with an assumable mortgage with desirable terms, a PMM may enable the seller to obtain a higher selling price. The seller also may view a PMM on sound property to be a desirable investment, providing a higher return than that obtainable if cash proceeds are to be reinvested. Finally, a PMM may have tax advantages to the seller, enabling gain to be recognized only as installment payments are received. Read more...

2012 Farm Land Seminar Series

Somerset CPAs and Halderman are teaming up to present the 2012 Farm Land Seminar Series. Join us to discuss:

  • Agricultural Land Values - Agricultural land values have increased 25% in the past year. Will it continue or is it another potential bubble? How will the recent drought affect land values?
  • New Home Construction & Development - New home construction has plummeted 70% in central Indiana since the housing bubble began to deflate five years ago. We may have finally hit bottom. Where is new home construction and development occurring in your area?
  • Tax and Investment Strategies - At the end of 2012, significant tax benefits are set to expire. There are unprecedented income, estate and inheritance tax planning opportunities that every land owner should understand. Read more...

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Real Estate Focus is provided by Somerset’s Real Estate Team for our clients and other interested persons upon request. Since technical information is presented in generalized fashion, no final conclusion on these topics should be made without further review. For additional information on the issues discussed, This email address is being protected from spambots. You need JavaScript enabled to view it. . Whether you are a building owner, building manager, real estate developer, real estate professional or an investor, we hope to provide you with timely information so you may be proactive in making your business decisions.

Somerset CPAs, P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.somersetcpas.com
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