Commercial Finance – The Mortgage Meltdown

Banks lend money to people and businesses. The money is used for investment purposes and consumer purchases like food, cars and houses. When these investments are productive the money eventually finds its way back to the bank and an overall liquidity of a well functioning economy is created. The money cycles round and round when the economy is functioning effectively.

When the market is disrupted financial markets tend to seize up. The liquidity cycle may slow, freeze up to a degree or stop completely. This is true because banks are highly leveraged. A well capitalized bank is only required to have 6% of their assets in core capital. It is estimated that the residential mortgage meltdown will cause credit losses of about $400 billion dollars. This credit loss is about 2% of all U.S. equities. This hurts the bank’s balance sheets because it impacts their 6% core capital. To compensate, banks have to charge more for loans, pay less for deposits and create higher standards for borrowers which leads to less lending.

Why did this happen? Once upon a time after the great depression of the 1930′s a new national banking system was created. Banks were required to join to meet high standards of safety and soundness. The purpose was to prevent future failures of banks and to prevent another disastrous depression. Savings and Loans (which still exist but call themselves Banks today) were created primarily to lend money to people to buy houses. They took their depositor’s money, lent it to people to buy homes and held these loans in their portfolio. If a homeowner failed to pay and there was a loss, the institution took the loss. The system was simple and the institutions were responsible for the building of millions of homes for over 50 years. This changed drastically with the invention of the secondary market, collateralized debt obligations which are also know as collateralized mortgage obligations.

Our government created the Government National Mortgage Association (commonly known as Ginnie Mae) and the Federal National Mortgage Association (commonly known as Fannie Mae) to purchase mortgages from banks to expand the amount of money available in the banking system to purchase homes. Then Wall Street firms created a way to expand the market exponentially by bundling up home loans in clever ways that allowed originators and Wall Street to make big profits. The big stock market firms were securitizers of mortgage-backed securities and resecuritizers who sliced and diced different parts of the groups of home loans to be bought and sold in the stock market based on prices set by the market and market analysts. Home loans, packaged as securities, are bought and sold like stocks and bonds.

In the quest to do more and more business, the standards to get a loan were lowered to a point where, at least in some cases, if a person wanted to buy a house and could assert they could pay for it they received the loan. Borrowers with weak or poor credit histories were able to get loans. There was little risk to the lender because unlike the earlier days when home loans were held in their portfolios, these loans were sold and if the loans defaulted the investors or purchasers of these loans would take the losses i.e. not the bank making the loan. The result today is tumult in our economy from the mortgage meltdown which has disrupted the overall financial system and affects all lending in a negative way.

Who is responsible for this situation? All loan originators, including banks, are responsible for turning a blind eye to loans that were based on poor credit criteria. Under the label of “subprime” loans there were low documentation loans, no documentation loans and very high loan to value loans- many of which are the foreclosures we read about on a daily basis. Wall Street is responsible for pumping this system into a financial disaster that may grow from the current $400 billion dollar estimate to over a trillion dollars. Realtors, mortgage brokers, home buyers and speculators are responsible for their willingness to pay higher and higher prices for homes on the belief that prices would only go higher and higher. This basically fueled the system for the mortgage meltdown.

Are there any similarities to the saving and loan crisis of the 1980′s? Between 1986 and 1995 Savings and Loans (S&L’s) lost about $153 billion. The institutions were regulated by the Federal Home Loan Bank Board and the Federal Savings and Loan Insurance Corporation. These entities passed laws that required the S&L’s to make fixed rate loans only for their portfolios. The rates that could be charged for these loans were determined by the marketplace. Imagine an institution with $100 million in loans at 6% to 8%. For years the interest rates on deposits were also regulated by the government. The interest rate spread between the two allowed institutions to make a small profit.

In 1980 the U.S. Congress passed the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA). A committee was established in Congress. Over a period of years the committee deregulated the rates S&L’s could pay on savings. Nothing was changed with respect to what could be charged for home loans. Many institutions started to loose huge amounts of money because they had to pay market rates of 10% to 12% for their savings, yet they were stuck with their old 6% to 8% loans. Some executives in the savings and loan business referred to this committee as the damned idiots in Washington.

Many books have been written about these events. There is documented evidence of substantial wrongdoing by S&L executives who were trying to invest funds to save their institutions, sometimes for personal gains. Some were sophisticated criminals. Congress recognized their mistake in 1982 when the Garn-St.Germain Depositary Institutions Act was passed to allow S&Ls to diversify their activities to increase their profits. It also allowed S&L’s to make variable rate loans. It was too little too late. After bankrupt institutions were liquidated by the government, the surviving S&Ls were assessed billions of dollars by the Federal Deposit Insurance Corporation to replenish the fund that insures the depositors of all U.S. banking institutions.
The mortgage meltdown and the savings and loan crises are similar with regard to the presence of greed and criminal activity. They are very different with respect to the fact that the S&L crises originated from a broken government mandated regulatory system and the mortgage meltdown has been caused primarily by a system that went wild with greed.

This has impacted non-bank lenders such as private commercial finance companies that provide hard money real estate loans, purchase order financing and accounts receivable financing. Most of these firms have raised their prices and their origination standards for safety and soundness of operations.

The bottom line: Bank lending can be replaced by other sources such as commercial finance companies to some degree. Hard money, purchase order financing and accounts receivable financing will help some businesses grow during these difficult times. But for the average borrower, businessman, or business owner these are difficult economic times, caused by the mortgage meltdown, which are here to stay for several years.

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Commercial Financing – The Benefits of Off-Balance-Sheet Financing

There are two different categories of commercial financing from an accounting perspective: on-balance-sheet financing and off-balance-sheet financing. Understanding the difference can be critical to obtaining the right type of commercial financing for your company.

Put simply, on-balance-sheet financing is commercial financing in which capital expenditures appear as a liability on a company’s balance sheet. Commercial loans are the most common example: Typically, a company will leverage an asset (such as accounts receivable) in order to borrow money from a bank, thus creating a liability (i.e., the outstanding loan) that must be reported as such on the balance sheet.

With off-balance-sheet financing, however, liabilities do not have to be reported because no debt or equity is created. The most common form of off-balance-sheet financing is an operating lease, in which the company makes a small down payment upfront and then monthly lease payments. When the lease term is up, the company can usually buy the asset for a minimal amount (often just one dollar).

The key difference is that with an operating lease, the asset stays on the lessor’s balance sheet. The lessee only reports the expense associated with the use of the asset (i.e., the rental payments), not the cost of the asset itself.

Why Does It Matter?

This might sound like technical accounting-speak that only a CPA could appreciate. In the continuing tight credit environment, however, off-balance-sheet financing can offer significant benefits to any size company, from large multi-nationals to mom-and-pops.

These benefits arise from the fact that off-balance-sheet financing creates liquidity for a business while avoiding leverage, thus improving the overall financial picture of the company. This can help companies keep their debt-to-equity ratio low: If a company is already leveraged, additional debt might trip a covenant to an existing loan.

The trade-off is that off-balance-sheet financing is usually more expensive than traditional on-balance-sheet loans. Business owners should work closely with their CPAs to determine whether the benefits of off-balance-sheet financing outweigh the costs in their specific situation.

Other Types of Off-Balance-Sheet Financing

An increasingly popular type of off-balance-sheet financing today is what’s known as a sale/leaseback. Here, a business sells property it owns and then immediately leases it back from the new owner. It can be used with virtually any type of fixed asset, including commercial real estate, equipment and commercial vehicles and aircraft, to name a few.

A sale/leaseback can increase a company’s financial flexibility and may provide a large lump sum of cash by freeing up the equity in the asset. This cash can then be poured back into the business to support growth, pay down debt, acquire another business, or meet working capital needs.

Factoring is another type of off-balance-sheet financing. Here, a business sells its outstanding accounts receivable to a commercial finance company, or “factor.” Typically, the factor will advance the business between 70 and 90 percent of the value of the receivable at the time of purchase; the balance, less the factoring fee, is released when the invoice is collected.

Like with an operating lease, no debt is created with factoring, thus enabling companies to create liquidity while avoiding additional leverage. The same kinds of off-balance-sheet benefits occur in both factoring arrangements and operating leases.

Keep in mind that strict accounting rules must be followed when it comes to properly distinguishing between on-balance-sheet and off-balance-sheet financing, so you should work closely with your CPA in this regard. But with the continued uncertainty surrounding the economy and credit markets, it’s worth looking into the potential benefits of off-balance-sheet financing for your company.

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Comparison Of Php Mysql Programming Language With Others?

A HTML page that incorporates a PHP script is regularly given a document name addition of “.php” “.php3,” or “.phtml”. Like ASP, PHP can be considered as “dynamic HTML pages,” since substance will differ in view of the aftereffects of deciphering the script.
PHP is free and offered under an open source permit.
Why PHP?
The PHP programming language t is a server-side HTML implanted scripting language.
The PHP language keeps running on the server-side. This implies the executions (read beginning) of the scripts are done on the server where the site is facilitated. HTML inserted implies that you can utilize PHP proclamations (read a bit of PHP code) from inside a HTML code. PHP documents are come back to the program as plain HTML.
A scripting language is a type of programming language that is generally translated as opposed to incorporated. In programming language such C or C++ you incorporate the program (for all time) into an executable document, before you can execute the program. A program that is composed in a scripting language, is deciphered one summon at once by a charge translator (Command mediator is by and large an executable written in another language (for example C/C++) than the scripting language.) Some different cases of scripting language are Perl, Phyton, Java and Ruby.
A last note: scripting languages are likewise frequently utilized by applications as control or design language. An illustration: Firefox is composed in C/C++ and can be controlled with JavaScript.
Things You Should Know
Since PHP is a HTML implanted language you ought to have an essential comprehension of HTML/XHTML and (a bit) JavaScript. In the coming instructional exercises we will clarify the PHP code, however we won’t clarify the HTML code (at any rate not in extraordinary detail.)
What is PHP (Hypertext Preprocessor)?
‘It is a server-side scripting language.
‘PHP is free and is an open source programming language.
‘The PHP scripts are executed on the server.
‘PHP underpins numerous databases (MySQL, Sybase, Oracle and numerous others.)
‘PHP keeps running on various stages (UNIX, Linux and Windows.)
‘PHP is perfect with all web-servers utilized today (Apache, IIS, and so on.)
‘A PHP record can contain plain content, HTML labels and scripts
‘The PHP documents can have one of the accompanying augmentations: php, php3 or phtml.
What do you require PHP MYSQL?
�Access to a web server (like Apache)
�PHP and MySQL ought to be introduced on the web server.
�It is additionally a easily to know programming language.
�Also has enormous group bolster.

The simplest path is to locate a web facilitating arrangement that bolster PHP and MySQL (a large portion of the web-facilitating suppliers do. The preferred standpoint is that everything is now introduced and that you can share your program (that you will compose) with whatever remains of the world. PHP MYSQL is programming and is additionally very adjustable.

On the off chance that you would prefer not to burn through cash, you can likewise introduce everything on your neighborhood machine. The most effortless route is to introduce WAMP and LAMP both are work in Linux machine. (WAMP = Windows Apache Mysql PHP and LAMP = Linux Apache Mysql PHP.) These bundles introduce all that you require. Perused the introduce manual of these bundles for directions. After establishment you ought to have entry to http://localhost in your program.

Why PHP is a higher-ranking?

Java and PHP are regular and also vital to now a day web and are too similarly crucial. In any case, for amateurs PHP is the undeniable decision in light of the fact that:
‘Less programming language.
‘Flexible
‘Fast
Differences between Dot NET and PHP
� Dot NET is not a language. Spot NET is a system that can be consolidated alongside numerous languages while PHP is a HTML installed scripting language.
� Dot NET runs just on windows or IIS while PHP keeps running on any Operating framework and HTTP server
� Dot NET is not an open innovation. Spot NET requires overhauling the equipment and burning through cash for programming licenses. In any case, PHP is an open innovation. PHP is free of cost and accessible free on web.
� Dot NET is not that simple, while PHP is effectively learnable and justifiable.
� Dot NET backings OOPS worldview and OOPS ideas however while PHP does not execute OOPS ideas.
That is just for this PHP language presentation instructional exercise. We trust that you will take in something from the coming PHP instructional exercises and as dependably we trust that you will fill us in as to whether something isn’t right by leaving us a remark.
Differences between JAVA and PHP
PHP is a language that is particularly intended for web programming with inherent coordination with the most prevalent open source database MySQL.
Simple to utilize: Compared to most arrangements like e.g. Java, PHP doesn’t should be ordered, so it’s simply to compose the script and after that transfer it to the server and after that refresh the program.
Incorporated database bolster: PHP has (for the most part) implicit support for the most prominent databases like e.g. MySQL, that implies it is anything but difficult to begin utilizing databases no extra drivers should be introduced, just to utilize the mysql-capacities. The simple to utilize online administrator apparatus PHPMyAdmin (discharged 1998) is likewise critical to the PHP’s accomplishment in mix with MySQL.
Modest facilitating: Since PHP has existed for long time and works great on both Linux and Windows, and numerous web servers have bolster for it. There is no issue to discover facilitating with PHP pre-introduced.
The client simply need to include a couple PHP-labels with e.g. a for-circle in its current HTML-records and after that transfer it to the server and see the outcome or a mistake message. Dynamic writing and affiliated clusters makes it additionally simpler to begin utilizing PHP.

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Quick And Fast Logistic Delivery Solutions Presented By Eagle Technosys

Eagle Technosys is a software development company that offers web services. Eagle Technosys is an Indian Company and but it works will all regions. Eagle Technosys have customers from all regions. Eagle Technosys is a multiscript company as it works with Real Estate Script, Courier Tracking Software, Logistics Scripts, B2B Marketplace Script, B2C Marketplace Script, Classified Script, Dealkart, Shopping cart Software, Hotel Booking Script, Tour Package Booking, MLM Networking,PHP Betting Script. Logistic Scripts of Eagle Technosys are very great and advanced featured. Logistic Script of Eagle Technosys include Parcel Delivery Booking Script, Uship Clone Script, Pro Same day delivery Script, Delux Same day delivery Script, Container Delivery Script, Car Delivery Script, and Parcel Car Container Delivery Script. One can book orders online individually or in bulk. You just need to give your order and choose the package details from the web site and your order will be delivered accordingly. Eagle Technosys provide you to track your parcel or container online. So, You can track the position of your order online with the tracking feature and you can also print it as Eagle provided the print option on page. Once you have make an order online you will have to pay according to your package you have chosen for delivery. You can make payment online according to your convenience as Eagle provide you all the best ways of make payment online. Eagle Technosys has top 5 rank in Google Adsense. Eagle Technosys is very advance company. It is growing higher day by day. Eagle Technosys launched Aliexpress Clone Script very recently. Eagle’s Aliexpress hold the B2B and B2C business. It offers different types of membership packages for the users that want to become member and learn the tricks of e-commerce business.

Golden Features Provided By Eagle Technosys To Its Users Are:

Eagle Technosys provide Multi-Scripts to users.
Eagle Technosys provides easy and fast way of order making.
Eagle Technosys believes in quick and fast reply.
Eagle Technosys provides payment gateways according to place to place.
Eagle Technosys provides different order packages, user can chose according to need.
Eagle Technosys provides online tracking feature.
Eagle Technosys provides membership packages. User can join membership according to his desire.
Eagle Technosys provides business tricks to businessmen.
Eagle Technosys provides as possible as best custom solutions to users .
Eagle Technosys is a lite software.
Eagle Technosys is mobile compatible.

About Author:- I am Wahenoor kaur. I am a SEO and content writer. I have written many blogs, articles, forums and classifieds and posted on Google Adsense. I love all the designs on Google posted by others. I appreciate all the web designing languages like PHP, Java, .net, Python. I am familiar with .net and PHP.

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