Mortgage Mire

The New York Times, March 11
“The Going Gets Tougher”

Getting a mortgage remains an arduous, prolonged process for many buyers, even with good incomes, and in numerous cases seemingly secure financing evaporates between signing the contract and closing. Though banks have turned down people for missing one payment on a bill, the bigger problem is that buildings themselves don’t always qualify due to new Fannie Mae and Freddie Mac lending guidelines. A new I.R.S. regulation, for example, says that Fannie can’t acquire mortgages made in buildings where more than 20 percent of the square footage is commercial.

The Atlantic, January/February 2010
“Capitalist Fools”

In 2006 Tishman Speyer and BlackRock completed the most expensive real-estate deal in history, paying $5.4 billion for Stuyvesant Town and its 11,232 mostly rent-controlled apartments. Four years later, as falling asset prices emerged as a huge problem for landlords and their bankers, Stuyvesant Town was on the verge of becoming the biggest real-estate default in history—with many other similar loans threatening to go bad as well. Beyond saying “cheap money makes us all stupid,” there’s no easy way to explain such calamities.