2. Key Questions… What? – Identify key terms and concepts that are important to real estate finance decisions Why? – Explain why those terms are important How? – Illustrate how those terms and concepts are applied in practice

3. The Basics Mortgages Traditional Finance Methods Alternative Finance Vehicles Fixed rates, variable, CPM, reverse annuity, price level, risks, yields, incremental costs, LTV, refinancing, prepayment Residential, underwriting, closing, settlement, corporate real estate, project and land development financing Course Map Notes, mortgages, default, foreclosure, bankruptcy, time value of money, compounding, yield, IRR Ventures, syndicates, secondary market, pass through securities, CMOs, MBS, CMBS You Are Here !!!

4. Schedule 4

5. Open House Today Informal – drop by my office (N-305) 2:30 – 4:30 Learn more Yummy Snacks 5

6. Real Estate Club The BEST club at MTSU Open to ALL majors Learn things that apply to the rest of your life Make some awesome friends Hang out with creative, entrepreneurial dudes Limited space, act now, while supplies last! 6

7. Homework… Bring your resume and post PDF to course discussion by next class

8. Today More Introductions So, what the heck is “real estate finance” and why do we care about it? Articles / News Chapter 2 – Intro Dynamic Terminals 8

9. Introductions Index Cards – Name and nickname – Major / Minor – When you graduate – Interests and what you do for fun – Home town – Your interest and/or background in real estate Speak up!!! 9

10. Workouts Restructure the loan – Recasting – Extension Agreement – Alternatives Transfer – Subject to Purchase an Option on Property Value

11. Workouts Voluntary Conveyance – Deed in Lieu of Foreclosure This can be tricky. For example, the presence of a 2 nd mortgage will make it problematic for the borrower to simply give a deed in lieu of foreclosure to the 1 st mortgage holder. In that case, the 2 nd mortgage would remain in effect and would not be extinguished by a deed in lieu of foreclosure. Friendly Foreclosure Prepackaged Bankruptcy Short Sale

12. Foreclosure Judicial Foreclosure – Judgment Lien Redemption – Equity of Redemption Prior to foreclosure – Statutory Right of Redemption After foreclosure Not in every state

13. Foreclosure Property Sale – Fixing a Price by public auction Upset price – Trust Deed: Trustor, Trustee, Beneficiary Power of Sale Clause – Court authority not necessary Used in a Limited Number of States – Purchaser Buys Any Title Defects

14. Foreclosure Parties – Senior & Junior Lien Claimants Deficiency Judgment – Property price does not cover claim – Several states limit the applicability of deficiency judgments Tax in Default – Tax sales

15. Bankruptcy Chapter 7 – Liquidation Chapter 11 – Available to business owners – Reorganization – Cramdown Chapter 13 – Reorganization

16. Banker Request 16 To finish my credit memo and complete the risk grading process we perform to move to commitment, can you gather and forward the following information (for each partner): An electronic copy (preferably a PDF file) of the package you sent me (at least the project related sections) Authorization to pull your personal credit (simply reply affirming to this email) Complete tax returns for the last two years Verification of stated liquidity on your PFS (12/31 bank/brokerage acct statements would be terrific) Land purchase and sale agreement and any brokerage agreement Fully executed lease (including all exhibits, including SNDA) Survey Proposed contractor and qualifications (when you're ready) We'll eventually need the final plans but we'll cover those items closer to closing.