real estate finance - full book (500 pgs)

The volume of financing required at a given time can

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Unformatted text preview: d started a tight–money policy, interest rates started to shoot up on builders' interim loans (those loans made to builders to construct homes), making the builders' costs increase, thus the cost of the houses went up. In some cases, the rates got so high that builders were forced out of business. Mortgage rates increased as the cost of funds to mortgage lenders increased. As the rates increased, many states were forced out of the mortgage market as rates reached or exceeded state usury laws. (Usury laws will be discussed later in this chapter.) These are only a few of the problems that can be brought about by a tight– money policy. THE TREASURY DEPARTMENT The government's balance sheet, just as in any company in the private sector, has to be monitored. In private enterprise, a company's board of directors provides direction as to the thrust of the company in the future. This direction is then spearheaded by the chief executive officer of the company. The quality of this direction is reflected in the performance of the staff and company profits. The U.S. government's financial performance – creating sources of income (receipts) and directing the allocation of that income (expenditures) – is directed by the President who submits a budget for approval and the Congress of the United States which adopts the budget and approves expenditures. The budget is contained in the annual Economic Report of the President, usually published in January. The U.S. Treasury Department handles the huge financing requirements to fund these budgetary allocations and adjust cash flow requirements during the fiscal year. The spending and taxing policy is referred to collectively as fiscal policy. Funds are acquired by sale of debt instruments to the public in the form of obligations (bills and notes). The volume of financing required at a given time can severely impact the funds available for mortgage financing. As the level of government spending is reduced, more money is available for the private sector for capital expenditur...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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