real estate finance - full book (500 pgs)

These funds are an important source of real estate

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Unformatted text preview: ublic funds by their respective state laws. Type of Institution – Financial non–depository intermediary. While public pension funds have invested to a considerable degree in Dynasty School ( 3-9 REAL ESTATE FINANCE mortgages, partly for political reasons, private funds, in spite of their greater size, have not. In part this is due to the ERISA restrictions which are intended to protect the funds of pensioners. The Department of labor now allows such funds to invest in securities backed by pools of mortgages where the securities are issued or guaranteed by GNMA, FHLMC, or FNMA. Private issues of mortgage–backed securities are also qualified investments under certain restrictions, as are individual loans. According to a survey by the American Society of Real Estate Counselors, domestic pension funds are the leading source of direct investment funding for institutional–qualify office buildings in the 1990s. Role in the Mortgage Market – Pension fund investments have increased as a result of the ERISA exemptions. Nonetheless, mortgages and securities must be competitive with other investments to attract sizeable amounts from pension funds. INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) AND KEOGH PLANS As private pension programs became more popular with liberalized tax–deferred contributions for Individual Retirement Accounts for employees, and allowances under the Keogh Plan for self–employed persons, substantially more of these dollars are entering the capital markets. These funds are an important source of real estate financing on all levels. New money is being brought into the capital market from employers, employees, and the self–employed in what might be viewed as a captive market, since the steady inflow of such funds is often more stable and dependable than savings inflow into thrift institutions. (Pension funds accumulate until each member reaches retirement age, whereas savings strictly as time deposits are more volatile.) Until recently, mos...
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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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