The final proposal from the National Commission on Fiscal Responsibility and Reform was shot down at the end of this week. But don’t worry, at least some Republican and Democratic lawmakers, as well as probably the President himself, are eager to keep the the package’s ideas alive through next year.    

Recommendations from the President Obama-appointed co-chairs include: eliminating or limiting the mortgage interest deduction, taxing dividends and capital gains as ordinary income‑and eliminating the Low Income Housing Tax Credit.  

The proposal of the National Commission on Fiscal Responsibility and Reform co-chairs got only 11 votes, not the supermajority 14 votes that are required from commission members in order for the plan to go to Congress and the White House for consideration.

As to be expected, some groups in the real estate industry had strong words to say regarding this final plan. If adopted, it would bring a “huge tax increase on millions of middle-class,” says National Association of Home Builders Chairman Bob Jones. Another effect could be: a “devastating impact on both present and future homeowners,” in the words of Michael Berman, CMB, chairman of the Mortgage Bankers Association.

As it is, the middle class believes it is shrinking and hurting. Maybe President Obama’s plan should not place the emphasis, if that is indeed the case, on making the Middle Class pay disproportionately.

By Keat Foong, Executive Editor

The chairmen of the president’s commission to reduce the federal deficit released their proposals yesterday.  

Meanwhile, the release of the full committee’s recommendations is scheduled for Dec. 1. Congress is expected to vote on the recommendations.

Some say the commission’s package of proposals to reduce the federal deficit would include recommendations to shelve the Low Income Housing Tax Credit program.

By Keat Foong, Executive Editor

The word is that special servicers are so inundated with defaulted loans that often, they can barely return the borrowers’ calls.

Well, if you think there are a lot of loans defaulting currently, this is not even the peak year of CMBS loan maturities. According to data from reserach company Trepp, L.L.C., only $9.3 billion in CMBS loans are maturing this year—compared to $44.7 billion in 2011 and $57.6 billion in 2010!

“The real refinancing hurdle for the market will not take place until the 2015 to 2017 time period,” says Paul Mancuso, vice president of product management. “During this period, all 10-year issuance from the market boom time period of 2005-2007 is scheduled to mature.” CMBS loan maturity volume in this cycle will hit a high of $134.1 billion, in 2017.

One can only hope that CMBS securitization would have recovered enough to be able to support commercial real estate’s refinancing needs at that point. In that regard, the CMBS market appears to be taking baby steps towards recovery, and industry participants expect even more new CMBS loan originations next year.

Meanwhile, especially if financing and the economy do not recover, there may be many more distressed properties to come onto the market. Many presenters at last week’s Distressed Real Estate Summit, sponsored by GreenPearlEvents.com, said we are only in the first inning of a distressed real estate market.

By Keat Foong, Executive Editor

There is now bubbling under the surface the possibility of another banking crisis, a home foreclosure-generated crisis.

Big banks that face possible legal action from mortgage bond investors for improper mortgage documentation have seen their shares drop last week. There are fears they will be forced to buy back the mortgage bonds from the investors.

The root of the problem: foreclosures have been improperly filed by the servicers, and/or servicers cannot produce the mortgage documents that they were required to keep. But there are calls for foreclosure moratoriums also because some homeowners are also being erroneously foreclosed on by the big powerful banks, or had huge fees wrongly imposed on them.

The Obama Administration does not support a national moratorium on foreclosures; we also have banks’ balance sheets to worry about if the properties cannot be unloaded.

Some say there is complete chaos generated by the housing foreclosure “mess” right now, as there is also the question of who owns the residential property if the mortgage notes cannot be produced. Says one blogger: “In most of CA, home sales have been way down lately…more and more I’m hearing people say: it’s a real mess with the banks; don’t buy now if you don’t have to…”

Another thing can be observed. The economic system is far from perfect, of course.

Jobs, jobs, jobs. Speaking to executives in the commercial real estate financing industry, I hear that the most important economic indicator for them is, without doubt, job growth. Job growth has to increase before the commercial real estate fundamentals can improve.

If Tea Party candidates sweep the upcoming elections in November, will that bring about better job growth prospects for the economy? There are two courses of action one would think a Tea Party politician would want to implement immediately and radically: (1.) cutting taxes and (2.) cutting spending.

Will cutting taxes and cutting government spending at a deep level bring about better job creation?

As it stands, those with capital are already sitting on a lot of cash and there has not been any extraordinary job creation. Also, if cutting spending would bring about job creation, the federal stimulus could not be a good thing. Yet economists would likely bemoan the “last extension of unemployment benefits” and “last round of federal aid to the states” that have already occurred this year.