again in 1959, when the LTVR allowed was raised to 75%.
mid-1960s could have a 97% LTVR and a term of thirty (and in some cases
maximum LTVR and term that banks and thrifts could offer.
banks could make loans of up to a 50% LTVR, with no specifications on
twenty-five years at a 90% LTVR if insured by the FHA (77) and a 66.7%
The market's perception of the contamination-related risk effects, resulting in increases in the required equity yield and in reductions in the LTVR, is ultimately reflected in corresponding increases in the applicable [R.sub.o] at each successive risk level.
The information in figures 1 through 4 depicts the effect of PVD from changes in either [Y.sub.e] or the LTVR independently.
Accordingly, figure 5 shows the PVD effects of varying the LTVR from 70% to 0%, while at the same time varying the equity risk premium from 0 to 1,000 basis points, equating to a [Y.sub.e] from 17% to 27%.
The formula specifically calculates an overall capitalization rate ([R.sub.o]) on the basis of equity yield rates ([Y.sub.e]) and financing (LTVR, interest rate, amortization period).
As explained, these adjustments could include [TABULAR DATA FOR TABLE 1 OMITTED] a lowered LTVR, an increased interest rate, a reduced term or amortization period, and increases in the equity yield rate.
As can be seen, the general financing parameters include a 70% LTVR, a 9.3% mortgage interest rate, and a 20-year amortization period.
As explained in the discussion of lender perceptions, one possible and likely response from lenders to contaminated property is to reduce the LTVR from what would be applied to an otherwise uncontaminated property.