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.
could make a limited number of noninsured loans at an 80% LTVR, but only
80% LTVR loans (80)--still below the 90% LTVR allowed for FHA-insured
Figure 4 shows that the loss of financing, with an LTVR of 0%, corresponds to a PVD of nearly 25%.
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.
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.
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.
Scenario 2 represents an intermediate risk level, with a 7% equity yield premium and a reduced LTVR of 50%.
TABULAR DATA FOR TABLE 3 OMITTED] Thus, the complete loss of financing, rather than partial financing on a reduced LTVR, would be a possible lender response.