Question

Facts

· Mortgage Principal at origination 1/1/2020: $10,000,000

· Annual Interest Rate at origination: 6%

· Term of Mortgage from origination 1/1/2020: 20 years

· Purchase Price: $10,000,000 on 1/1/2020

· The mall owner has stopped paying principal beginning April, 2021, and anticipates being unable to pay even the interest portion beginning September, 2021 unless the CDC allows less strict mask and social distancing requirements.

· The mall had a fair market value of $20 million on 1/1/2020, and expects a current appraisal to be at about $16 million.

· Ignore refinancing costs.

· The securitizations do not qualify for sale accounting, and the creditor retains legal title to the mortgage as well as a 10% participation in the mortgage.

· Today is August 31, 2021.

1.Create an amortization table that allows for an input each period of the amount that the borrower actually pays. Using the facts of the case, use the amortization table structure to find the principal amount owed as of September 1, 2021.

2.Create a separate restructured loan that is a reasonable alternative to the current unaffordable mortgage.

3.Create an amortization table for the restructured loan with the modifications and expected mortgage payments. If the creditor and borrower would have different accounting treatments for the loan, create an amortization table for the creditor and the borrower.

Answer 1

1. Answer: