Take 21/22 Program

By: Delaena, MBA Candidate, Class of 2009

The Take 21/22 Program allows MBA students to take two additional classes after they complete their graduation requirement of 20 classes.  These two courses are free of charge and designed to allow students to further pursue academic interests as they end their time as a Simon student.

I decided to take Special Topics in Finance (Real Estate) for a couple of reasons. First of all there is no organized and liquid real estate capital market in my home country Ghana. For the most part, if you want to build a house in Ghana, you just buy a parcel of land and develop it on your own. There is a small mortgage industry but it’s at best, a minute part of the economy. I want to learn how real estate capital markets work in the U.S. and then hopefully apply the useful (not the reckless sub-prime mortgage industry or the 125% Loan to Value that mortgage lenders doled out to borrowers at the height of the housing bubble) aspects of it to Ghana's fledgling financial markets.

Secondly, real estate constitutes about 11% of U.S. GDP and it’s a critical component of the U.S. economy. It played a significant part in the credit crisis that led to this recession. Essentially, the inflated property values during the bubble, allowed mortgage lenders to securitize sub-prime mortgages (bundled with other fixed income asset classes with predictable cash flows) into collateralized debt obligations (CDOs), sliced them into different tranches and sold them off to banks and investors in order to provide liquidity to issue more mortgages. With the bust of the housing market, home equity vanished overnight, sub-prime borrowers who couldn’t afford mortgages in the first place defaulted on their mortgages and the CDOs went from being illiquid pieces of paper to being worthless. Of course you don’t realize it’s a bubble till it busts so it’s often difficult to see these things without the benefit of hindsight; but I hope to learn from this class the lapses within the industry that led to such loose lending standards and how such a bubble could be avoided if at all possible.

The lecturer, Mr. John Anderson is the President of Northern Capital Group Inc., a real estate development and investment company based out of Rochester, New York. With over 25 years of industry experience, Mr. Anderson was Vice President (from 1985 to 1989) of Citicorp Real Estate Inc., Citigroup’s main real estate banking vehicle providing financing for large real estate developers and owners on a worldwide basis. There couldn’t be a more qualified person than him to bring real world experience in the industry to the classroom.  I didn’t want to miss the opportunity to learn from such an industry leading practitioner, so I took advantage of the Take 21/22 Program.

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