The credit collapse and the ensuing deleveraging from financial institutions are expected to have a colossal impact on the real estate investment market.

If industry executives are right, fortunes could be made, but also the number of real estate investment managers will shrink because of the lack of available capital and portfolio returns might suffer.

“I don’t think anybody has lived through what we are living through right now unless they are 100 years old. The magnitude is so massive,” said Tim Ballard, chief investment officer of Buchanan Street Partners, a Newport Beach, Calif.-based real estate subsidiary of The TCW Group. “This will affect … job growth, consumption and other things. The S&L (savings and loan) collapse did not have nearly the same effect.”

Commercial real estate is in the second or third inning of a game that might go into extra innings, industry insiders said.

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Lawyers representing a trust created for Heath Ledger’s two year old daughter, Matilda, have sued Ledger’s insurance company, ReliaStar, for delaying a $10 million dollar payout to the trust, following the star’s death in January due to an accidental prescription drug over doze.The law suite alleges ReliaStar is acting in bad faith and wrongfully prying into the life of the actor following his death, reports TMZ.

In their rejoinder, ReliaStar says, “ReliaStar is entitled to investigate Plaintiff’s claim to determine if the ‘Suicide’ provision is applicable.”

ReliaStar also claims Ledger may have incorrectly answered two questions while applying for the insurance cover: whether he was taking prescription drugs and whether he ever used illegal drugs.

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It’s a lot harder to obtain a commercial mortgage loan these days, and real estate industry officials say it’s about to get even harder.

The officials said most commercial mortgage lenders — including banks, credit unions, life insurance companies, pension funds and trusts — had already tightened up their credit policies and lending criteria after the subprime mortgage crisis began to unfold last year in the United States.

And last week’s spectacular U.S. financial market meltdown, which saw the collapse or near death of financial giants such as Lehman Brothers, AIC and Merrill Lynch and the loss of billions of dollars of value from the equity markets, has only added to their nervousness.

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Deborah Horn tugs on the handle of the glass-paned entrance of the IndyMac Bancorp Inc. branch in Manhattan Beach, California. The door won’t budge. The weekend is approaching, and Horn, 44, the sole breadwinner in a family of three, needs cash.

A small notice taped to the window on this Friday afternoon in mid-July tells her why she’s been locked out. IndyMac has failed, the single-spaced, letter-sized paper says; the bank is now in the hands of the Federal Deposit Insurance Corp.

“The Receiver is now taking possession of the Bank,” the sign says.

“I’m physically shaking,” says Horn, an academic tutor, as she peers into the bank. Inside, an FDIC examiner is talking to six stone-faced IndyMac employees. “I don’t know when I’m going to be able to get my money,” Horn says. “I’m a single mom. This is the money I live on.”

Don’t worry about Horn. She’ll be all right, as will most of Pasadena, California-based IndyMac’s 200,000-plus customers.

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Industry professionals report some consumers are ‘spooked’

Massive federal moves that are intended to stop the bleeding in the financial markets are impacting consumer confidence in the housing market, some real estate professionals report.

A Bush administration plan to buy hundreds of billions worth of mortgage-related assets will be tossed around by Congress this week, and the few details and potentially far-reaching impact of the plan have reportedly made some prospective buyers hesitant to act.

The announcement of that plan on Friday followed days of Wall Street chaos during which Bank of America agreed to buy Merrill Lynch & Co., 158-year-old investment bank Lehman Brothers Holdings Inc. filed for bankruptcy, and the federal government announced a takeover of mortgage giants Fannie Mae and Freddie Mac.

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Treasury Secretary Henry Paulson is using the near-bankruptcy of American International Group Inc. as a call for insurance regulatory reform.

Appearing on NBC’s “Meet the Press” on Sunday morning, Mr. Paulson said to have allowed AIG the declare bankruptcy would have been “unthinkable,” adding that the company was “a few hours” from doing so.

“What the government did was come in in a senior position, senior to the senior debt, well ahead of the shareholders, with…an $85 billion funding facility to allow the government to liquidate this company in a way” that avoided “a real catastrophe in our financial markets,” said Mr. Paulson, according to a transcript posted on MSNBC’s Web site.

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The home mortgage market is devilishly difficult to navigate in normal times. During a time when home prices are declining, the difficulties are compounded.

Problems I had never thought about before now pop up regularly in my mailbox. Here are a few:

Constructing a home has become more hazardous. Building a home to one’s own specifications is enormously appealing to many people. It is also time-consuming, with many pitfalls that can cause delay, extra costs or both.One reader, John, agreed with the lender on a combination loan — a construction loan that would convert into a permanent mortgage upon completion of construction, with a 5 percent down payment. The construction cost was $1 million, making the down payment $50,000. Construction took a year, at the end of which the lender had the house appraised and found it was worth only $800,000. This reduced the loan amount to $760,000 and forced the borrower to come up with $240,000 rather than the anticipated $50,000.

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Massachusetts regulators in charge of implementing key portions of the state’s health care reform law are considering a delay in rules that impose financial penalties on residents not enrolled in health care plans providing so-called minimum creditable coverage.

In July, the Massachusetts Health Insurance Connector Authority, responding to comments that its earlier rules were too rigid and not sufficiently detailed, proposed new rules that would increase the likelihood that mainstream employer plans will pass the minimum creditable coverage threshold, keeping employees from being hit with penalties that can be more than $900 a year.

The proposed rules also increase the chances that high-deductible health insurance plans linked to health reimbursement arrangements will pass muster, while easing requirements on how many annual preventive visits health plans must cover.

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The peak of more than one year of financial crisis resulting from bad mortgages and real estate investments materialized this weekend as locally based Lehman Brothers filed for bankruptcy, and as Bank of America revealed it would pay around $50 billion to acquire Merrill Lynch. Although there are still some questions as to how layoffs will occur, and how it could affect the broader economy, sources tell GlobeSt.com that the office leasing market here will soften.

According to a Jones Lang LaSalle forecast, looking at the situation with Lehman and depending upon if all or none of the space is added to the market, if there is 100% of disposition, roughly 2.7 million sf will be added to the market resulting in a potential Q1 ’09 midtown class A vacancy rate of 12.1%. The forecast already assumes more than 15,000 in job losses prior to recent announcements. If there is a 75% disposition, a little more than two million sf will be added to the market resulting in a potential vacancy rate of 11.7%. If there is 50% of disposition, about 1.3 million sf will be added to the market leading to a vacancy rate of 11.3%. If there is 25%, roughly 673,345 sf will be added to the market, pushing a potential vacancy rate to 10.8%.

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