Question-and-Answer Session
Operator
Thank you. (Operator Instructions) And our first question comes from the line Ee Lin See with Credit Suisse. Please go ahead.
Ee Lin See - Credit Suisse
Hi, good morning. I have three questions. The first one is why do you think the total loss coverage of $908 million or 36% of NPLs is enough? We're hearing that condo and land values have dropped to around 20% of book value, so an average LTV of 75 would imply 55% loan loss?
And the second question is can you please explain what specific assumptions changed to change your '09 in flow compared to the previous projection of $5 billion? And the third question is what is the main reason for the NPL increase? Is it the inability of developers to achieve pre-sales of condos? Or maybe you can talk about what stage of development the projects are in when they become NPLs mostly? Thank you.
Jay Sugarman
Okay. Let's start with the first question, which is what we base our recovery profiles on. As Katie said on the 75% loan to value metric, obviously that's an average. We look at each and every transaction individually very difficult to use rules of thumb on our portfolio. Many transactions have specific credit support it's not going to be apparent in some of the overall metrics.
Our NPL list and our reserves against NPLs is based on real-time information coming from the field, on transactions that we see as truly comparable and indications of real value. I would tell you, throughout the portfolio generally the higher quality better sponsored transactions are not receiving $0.20 on the dollar receiving much higher recovery rates. Not to say that's true in every single instance, but overall I think those would be far more conservative even in this tough environment than we would expect to recover. Certainly haven't had the experience yet of seeing that kind of minimal recovery on first mortgages in generally high quality real estate situations.
But I think given the toughness of the marketplace, we're certainly watching indications of value every day to make sure we are on top of that.
Katie Rice
Yes, Ee Lin, I think your second question was related to sources and uses and why the big change that we're forecasting, particularly in 2009. And I think we monitor this number pretty carefully and we have our asset management teams scrub these numbers and there are two big inputs to the numbers. The first is what are we using the money for? And with that really revolves around our funding schedule for primarily our construction projects.
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