NEW YORK — While banks and other lenders are not having widespread problems with commercial properties compared to residential properties, The New York Times said refinancing attempts could significantly change that this year.
The publication said the Real Estate Roundtable, a lobbying group, is seeing an increase in defaults and foreclosures on an estimated $400 billion in commercial mortgages that come due this year, describing the wave as "the next ticking time bomb." Lawmakers have asked to include commercial real estate relief in the economic stimulus package.
According to the Times, commercial property loans were repackaged in 2006 and 2007 with nearly 60% of commercial property loans turned into securities. Borrowers are now having a hard time rolling over the loans now that the market for those securities has evaporated.
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Hotels and shopping center are the most troubled properties plagued by owner bankruptcies and stalled sales, according to the Jan. 4 article. The city of New York leads the nation in having the most troubled properties valued at $12 billion. Nineteen other cities, including Seattle, Atlanta, and Denver account for more than $1 billion worth of distressed commercial properties, the publication noted.
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