Free Web Press - Commercial Mortgage Backed Securities - Written by Mike Jaeger Live May 24, 2010
This recent article states the problem well. The source is noted at the end of it FYI. My comment to it was sent because this topic needs attention. The simple plan always works best. When a ship is sinking, the people get into the life boats. The ship crew does not create a long procedure with many documents to create new jobs for themselves, explaining who qualifies for a life boat... all are qualified for a a seat on the life boat. That idea is insane. Insanity is a reality in our economy today. The next shoe to drop are these loans which are going bad... but those who manage them are creating jobs for themselves instead of doing their job.
Follow the comment link below the article to source it.
Commercial mortgage-backed securities (CMBS) are more and more frequently requiring a “special touch,” reported Fitch Ratings on Friday[1]. Special services for commercial loans can include forbearance, loan modifications into A/B notes and bulk note sales. Because the risk of default is spreading so rapidly through the secondary commercial market, specially-serviced CMBS loans are on the rise, with a total of $81.7 billion in debt at the end of Q1 2010.
This rise in troubled debt is creating a need for more staff and restructuring in special service organizations in order to keep these loans alive, and the loan servicers themselves are working with their most experienced employees to establish “creative workout strategies for commercial mortgages,” reported DSNews.com. However, presently there is no standard strategy or process, and each CMBS is approached on an individual case basis. Despite all the extra effort, 487 CMBS loans – $8.43 billion – have defaulted in the first quarter of this year.
This new era of creativity and flexibility in the commercial real estate market presents a major opportunity for both new and experienced commercial real estate investors. How are you moving in these new, uncharted waters?
Thank you for reading. Your comments are welcome below.
1 comment:
I thought lenders would take more initiative and convert their loans unilaterally, for short periods of time, with extensions, lower rates, and payment reductions. These moves would reduce default, buy time, add value, and increase competition for commercial real estate. Cash flow would improve. If they were truly playing with their own personal money… they would send out short term unilateral modifications on all their loans… some to solicit new business…. and some to buy time for their operators and investors. This would cause more competition, less default, and reduce net loss. A simple plan with a low overhead to implement.
Simple is as simple does… a line by Forest Gump, is what the lenders missed… or did they get led to their slaughter by TARP babies ? Big banks saving themselves to eat their competitors… No, that would never happen in America, would it ?
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