are we begging the question.
This week there was issued only the 2nd package of CommercialMBS's this year.
If you look at the chart of CMBS delinquencies, you will think you see why.
You do not.
For two reasons.
First, what we need to know is what KIND of CRE loans those are...
If they REFIs, then we need to know if they are delay and deny loans being rolled over
OR
whether they truly ARE modifications of prior loans with the write downs being fully taken.
Or, whether they are NEW, original CRE loans.
bcuz if they are then they are packages of CRE properties bought at highly marked down price.
and/or they are very high grade CRE properties.
As the comment to the Seattle Times 1st article points out to U.S.:
A total of $602 billion were written between 2005 and 2007 --
A total of $602 billion were written between 2005 and 2007 --
49 percent of all such securities issued over the past 20 years
Almost all of those loans are 5 year balloon CREs, which MUST be
paid off, rolled over, or foreclosed upon between 2010 and 2012.
Why are Banks/lenders so willing to roll these CRE loans over:
For perhaps a third of our local and regional banks, dealing with their existing non-performing CRE loans (never mind those that are headed for trouble) would result in overnight insolvency -- thus their desperate measures to prolong their lives are understandable
"Extend and pretend" is, in fact, really "delay and pray".
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Sound Economy with Jon Talton
Veteran financial journalist Jon Talton blogs daily on the most important economic news, trends and issues involving Seattle and the Northwest. Read his regular column every other Sunday in the Seattle Times.
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Did we dodge a bullet on commercial real estate? Maybe or no way...
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Rating Agencies See
CMBS Delinquencies Rise in May
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Council Pushes Loan-Modification Disclosure
Commercial Mortgage Alert
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