Has the American real estate market fully rebounded from the lending crisis and financial crash of 2007? A final repercussion from that situation has just surfaced, causing some commentators to ask hard questions about the future prospects of real estate investments and projects.
Specifically, a group of commercial mortgages totaling around $90 billion is maturing. The mortgages represent the leftover debt from the selling spree of 2007, when institutional investors purchased around $250 billion of commercial mortgage-backed securities. Unfortunately, landlords may not be able to pay off their borrowed cash, and new loans are not as easy to come by anymore.
Commentators say that this last wave of pre-crisis debt is necessary before the real estate recovery will be complete. They predict that delinquency rates for commercial mortgages bundled with bonds may rise to 5.75 percent in 2017. That increase of 2.4 percentage points would reverse several years of declines.
For business owners facing a maturing commercial loan, an attorney may be a life-saving resource. Our Virginia law firm focuses on both business and real estate law. That combined focus has provided us with experience in all stages of commercial loan and commercial real estate transactions. We have also helped a variety of clients, including institutional investors, commercial landlords and business tenants.
Since foreclosure can be costly and time-consuming for all parties involved, parties are often open to negotiation and contract revision in order to provide workable solutions. The new administration’s focus on commercial development may also provide regulatory incentives that could help you keep your business afloat.
Source: Bloomberg, “A $90 Billion Debt Wave Shows Cracks in U.S. Property Boom,” Sarah Mulholland, Jan. 24, 2017