Posts Tagged commercial mortgage loans
Commercial Mortgages Are Difficult to Obtain These Days
Gone are the boom days of commercial real estate serveral years ago. Since 2007, commercial property values have declined over 40%, according a report by Moody’s. Along with increasing default rates, obtaining a commercial mortgage is tougher indeed. Note what an artice written by Emily Maltby in the Online Wall Street Journal had to say regarding getting approved for a commercial mortgage: “Many banks taking extra precaution before issuing commercial mortgages are reeling from those kinds of losses and are wary of putting more of those loans on their books. According to a Real Capital Analytics’ study of Federal Deposit Insurance Corp. and bank data, the default rate for commercial real-estate mortgages rose to 4.2%, amounting to .5 billion, for the first quarter of 2010. That’s the highest default rate since 1992.”
Banks don’t want additional “toxic” commercial mortgage loans on their books. A good portion of commercial mortgages issused within the past few years are held by local and regional banks. Many of those loans are due to reset, from now until 2014. Without obtaining needed financing, a flood of commercial mortgages will go into default.
Tags: commercial mortgage loans, commercial property values, federal deposit insurance, loan workout, loan workoutsRelated posts
The Basics of Commercial Mortgages
A commercial mortgage is a type of loan that uses real estate as security for repayment. This type of mortgage differs from residential mortgages in the sense that only commercial properties such as: acquiring commercial land or built up property, expanding existing facilities, refinancing existing debts, development of commercial properties, etc are accepted as collateral and businesses have to be incorporated – partnerships, limited companies, etc, to be eligible to take them.
Tags: balloon payment, commercial mortgage loans, debt service coverage, debt service coverage ratio, loan repayments
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