Commercial Real Estate is lurking potential next mortgage crisis

Federal Reserve and Treasury officials to crawl to the commercial sector, a property of a circular punch to the economy of the United States, struggling to avoid matting. Unable to perform Translation:invalid text
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Unable to perform Translation:Unable to perform Translation:invalid textA typical CMBS is filled with a diverse group of mortgages on properties, often less than 100, with loans ranging from a few million dollars to over 100 million dollars. A CMBS repairer, usually a large financial institution like Wachovia and Wells Fargo, collects monthly payments from borrowers and remit money from institutional investors to buy securities. Unable to perform Translation:invalid textCMBS, of course, aren \ 't the only type of debt for commercial real estate that suffer from higher risk. Banks hold $ 1.7 trillion of mortgages and commercial loans for construction, and delays in payments on the debt that has already played a role in the rise of bank failures this year. Unable to perform Translation:invalid textMa \ bank losses on commercial mortgages have the opportunity to meet too high, and high foreclosure rates on the CMBS market could play a role. Until now, banks are able to put a lid on the commercial losses of real estate by increasing the debt, as if the basic properties to generate enough money to pay the debt must take experience. The banks have a strong incentive to refinance is relaxed, because accounting standards have prevented the identification of the value of claims down. Unable to perform Translation:invalid text\ "There is no incentive for banks to take losses \" on their commercial real estate loans, said Jack Foster, Head of Real Estate of Franklin Templeton Real Estate Advisors. Unable to perform Translation:invalid textCMBS are owned by dozens of investors, and to extend the operator CMBS loans above a certain amount of restructuring or doubtful debts is limited because the banks. Earlier this month, was not a coincidence that the CMBS mortgage debt accounted for six of the seven office buildings in Southern California that Maguire Properties Inc. said it was giving up. \ "While most of the evolution of the [CMBS], no one thought that all the outstanding loans to that \," said Nelson Rising, Maguire \ 's Chief executive.Indeed property developers and many investors complain there is no way to identify the investors to keep their debt and that it is difficult to negotiate with CMBS servicing. In the context of complaints, the Treasury, taking into account guidelines to speak of such services and how to avoid failures and seizures could be used by people familiar with the matter. But investors in CMBS bonds argue that workshops are ultimately bound by contract holders. Unable to perform Translation:invalid textSo Maguire will soon be a large number of companies. In a study conducted for the Wall Street Journal, revealed that the real point at 281 CMBS loans worth $ 6.3 billion weren \ 've paid for refinancing when they are in the last three months, while the value of $ 173 borrowing 5, 1 billion euros, down from more money than needed to pay debts. Unable to perform Translation:invalid textChange the voice of the newspaper is likely that the property values even further thrown on the CMBS market. And it would put pressure on banks to give loans. \ "What \ 's happening in the world CMBS is a precursor of what he says can be seen in banks \' books, \" Frank Innaurato, managing director of Real Point. Unable to perform Translation:invalid textThe market for commercial real estate could be further improved with the economy and rescue plans saved Washington. Moreover, capital markets will start to make it easier for real estate investment trusts traded. Made since March by more than two dozen REITs have increased by more than 13 billion dollars from the sale of shares. Unable to perform Translation:invalid textHowever, most of the $ 6.7 billion in commercial property in private hands. It is also unlikely that many advantages over commercially rapid economic recovery. What are the owners of employment and rents are increasing, and this means that employers must start hiring and consumers need to shop more. So far, there is no evidence that this happens.