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Extend and Pretend
Implications for Real Estate
By: Mark G. Dotzour
April 2011
In "normal" times, when a commercial real estate (CRE) loan matures and the property value has fallen below the loan amount, the owner must either come up with more equity, or the property is foreclosed on and is sold to a new owner. The lender takes a loss and moves on. The new owner can then lease it to businesses at a lower rent because its investment is smaller.
What is Meant by 'Extend and Pretend'? Clearly, these are not normal times. Many maturing loans are being extended rather than foreclosed on. This postpones the day of reckoning when the owner loses the property and the lender incurs the loan loss. This phenomenon is called "extend and pretend." The lender extends the loan and pretends it is still performing.
Banks are weighed down with loans like this. Wall Street
has sold billions of dollars of these loans to investors all over
the world. Why don't the banks and other lenders foreclose on these properties and let the market clear? Why don't they sell them to new owners that can fix up the properties and find tenants for them?
Read more: http://recenter.tamu.edu/pdf/1962.pdf |
Commercial and Multifamily Mortgage Originations up 88%
By: Kerri Panchuk, HousingWire
3/31/2011
Commercial and multifamily mortgage originations grew 88% in the fourth quarter of 2010 when compared to 4Q 2009, the Mortgage Bankers Association said in its Fourth Quarter Commercial Real Estate-Multifamily Finance Quarterly Report. An increase in the involvement of insurance companies in the CMBS segment helped drive the growth in the segment, the association said. The latest Fourth Quarter report elaborated on this trend saying, "loans for conduits for CMBS saw a 60-fold increase compared to last year's fourth quarter. There was also a 170% increase in loans for life insurance companies, a 65 percent increase for Government Sponsored Enterprises (or GSEs - Fannie Mae and Freddie Mac), and loans originated for commercial bank portfolios saw a decrease of 25 percent."
Read more: http://www.housingwire.com/2011/03/31/commercial-and-multifamily-mortgage-originations-up-88 |
Central Texas Economy in Perspective
By: Austin Chamber of Commerce
4/19/2011
The Austin metropolitan area added 13,900 jobs, or 1.8%, in the 12 months ending in March according to the latest release of preliminary payroll jobs numbers by the Texas Workforce Commission and the U.S. Bureau of Labor Statistics. The previous couple of releases of these numbers had shown some slackening of Austin's year-over-year job growth compared to that seen in the second half of 2010. This month with new data for March and revised data for February, the pace of job creation picks up. Year-over-year change hit a recovery period low of 1.3% in December, but successive months have seen 1.6%, 1.7%, and now 1.8%.
Read more: http://www.austinchamber.com/the-chamber/media/economic-indicators.php |
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Austin Ranks High for Everything
By: Colin Pope, Austin Business Journal
4/13/2011
Rarely does a week go by without Austin being listed at or near the top of a "best of" list. With so much positive PR for this city flying around, I thought it would be helpful to wrangle it all together. So here goes.
· The biggie people still like to talk about came from Kiplinger's Personal Finance in May 2010, which tagged Austin as the No. 1 best city to live in for the next 10 years.
· Just last week, Austin placed third in a "Youngest Cities" ranking, which was based on how youthful residents feel, not their actual age.
· When it comes to social networking, few cities beat Austin's prowess, Men's Health magazine says.
Read more: http://www.bizjournals.com/austin/blog/big-picture/2011/04/austin-ranks-high-for-well-just.html |
Two Austin Firms Make Forbes Biggest List
By: Mark Harden, Ashley Furness, Denver Business Journal, Austin Business Journal
4/21/2011
ExxonMobil Corp. is the highest-ranking Texas business on Forbes' latest list of the world's 2,000 biggest publicly traded companies. The company is one of 50 Texas-based businesses on the list this year, including two companies headquartered in Austin. ExxonMobil was ranked No. 4, followed by second highest rated in Texas, AT&T Corp. at No. 14 overall.
Read more: http://www.bizjournals.com/austin/news/2011/04/21/two-austin-firms-make-forbes-biggest.html |
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