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January 25, 2017 | Commercial Realty Loan Defaults Booming

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

Remember how subprime mortgages packaged and sold as safe investments began to implode in 2007 and set off a domino cascade of financial loss around the world?

The same actors and actions that were allowed to reload after the 2008 meltdown, have been back at it since.  Insanity expects different outcomes.  See:  Mall owners rush to get out of the mall business

The moves are an echo of the housing crash, when mortgage borrowers stopped making payments and walked away from homes that had lost value. In some cases they sent back the keys in envelopes, a practice derided by critics as “jingle mail.”

As mall property values sink below their loan balances, “some mall owners are more aggressively taking the step to walk away,” said Morningstar Credit Ratings Vice President Edward Dittmer…

One reason mall owners struggle to restructure loans is that many were packaged into commercial mortgage-backed securities, and these bonds in turn are owned by numerous investors, making it difficult to negotiate new deals.

And it is not just commercial loans that have been oversold this cycle, student and auto loans are at record highs coming into 2017 as defaults predictably mount.  We can rest assured the bankers and brokers who helped put all this genius together have already been paid their commissions upfront.  Over to you uncle Sam. (This chart shows outstanding totals to last March, both have grown since).
student and car loans
The perfect cross-sell, we now also have the magical combo pack of student-car-loans with 100% approval guarantee!  No income, no assets, only debts? No problem we have a car loan for you!  See:  Student car loan.  It’s all about helping the young people!

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January 25th, 2017

Posted In: Juggling Dynamite

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