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C&D (construction and development) and CRE (commercial real esta

(2007-08-24 23:08:06) 下一个

From the WSJ: Condo Troubles Further Squeeze Property Lenders

For the nation's real-estate lenders, the other shoe may be about to drop: condominiums.
So many shoes are dropping, the turmoil will be named Imelda!
Alreadyplagued by rising home-loan defaults and foreclosures amongoverstretched consumers, major markets across the country -- includingparts of Florida, California and Washington, D.C. -- are seeing risingforeclosures and bankruptcies of entire condo projects.
...
Typically,condo developers are required to pay off construction loans shortlyafter construction is completed. But with sales stalled, moredevelopers are defaulting, creating headaches for banks and real-estatefunds that financed the projects.

Delinquencies on condo-construction loans have already jumped to 4% from 1% over the past year. ...

Underlying the defaults was a loosening of lending standards.
Kudosto WSJ journalist Alex Frangos for not blaming the problems on subprimeloans. These "loose" lending standards were pervasive in C&D(construction and development) and CRE (commercial real estate)lending, in addition to residential real estate.
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