Half of Commercial Mortgages to Be Underwater by end of 2010

Discussion in 'Wall St. News' started by WallStWhizKid, Mar 29, 2010.

  1. Half of Commercial Mortgages to Be Underwater: Warren
    | 29 Mar 2010 | 07:04 PM ET

    By the end of 2010, about half of all commercial real estate mortgages will be underwater, said Elizabeth Warren, chairperson of the TARP Congressional Oversight Panel, in a wide-ranging interview on Monday.

    “They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have these dangerous concentrations in commercial real estate lending."

    As a result, the economy will face another “very serious problem” that will have to be resolved over the next three years, she said, adding that things are unlikely to return to normalcy in 2010. (See the video below for the full interview.)

    Meanwhile, the U.S. Treasury on Monday pledged to sell its 7.7 billion Citigroup shares this year, a step that further reduces the government's influence on the banking giant. Warren said she is having difficulty getting clarity on Citigroup’s business plans.

    “This is a cake that is still being baked,” she said of the company's plans. “[Citi's CEO] Vikram Pandit said he was going to shrink the company by 40 percent...and Citi’s numbers keep moving around so much I don’t know.”

    Speaking on troubled mortgage lenders, Warren said it’s time for the government to "pull the plug" on mortgage lenders Fannie Mae and Freddie Mac .

    “I’m one of those people who never liked public-private partnership to begin with. I think what they did was use public when public was useful and private when private was useful,” she said. “And I think we’ve got to rethink that whole thing.”

    “There is no implicit guarantee anymore,” she added. “I don’t care how big you are, if you make serious enough mistakes, then your business can be entirely wiped out."

  2. hayman


    Add this to the re-emerging credit bubble, and we are in for some serious problems. Boy, am I glad that I can now safely park my hard-earned cash in this burgeoning stock market :D
  3. sumfuka


    :D Too Late; Too Big To Fail is forever set in stone already. You can't just splash cold water onto the stone and expect the writing to melt away.
  4. I wonder what percentage of commercial buildings have been purchased in the name of a trust or LLC to reduce legal liability and taxes for the home company. If a lot of underwater commercial real estate is held in a separate legal entity which would allow the owners to walk away without risking company assets, we may have massive commercial real estate defaults.
  5. Justice....When a complete asshole takes every dime at the end of his illustrious cockroach ridden career and goes "All in" commercial RE leases. Made plenty of coin but in the end what goes around comes around. Shit he'll be too friggin' old to do petty chores on the property jus have to shoot his sorry ass.,....

    My point...ummm.... oh yeah....bailouts are for ninnys. Let the fools fry.
  6. I am not sure but owners of LLP or LC can not transfer money to their personal accounts whenever they want.

    Maybe in a third world country but not in USA

    If that was the case, then every CRE LLP or LC would be rich no matter if they are bankrupt or not. Even the thought of it is crazy.
  7. More fantastic news!

    IYR is only up 120% from it's lows 55 weeks ago. This should be good for another 20% surge.

    If more good news like this comes out we will be at DOW 12,000 by Independence day!