Fed, Treasury fear mass commercial property foreclosures

08/31/2009 | Wall Street Journal, The

The perilous state of many CMBS issues has Federal Reserve and Treasury officials searching for ways to prevent widespread foreclosures on commercial real estate mortgages. In some cases, lenders can keep a lid on distressed commercial property loans made directly to borrowers and held directly by the lender by extending the debt so long as the underlying properties generate sufficient cash flow to cover the debt service. But because of the way they are structured, it is extraordinarily difficult to do this with loans tied to CMBS issues.

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