Dangerous Concentrations of Commercial Real Estate Lending

Policy makers are concerned of the impact that community bank failures will have on the local markets. TARP estimates that by the end of 2010 half of all commercial real estate mortgages will be underwater, with many of these loans held by community banks. TARP warns that almost 3,000 banks have, “dangerous concentrations of commercial real estate lending.”

The large stockpile of commercial real estate loans could overwhelm risk management controls, leading to another economic downturn. While at first reluctant many commercial lenders are now modifying mortgages in effort to prevent another default tsunami.

April, 30 2010 – DS News