Half of Commercial Mortgages to Be Underwater: Warren

[The Northerner]

Source: CNBC

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 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.

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 plans.

Read more: http://www.cnbc.com/id/36085517

[stray cat]

1. so do we pay to help them make their payments as well?

[DCBob]

4. I suspect there will programs to discourage owners from defaulting...

and encouraging them to keep their properties. Maybe a temporary deferral of payments to the bank. Not sure but they need to do something or this could send us right back into a major recession.

[DCBob]

2. At least this administration is able to anticipate potential serious problems...

and perhaps do something to help minimize the negative effects. The idiot Bush administration was completely asleep at the wheel for 8 years.

[tclambert]

8. The Bushies weren't asleep. They deliberately refused to act.

It is an article of faith amongst the GOP chosen that the free market can do no wrong, and the government can do no right.

What always amazed me is that anyone would vote for candidates who insist the government can never do anything right. What kind of job performance would you expect from them if elected? Imagine how embarrassed Bush would have been if he had accidentally performed competently one time. It would have disproved one of the core tenets of his political religion. He would have had to apologize to his entire constituency. Luckily, he avoided all that. Instead, he held true to his beliefs and determinedly exploited every opportunity to demonstrate his unwavering incompetence.

[mike_c]

9. best. response. evah!

:applause:

[defendandprotect]

14. Not only refused to act, they STOPPED Gov. Eliot Spitzer and other governors from acting. .. !!!

Spitzer was getting Governors together to act on this ...

Bush actually stopped them --

[xchrom]

3. Recommend

[cornermouse]

5. I'm going to take a moment to point out that

Allentown Jake has been correctly predicting this for quite a while now and it would seem the media finally caught up.

[Michigan-Arizona]

10. Yes he sure has cornermouse, thank you for stating that! N/T

[Tansy_Gold]

11. This has been a routine topic for discussion in the

daily Stock Market Watch thread and the Week-End Economists thread for well over a year.


TG

[zonkers]

6. oops. deleted.

[izquierdista]

7. The only thing they can do

is to write these loans down (but not off) as quietly as possible and say "what? underwater? no way, it's been renegotiated and it's a performing loan in good standing".

Any attempt to try and foreclose and the bankers are going to look worse than the cannon loader who forgot to cool the barrel off before reloading.

[fascisthunter]

12. my father payed most of his house off

just two more payments and my mother owns it. Good job noodle-man.

[Alcibiades]

13. The big difference is that homeowners might want to stay

But commercial owners, or tenants, have a bigger incentive to move if they cannot afford their mortgage/rent. They don't need to worry about taking their kids out of school, finding a new job, etc.