More Underwater Commercial Borrowers Walk
An increasing number of commercial borrowers are walking away from their loans. In most cases, mortgages on commercial property are non-recourse loans, so the lender or investor has no further claim on the borrower’s assets.
“Frankly, I am surprised that we have not seen a lot more,” said Rob Little, chief investment officer of Cornerstone Real Estate Advisers LLC.
While most borrowers attempt to work out a deal to manage the debt and remain owners in order to profit when times are better, if a property is deeply underwater, and the cost of modification is too high, “then it can make sense to walk away,” says Aaron Bryson, an analyst with Barclays Capital.
Source: Wall Street Journal, Prabha Natarajan (03/10/2010)
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