2024-03-13 07:30:00 ET
Summary
- Commercial real estate (CRE) is experiencing fast rising delinquency rates, especially for loans against office properties.
- Regional banks, which originate 70% of CRE loans and hold a good portion of the debt, are at risk due to the deterioration of their commercial real estate loan books.
- Issues at New York Community Bancorp are just the tip of the iceberg: Other regional banks could face similar challenges in the quarters ahead.
- Why the problems in the CRE space are in the early innings and their potential impacts on the economy are discussed below.
During the foreclosure crisis that followed the housing bust just over 15 years ago, " Jingle Mail " became a popular term in the financial press. It referred to a growing set of homeowners, who because of the plunge in housing prices after the extremes of the Housing Boom that preceded the crash, now had substantial negative equity in their homes. Instead of continuing to make mortgage payments in the hopes that valuations would eventually improve, they simply sent their keys to their mortgage lender and abandoned the property. Thus, the rise of the term....
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For further details see:
Fed Rate Cuts Won't Save The Commercial Real Estate Space