It turns out that struggling homeowners aren't the only ones seeking mortgage assistance these days: ailing businesses are as well. But banks' strategy is a little different for commercial real estate. Lenders are relying on extensions, hoping that the firms fare better in future months. The Wall Street Journal reports:
Restructurings of nonresidential loans stood at $23.9 billion at the end of the first quarter, more than three times the level a year earlier and seven times the level two years earlier. While not all were for commercial real estate, the total makes clear that large numbers of commercial-property borrowers got some leeway.
But the practice is creating uncertainties about the health of both the commercial-property market and some banks. The concern is that rampant modification of souring loans masks the true scope of the commercial property market weakness, as well as the damage ultimately in store for bank balance sheets.
Read the full story at the Wall Street Journal.
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