The mortgage crisis is threatening the economy with a second coming.
This time the mortgage crisis comes in the form of commercial mortgage loan defaults. Taking a look at a 500 billion plus pool of commercial real estate backed loans Fitch found that 7% of the loans are in default. As if this was not bad enough Fitch also reported that they expect 11% of the loans to be in default by year end.
To put this in perspective these loans typically have a default rate of less then 1%. So if Fitch is right then the investors are looking at a almost 1200 % worst then expected default rate!
Just like residential mortgages, borrowers will have to try a way to stop foreclosure and obtain a mortgage workout such as modification if they are to keep the property.
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