Distressed CMBS loans could hit $60B by 2011

By the close of 2010, the country may be looking at more than $60 billion in distressed loans that are tied up in commercial mortgage-backed securities, according to a new Credit Suisse Group report released yesterday. Troubled loans are increasing by $2.7 billion a month, as of the fourth quarter of 2009, up from $1.4 billion a month during the first quarter, and the buildup could prevent a larger economic recovery. About 5 percent of loans are at least two months overdue, a more than 10-fold increase over the end of 2008 and an overwhelming caseload for special servicers. Discounting the loans that are not yet in distress, it would take such companies five and a half years to resolve the $28.8 billion in delinquent loans. “The transfer of distressed loans into the hands of stronger operators to create value at the property level where in turn they contribute to local economies is a vital step in any recovery,” according to the report. [Reuters]