Life insurance companies are taking advantage of the volatile commercial mortgage market and tight lending strategies by Wall Street investment banks by becoming major lenders, the New York Times reported.

In the second quarter of 2011, life insurance companies underwrote $15.7 billion in new commercial mortgages — the largest number since the American Council of Life Insurers began keeping records in 1965.

“It is as if these guys died and went to heaven,” said Lawrence Longua, an associate professor at the Schack Institute of Real Estate at New York University. “Life insurance companies are pretty much the only game in town.” [more]

From the July issue: Commercial lenders are facing reality — but not all at once. In
addition to reluctance to admit they have bad loans on commercial
properties, lenders have been trying to avoid taking large losses in a
single quarter, industry experts said. In many cases, they are holding onto underwater real estate loans
not only because they don’t want to accept low-ball offers, but also
because they cannot afford the appearance of a large single-quarter
loss, said real estate insiders. Alan Miller, senior director of commercial real estate brokerage
Eastern Consolidated, offered a wry phrase to describe lenders
extending a loan past its maturity date to keep it from being
considered non-performing: “extend and pretend.” [more]