Commercial defaults to topple small banks, LeFrak says
August 28, 2009 10:00AM
Harrison LeFrak, managing director of the LeFrak Organization, told Bloomberg News that he expects the impending wave of commercial real estate defaults to topple more than 500 regional and community banks in the next 12 months alone. The troubles in the commercial lending market are a result of unrealistic underwriting standards from 2005 through 2007. The loans underwritten in those years are slated to come due beginning in 2010. The commercial mortgage backed securities market is in even more serious trouble than the rest of the commercial market, because there is no way to negotiate the commercial bonds.
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Comments
Anonymous
Anyone who buys a home now or in the near future deserves what's coming to them. Everyone knows about these defaults. The banks will need to be bailed out again (DB says $250B of unrealized losses on these commercial loans) and it's possible Obama will say no. If you own now, sell at any price. Get out before you too go bankrupt. Whether Harrison is mostly right or not there is just too much risk in the market for people who are highly levered to own a home (or any asset really) who's value is more than 50% of your total net worth. And my guess is that that case is true for most Americans (and enough NYers to make a big difference).
Comment #1 Posted By: Anonymous 08/28/09
Anonymous
And. Harrison is an expert because Sam was his grandfather? Please... He knows how to collect rents from RS tenants, in largely neglected buildings...he is NOT a banking expert. Here he is simply repeating what REAL experts have been saying for months. Good show Harrison...go play with your yacht and leave the rest of us alone.
Comment #2 Posted By: Anonymous 08/28/09
Anonymous
What he says makes sense. I don't particularly like the way they do business, but he is right on this point.
Comment #3 Posted By: Anonymous 08/28/09
Anonymous
#2 - bitter much? Harrison nailed the issue - and yet you found a way to mock him. You must be really fun to be around.
Comment #4 Posted By: Anonymous 08/28/09
Anonymous
Number 2 you are clearly a person who is jealous of the good fortunes of others. You should join the Obama White House and apply for a job at the IRS.
Comment #5 Posted By: Anonymous 08/28/09
Anonymous
#2 you are absolutely right
Comment #6 Posted By: Anonymous 08/28/09
Anonymous
Not jealous of ANYONE...not my way. I do not judge others by their material wealth...as do shallow people such as yourself. Just stating facts, which you seem to forget, or you never knew in the first place. What he says has been said, many times over by others. POORLY managing old, crappy Class B and C buildings, in disrepair, built by your grandfather, (who WAS a good guy...) does not make you an expert on banking. The LeFraks have been milking these buildings and tenants for years...this gives them credibility in your eyes? Actually I am fun to be around, not that I have to prove anything to you, who is stupid enough to make comments on someone you do not know...feel you are above all else much? Point is: This is old news...he has contributed nothing new...just the words of others. #1 agreed...yet people are still out there buying...what is the rush to be underwater? Oh, the comment on Obama is racist...it was BUSH who started this mess...remember? Biggest government in history, biggest deficit...a Republican no less. Perhaps YOU should get a job on FOX? Real and balanced...right. Next...
Comment #7 Posted By: Anonymous 08/28/09
Anonymous
#7 - you say "who is stupid enough to make comments on someone you do not know" OH THE IRONY. Does this mean you know LeFrak? From your posts it's clear you've never met him - so JACKASS what the hell are you talking about? Don't you get it - Bush and his crooked friends spent us into huge deficits, but now the Dems are like the Republicans on steroids. Do you really defend the actions of the Dems right now. Really? Or do you just want to deflect the criticisms onto the Republicans because somehow in your mind you think that makes the Dems actions less egregious? Both of our major political parties are run by crooks and if you affiliate with either one you are a tool.
Comment #8 Posted By: Anonymous 08/28/09
Anonymous
# 1, What if your not leveraged and own your real este. Would you still sell at any price, I guess the real question is If I sold my property where should I put the Money? In the bank? Gold? the stock market? I feel safer keeping my assets at least they wont evaporate over night.
Comment #9 Posted By: Anonymous 08/28/09
Anonymous
Both parties are corupt and responsible for this mess.....and we the people put them there.
Comment #10 Posted By: Anonymous 08/28/09
Anonymous
#8 Wrong again...but it is none of your business...I know more than you think. What "is clear" is what I want to disclose...not here to prove anything to you...in fact, I could care less. It is true that BOTH parties are full of it..but at least give Obama a chance...he inherited the biggest mess in US history. Clinton left Bush with a stable platform...look at what he has done... I am independent, always was. Republicans are now in bed with the insurance industry and are spreading fear, especially amongst the seniors and non-educated masses. Not good...not the moral high ground...bad for the 40 million without health insurance. We need a solution...and we need it now...people are dying in this country, and that is shameful. Be well...
Comment #11 Posted By: Anonymous 08/28/09
Anonymous
#9 - #1 here. I think if your home's price represents less than 50% of your net worth than you can afford the luxury of staying put. If the price is more than 50% it's just too risky for you to stay. If we go lower from here (very likely) then you could go bankrupt - one should never take such risks. Personally I got short the DOW this week and got short oil at 70 recently and long Nat Gas. I also own rental apartments in low income neighborhoods here in the City. My revenues are greater than my expenses and I'm a long term holder. These aren't home run type real estate plays but 5 to 10% annual returns based mostly on the difference between years when some people move out (thus giving me a decent rent increase) and whether or not oil is above $100 and whether or not Bloomberg approves another 20% hike in real estate taxes another 10% hike in water bills - another 10% hike in electricity etc etc.
Comment #12 Posted By: Anonymous 08/28/09
Anonymous
PS #1 again - if the Dow hits 10K and then 10.5K I'll get short more - I'm not stopped out until 11K. Oil I'm stopped out at 80 and Nat Gas I don't know as much about - but I'll continue to build a small position in the 2s --- anything below 2 and I'll start building a sizable long position.
Comment #13 Posted By: Anonymous 08/28/09
Anonymous
#8, I will give Obama a chance when he gives us a chance to read the 1000 page bills he keeps passing,when he gets rid of tax cheat rangel. when he starts showing his country and the world that he is proud to be American. Tell the dying without ins. to go to the emergency room that what the illegals do, and they are alive. also independent.
Comment #14 Posted By: Anonymous 08/28/09
Anonymous
# 1- # 9 here. thanks for your view. How do feel about the banks? I'm not so sure it's safe keeping money there and the stock market is not for me, so I keep looking for well priced property. I purchased property early nineties and after 911 so I believe I'm well positioned.
Comment #15 Posted By: Anonymous 08/28/09
Anonymous
# 8 your man Obama, should not be prosecuting the CIA. remember 911?
Comment #16 Posted By: Anonymous 08/28/09
Anonymous
#17 - #1 again - Cash in the bank is safe, the Feds have to bail out the FDIC - everyone knows it - but only keep up to $250,000 per bank though. I like the idea of buying property in locations where it cash flows. For example Vegas. You can buy a $100,000 house that is two years old in a decent neighborhood that rents for $1,000/month. Prices may go lower there, but 10 or 15 years from now it will be a good play. Eventually Vegas will come back. I think owning real property and borrow 30 year money right now is a great idea. But, I wouldn't buy anything in NY that's not cash flow positive on day one. #16 - don't forget that Obama put a tax cheat in charge of the IRS - I wouldn't get your hopes up about anything just happening to Rangel.
Comment #17 Posted By: Anonymous 08/28/09
Anonymous
@ Comment #12 Govt DOES NOT create wealth. It is the private sector that FUNDS the Govt. Obama is a functional illiterate in economics because he thinks he can spend his way out of a DEBT based contraction. Deficits under Bush were $400 billion annually and under Obama it is almost $2 trillion. When the Private Sector shrinks, the Public sector also has to shrink simply because it is on the expense side of the ledger of the nations GNP. Furthermore, the Govt DOES NOT control ANY market based economy otherwise it would be a socialist /communist economy i.e. state run.
Comment #18 Posted By: Anonymous 08/28/09
Anonymous
# 20 I'm afraid that is where we are headed socialist/communist economy.
Comment #19 Posted By: Anonymous 08/28/09