Lenders get more help with “extending and pretending” commercial mortgages

How long will banks be able to delay dealing with troubled loans?

TRD New York /
Nov.November 03, 2009 09:30 AM

From the November issue: The new tax rules handed down by the Treasury Department in mid-September are prompting more lenders to employ already-popular “extend and pretend” and “delay and pray” strategies. These darkly comic catchphrases, of course, are used to describe the practice of extending the maturity on troubled loans rather than working out a deal that would reveal just how little the debt is now worth. Those who follow commercial real estate say the federal government’s new regulations — which were designed to help facilitate the modification process for troubled securitized loans — give loan servicers greater leeway to extend loans. Attorneys and advisors with experience working on troubled loans say they have seen a big increase in “extend and pretend” transactions this year across various asset classes. They forecast more such deals, thanks to two favorable trends — the new accounting rules and low interest rates. “Our view is that this condition [of rampant extensions] is going to continue for a while — the alternative is for lenders to decide they have to recognize losses,” said Paul Fried, managing director at advisory firm Traxi.


Related Articles

arrow_forward_ios
445 Fifth Avenue and Harbor Group's Jordan Slone (Google Maps)

Harbor Group sued after defaulting on $40M loan at Midtown retail space

Harbor Group sued after defaulting on $40M loan at Midtown retail space
Governor Andrew Cuomo (Getty; Pixabay)

Landlords, tenants react to Cuomo’s latest eviction ban

Landlords, tenants react to Cuomo’s latest eviction ban
Retail bankruptcies are on pace to surpass those filed in 2010, while store closings have already passed those from 2019, according to a report (Getty)

Retail bankruptcies on pace to rival 2010: report

Retail bankruptcies on pace to rival 2010: report
175 Water Street and Nathan Berman of Metro Loft Management (Berman via CityRealty)

Inside Metro Loft’s new design for 175 Water Street

Inside Metro Loft’s new design for 175 Water Street
A rendering of 121 Morgan Avenue in Bushwick and Benefit Street Partners’ managing director Micah Goodman (Photos via EXR; Benefit Street Partners)

Brooklyn developer duo hit with foreclosure lawsuit

Brooklyn developer duo hit with foreclosure lawsuit
Corey Johnson, Andrew Rigie and Mayor Bill de Blasio (Getty)

Commercial tenant protections get extension from de Blasio

Commercial tenant protections get extension from de Blasio
(iStock)

New York’s law firm leasing volume down by 45%: report

New York’s law firm leasing volume down by 45%: report
A federal judge issued an injunction allowing TikTok to remain in app stores. The company recently signed a major office lease at One Five One in New York (Getty; iStock; Google Maps)

TikTok, savior of NYC’s office market, not yet banned in US

TikTok, savior of NYC’s office market, not yet banned in US
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...