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

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

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
Seth Weissman, John Catsimatidis, Mayor Eric Adams
They said what now? Real estate quotes of the week
They said what now? Real estate quotes of the week
From left: Robert Reffkin and Rupert Murdoch (Getty, Compass)
ChatGPT didn’t write this week’s real estate news roundup, we promise
ChatGPT didn’t write this week’s real estate news roundup, we promise
Seth Weissman, Financing
Urban Standard wants to rescue property owners from high interest rates
Urban Standard wants to rescue property owners from high interest rates
From left: Michael Dell with 25 Water Street, Alex Sapir with 261 Madison Avenue and Marc Holiday with One Madison Avenue (Getty, Edge Funds, Sapir Organization, SL Green)
Office properties (yes, office!) got Manhattan’s biggest December loans
Office properties (yes, office!) got Manhattan’s biggest December loans
Salim Assa with 15 West 55th Street
Troubled Midtown rental saga headed for a foreclosure finale
Troubled Midtown rental saga headed for a foreclosure finale
Atlas Hospitality Brokerage president Alan Reay (Atlas Hospitality Brokerage)
Listen: Inside the looming distress across the hotel market
Listen: Inside the looming distress across the hotel market
Businessman arguing with buildings
The bickering bros: Jemals escalate battle over portfolio
The bickering bros: Jemals escalate battle over portfolio
Vornado Realty Trust chairman Steve Roth and 401 Seventh Avenue (Getty, LoopNet, Vornado Realty Trust)
Vornado eyeing NYC’s casino sweepstakes
Vornado eyeing NYC’s casino sweepstakes
arrow_forward_ios

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

Loading...