Editor’s note

Just like the economic crisis spread from subprime borrowers, then from bank to bank, and finally throughout the broader economy, the catchphrases used to capture the fallout have their own means of virus-like contagion.

One of the catchiest phrases I’ve heard so far is “extend and pretend,” describing a common approach banks employ in dealing with problem loans today. The idea is to “extend” a loan past its maturity date to keep it from defaulting and showing up as a bad loan on the bank’s books — therefore “pretending” that everything is hunky dory.

A recent story in The Real Deal by staff reporter Adam Pincus popularized the phrase, which quickly spread to media outlets far and wide. A search of the database Nexis shows the first usage of the phrase on July 1, the day it appeared in Pincus’ story, after which it appeared for the first time ever on CNBC on July 6, the Associated Press on July 10, the New York Times on July 11, USA Today on July 28, the Los Angeles Times on July 30, Fox Business on Aug. 17 and the Washington Post on Aug. 21. (The phrase also appeared in a few isolated blog posts not recorded by Nexis, according to Google.)

It’s nice to lead the media giants in coining a phrase! And thanks to Eastern Consolidated broker Alan Miller for using the quote when he spoke to Adam.

It also highlights the need to make the often painfully arcane web of issues associated with the mortgage meltdown more accessible. There are still many phrases that need to be invented to explain the distressed market to the lay reader. So please give us some more.

“Delay and pray” is another good turn of phrase, similar in meaning, but describing lenders holding off on taking action against borrowers while hoping for an economic recovery to make their loans right. The phrase has yet to make it into mainstream media, or even these pages for that matter. (Now I have an idea for my next headline.)

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I’ll take “extend and pretend” or “delay and pray” any day over “Manhattan is an island,” that most popular of tropes during the recent boom, which suggested that the borough was insulated from any problems in the national real estate market. And which has since been proven wrong, of course. (The Real Deal probably won’t run a list of brokers who trotted out that tired phrase during the boom, but maybe we should.)

What this market needs, though, is a recovery that will spread, and not just through words. I recently sat down with Cushman & Wakefield broker Glenn Markman, who had an interesting take on how the pain has widened so quickly in New York, and how that might presage some hope for the future.

It’s not just the fallout on Wall Street that has caused Manhattan asking rents to plummet more than 30 percent in the span of a year; the consolidation of building ownership has also played a part. Markman pointed out that the emergence of REITs as big-time building owners in Manhattan since the last major downturn in the early 1990s, as well as the fact that today there are only probably 100 “real” building owners in the city who count as major players, has made for more price transparency this time around and caused rents to drop more quickly than they would have otherwise. “It makes the market move faster,” Markman said, adding that the phenomenon would help speed a rebound when things turn back up, too.

Until then, we are stuck with the current distressed situation. Investors have truckloads of money sitting on the sidelines, waiting to jump back in when they think things have hit bottom. Just who has this money, and how much, is explored in a series of stories by reporter Candace Taylor that is worth a close read (see “The big money grab”). I would also direct you to a profile of Vornado’s Steve Roth, in which reporter Adam Piore shows how the square-jawed mogul is building a war chest to go shopping for distressed assets (see “‘Vornado Tornado’ gets ready to land”).

Speaking of distressed assets, a reminder to join us at The Real Deal‘s fifth annual forum, “Distressed Opportunities: Taking advantage of distress and searching for a real estate recovery.” It’s on Oct. 14 at Lincoln Center (see the banner ad at the top of TheRealDeal.com for more information).

What will the chemistry be like when you bring together a diverse group of panelists, including rock star economists Nouriel Roubini and Mark Zandi, fast-talking superbroker Dolly Lenz, Corcoran honcho Pam Liebman, controversial Coney Island developer Joseph Sitt and Plaza developer Miki Naftali? With an illustrious group like this it’s anyone’s guess, but it will undoubtedly be an informative and lively conversation with some of the leading figures in the New York real estate pantheon. I guarantee you will come away that much smarter for attending.

Look forward to seeing you there!