The Real Deal Miami

Commercial defaults to topple small banks, LeFrak says

August 28, 2009 09:34AM

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.