Congressional panel warns of new wave of commercial real estate losses

The Congressional Oversight Panel said in a report released today that it is “deeply concerned” that a pending wave of commercial real estate loan failures could threaten the nation’s fiscal stability, but that “no single cause” can be identified in the commercial mortgage crisis (see full report below). Loans made during the peak of the commercial market bear the highest risk of default, according to the report, while almost half of the commercial real estate loans expected to reach maturity between 2010 and 2014 are currently underwater. All told, about $1.4 trillion worth of commercial real estate mortgages will hit the end of their terms during that four-year period. Although 2010 may remain somewhat calm, the report claims, 2011 and the subsequent years could be brutal for commercial lenders with expected losses for banks ranging from $200 billion to $300 billion. TRDCongressional Oversight Panel Report