The Real Deal Miami

Lenders to shift to amend mortgages

October 13, 2010 02:45PM

Lenders will shift toward amending mortgages next year rather than extending maturities, leading to increased sales of distressed real estate, according to the annual “Emerging Trends in Real Estate” survey conducted by PriceWaterhouseCoopers. More than 63 percent of the 900 surveyed said they expect maturing loans to be modified, while 7.1 percent said loans will continue without changes to defer losses, a practice known as “extend and pretend.” “‘Extend and pretend’ was the sound bite from a year ago,” Mitch Roschelle, co-chairman of the survey, told Bloomberg News. “Now it’s ‘extend and amend.’ There’s less pretending and more focusing on the reality.” According to the PWC report, commercial real estate executives have lowered their return expectations. Stagnant wages and high unemployment rates have led landlords and their lenders to focus on current yield rather than expecting prices to rise, the report said. [Bloomberg]