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Thursday, June 11, 2009

CRE "Partial Interest Only Loans" Coming Due

by Calculated Risk on 6/11/2009 03:01:00 PM

From Bloomberg: Bondholders Face Losses From Commercial Mortgages(th Ron)

Investors in bonds that packaged $62 billion of debt for U.S. offices, hotels and shopping malls are bracing for more loan defaults through 2010 as Bank of America Merrill Lynch says landlords’ monthly payments may jump 20 percent or more.

Principal is coming due on the so-called partial interest only loans ... About $179 billion of such loans were written between 2005 and 2007 and bundled into bonds ... About 87 percent of mortgages sold as securities in 2007 allowed owners to put off paying principal for several years or until maturity, compared with 48 percent in 2004
Hey, Option ARMs for commercial real estate ... hoocoodanode prices would fall?