2009-02-11, 17:54

Springing Guaranty Risks In The Current Economy

By: Chris Iavarone
Although the credit crisis had its start with the single-family “subprime” residential loan industry, the contagion has now spread to commercial real estate loans.

This is true not only because of the limited available credit to refinance maturing loans, especially loans that were originally financed by conduit lenders, but also because commercial real estate vacancy rates are rising rapidly and values of properties are dropping.

With job cuts rampant and businesses either failing or retrenching, the immediate prospects for a turnaround are poor and the Urban Land Institute has warned that 2009 will be the worst year for the commercial real estate market since the recession of 1991-1992.

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This article is by Jeffrey Tarkenton, and was originally published in Law360 on February 5, 2009. Republished with permission.

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