In Bankruptcy News, general law

Remember back to 2007 and 2008 when the residential housing market collapsed and we entered the Great Recession? Millions of real estate developers and homeowners filed bankruptcy because the market crashed and all of a sudden their houses weren’t worth what they owed on them. There’s fear that 2017 might be the start of a similar recession caused by defaults in commercial real estate loans.

Commercial real estate is everything that isn’t single-family housing. It includes apartment buildings, shopping malls, industrial sites, restaurants, office buildings and even golf courses. Back in 2006 and 2007, before the Great Recession, many millions of dollars of commercial loans were rewritten on ten-year terms, terms that started coming due this year and which will accelerate in 2017. Many borrowers aren’t able to make the required payments as these loans term out and are defaulting on their loans.

Morningstar Credit Ratings predicts borrowers won’t be able to pay off about 40% of the commercial loans that will come due in the next year.

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