Not only will the banks be holding interim construction loans without any take-outs because there are no tenants in these “spec” buildings to pay the mortgage, but
I believe there will be many large institution lenders and pension funds who bought buildings 10 years ago and either the loans are coming due as a balloon and the borrowers now have no tenants to generate cash flow to pay the mortgage so they will just walk. The Pension Funds will have no cash generated because the buildings they bought 10 years ago have emptied out due to the recession so won't have cash to fund to their members.
The “Lawyers” came up with LLC’s, PC’s and a number of vehicles which required no personal guarantees like in the “good old days” so the borrowers will just walk from their loan commitments and keep their homes, big cars, fancy vacation homes,etc.
If the Government thought the past bailout was the end, it was just the beginning of a disaster to our financial problems.
JMHO
Balloon payments are a stupid concept—as we all are about to learn. They were based on the absurd assumption that refinancing would be a sure thing when the future day came.
Well, the future is about to be now and the balloon is about to make a very loud noise.