Aw... shucks...
Posted on 01/02/2024 8:05:20 AM PST by george76
Hundreds of loans on office buildings are about to come due at a very bad time..
Loans were taken out in time of low interest rates and are now hard to refinance..
Too many of the loans defaulting could trigger banking crisis and hurt economy
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About $117 billion worth is expected to be due this year and needs to be repaid or refinanced,
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A big chunk of it is at risk of defaulting and costing banks and developers huge sums, sending some into insolvency.
Owners of office space around the country took out their loans when interest rates were half what they are now, and may not be able to refinance them at higher ones.
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One example is the Seagram building on Park Avenue in Manhattan, which was mortgaged at $760 million in 2012. The loan assumed the building would bring in $74 million in revenue a year, but the best it ever did was $69 million in 2018 - and only $27 million in 2022.
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Commercial mortgages, unlike home loans, are almost always paid interest-only, leaving the original price to be paid at the end, or refinanced to start the process again.
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Economists last month found 40 per cent of office loans on bank balance sheets were underwater - owing more than the property is worth.
Smaller regional banks who loaned the money to buy them could themselves be at risk if the loans default as they are not big enough to handle the losses.
Moody's Analytics estimates 224 of the 605 loans that will expire soon will be tough to repay or refinance because their owners have too much debt or the buildings aren't making them enough money.
(Excerpt) Read more at dailymail.co.uk ...
The post I was replying to referred to government bailing out insured accounts. Insured accounts are covered by the FDIC’s Deposit Insurance Fund, which is funded banks, not taxpayers.
The banks get their money from whom?
Banks get their money from profits in their business. Or are you trying to say that the banks get their money from taxpayers, because their customers pay taxes? By that logic, you could say that when retailers buy inventory it is paid for by taxpayers. The common usage of the term “paid for by taxpayers” means paid for by tax dollars collected by the government, which is not the case for the FDIC insurance which covers consumer banking accounts up to $250,000.
OK; I see what you mean now.
Thanks.
My son the union carpenter worked constantly in Manhattan for the first three years of the Trump administration. Mostly office and store renovation or upgrades. He’d finish on one job and move on to the next; there was work aplenty. That died out with the work-from-home results of the scam-demic.
Now there’s very little work of that kind, for the reasons stated in this article.
Thanks for being so nice!
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