Facing Widespread Foreclosures, Banks Allowing Some Debtors a Free Pass
Wall Street Journal reports: According to Dan Fasulo, Managing Director of Real Capital Analytics, debtors who took excessive risks in the cheap debt environment of years past have overwhelmed banks' abilities to hold every borrower fully accountable for their liabilities. "A lot of investors who lost money in this cycle are going to be given a pass...," said Fasulo, due to the unique nature of the most recent downturn, which is causing foreclosures to stack up on lenders' balance sheets both in number and in volume. Given the fallout in pricing and sheer number of troubled assets witnessed over the past two years, lenders that have distressed properties on their books have been more willing than during previous cycles to restructure or extend loans.
The practice of playing massive boom-year outstanding liabilities against banks' tolerance for recouping losses was exemplified in a recent profile on Joe Moinian by the Wall Street Journal. Mr. Moinian, a major commercial real estate developer with 20 million square feet of US holdings, has been able to restructure several hundred million dollars of debt backing high-profile properties such as the W Hotel in downtown Manhattan, and assets in Los Angeles.
View the full article on Wall Street Journal: Facing Widespread Foreclosures, Banks Allowing Some Debtors a Free Pass
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Posted by: Nina Turner