Commercial mortgage crisis still ahead?

November 27, 2008 – 6:13 pm – No Comment

The same bad debt and problems that brought about the residential mortgage crisis may soon bring about the commercial real estate bust.

Malls across the country are being forced into foreclosure, as well as hotels and other commercial properties.

A problem facing commercial mortgages is that, unlike residential mortgages, they aren’t paid over 30 years, they are paid between 5 and 10 years, with most of the balance due at the end.

One thought was that the $700 billion bailout would go to help financially back some of the risky securities and help out some of these properties, however, treasury secretary Paulson said that the U.S. no longer planned on buying troubled securities. The news wasn’t welcomed by those who were in need of the bailout.

California, New York, Texas and Florida all have a large amount of mortgages in the securities market and will be hit the worst.