Significance of Commercial Mortgages in 2010

For most people who were involved in the real estate business in 2009, it was a year for them to remember. The year gave record number of foreclosures, a total wearing down of equity, the gradual downfall of the banking institutions , and job losses beyond all imagination. 2009 also introduced lexicon of real estate, like 'extend and pretend'. Short sales have infiltrated the lives of the housewives of Orange Country.

                         

Yet we perceive that there will be substantial growth in business-to-business litigation in 2010. Surveys were done throughout the year 2009 and it was found that there would be heavier caseloads in 2010 or remain almost the same. A big chunk of growth in litigation will be seen in such areas where typically pick up when times get tough. As the economy goes down, litigation goes up in areas like bankruptcy, contracts and employment. A commercial mortgage security (CMS) has jumped 85 basis points by the end of November 2009. So what we are seeing ahead is a recipe for disaster in the commercial real estate market in 2010.

According to government officials, the US has about $300 billion in negative equity overhand what will need to be refinanced in the next two years. The numbers will increase to approximate $2 trillion or more in commercial mortgages as people will be failing to refinance their commercial loans. They are expected to come due for payment within the next five years. Commercial foreclosures will be at a high in the coming days. Banks will not agree to do commercial mortgage refinancing readily. So be careful if you are a business owner and seeking help for a commercial loan workout or commercial loan modification.

The commercial mortgage loans rate has recently hiked from 4.8 percent to 5.65 percent in the month of November last year. This will be rising more in the long run of this year and also into 2011. This could possibly bring advantage for investors in commercial mortgages. Lenders can acquire properties that only a few years back would not have considered. Almost all types of commercial properties are viable for acquisition and joint ventures at bargain prices. Such properties will be available through connections of lenders dealing with hard money loans or commercial mortgages.

                                       

2010 may be a disruptive year, but surely one of action in real estate business. I personally expect that buyers and sellers will begin to collide in the coming months. If you are a home buyer, there should be incentives which will worth much if you jump now into the market. With low interest rates and tax credits one should offset any drops in the value over the coming months. But be cautious if you plan to flip properties frequently. Therefore go out and commence uncovering the property right now before the storm clears and the prices move upwards in the next few months.