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Banks kick commercial real estate loans down road

Ilaina Jonas Reuters
Crews lay asphalt at Logan Airport with the Boston skyline behind them November 3, 2006.

Crews lay asphalt at Logan Airport with the Boston skyline behind them November 3, 2006.


NEW YORK (Reuters) - For the past six months or so, Wall Street has been bracing for what many fear may be the next shoe to drop on the already battered U.S. economy: a U.S. commercial real estate bust that could rival the housing market collapse.



Yet, lenders have been keeping that shoe in the closet -- forestalling foreclosures by extending loans, despite rapidly rising mortgage default rates.

"In today's environment, it's obviously not very attractive to foreclose on a borrower," said Matthew Anderson, co-founder of real estate consulting services firm Foresight Analytics.

The U.S. commercial real estate sector has been grappling with a credit crisis that has dried up some of its most important sources of lending. That has left many borrowers unable to refinance maturing mortgages. Even when they can obtain financing, borrowers are often obtaining much less than they need.


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