Debt Threat: Saving Multifamily Rental Housing From Zombie Mortgages
While we read regularly about single family homeowners across the country who are facing foreclosure, collapses in the financial sector have also significantly impacted commercial proper ties. Across the country, shopping malls, office buildings, and hotels which have failed due to the current recession are hitting communities hard. With commercial real estate (CRE) loans based on wildly overoptimistic expectations of income, many of these properties are now facing default and foreclosure.
Worse, they are becoming an economic drag on their communities. The Shops at Atlas Park, a new shopping mall in a commercially underserved area of Queens, is currently in foreclosure. The South Shore Outlets Mall in Staten Island is delinquent on its loan. Hidden within the financial tangle of commercial real estate mor tgage loans are residential multifamily rental properties carrying debt loads that exceed their ability to pay. Without intervention, many of these buildings may become the problem properties of the future, as well as a negative influence on their surrounding neighborhoods. And while Stuyvesant Town and Riverton Houses have received much publicity, they are only two examples of a much larger problem. And it’s not just in New York City…
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