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The market for commercial mortgage-backed securities, particularly hotels and retail, continues to worsen with no sign of an imminent turnaround.
The September edition of CMBS analysis firm Trepp’s monthly report found that 26% of hotel-backed CMBS loans are in special servicing, while the same is true for 18.3% of CMBS loans tied to commercial retail properties. Both sectors’ special servicing rates are the highest on record, while industrial, office and multifamily all have below 3% of their CMBS loans in special servicing.
Luxury hotels in major cities seem to be the hardest-hit subsection of the hospitality industry because they are more dependent on business travel and large events that remain all but nonexistent across the country.
Hotels in Houston, which has also been hurt by the oil industry’s struggles, hit a 69% delinquency rate in September, according to Trepp data obtained by Commercial Mortgage Alert. Just over 50% of Chicago’s
By Amy Sorenson, Kelly Dove and Tanya Lewis
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Law360 (October 6, 2020, 3:50 PM EDT) —
Nevada was an epicenter of the Great Recession and housing crisis of 2008-2009. Home prices plummeted, accompanied by widespread job losses and decreases in income. Homeowners defaulted on mortgages and, in some cases, walked away from their homes.
With such significant personal and financial impacts on borrowers also came significant financial impacts on lenders. While the effects of mortgage defaults were widely reported, lenders also sustained substantial losses as the
The coronavirus pandemic came at a bad time for the Burnsville Center mall near Minneapolis. In May,
said it would close its store. J.C. Penney Co., which also has a store at the mall, filed for bankruptcy.
CBL & Associates Properties Inc.
risked losing the mall if it stopped making payments on the $63 million mortgage. Instead, the company overseeing
securitized mortgage agreed to defer payments for three months, according to the loan servicer’s commentary collected by data firm Trepp LLC.
But CBL didn’t pay off the loan after three months. Now, Burnsville Center is one of hundreds of properties across the country heading to foreclosure.
CBL didn’t respond to requests for comment.
Lenders, for the most part, were initially happy to grant debt forbearance and hope that the pandemic would end soon. But many now expect the pandemic and its aftereffects to linger for
Whenever you sell a home, you need to calculate your capital gains to determine whether you owe any tax. If you engage in a short sale or your mortgage lender forecloses on your home, the Internal Revenue Service treats it just like a sale. Foreclosures and short sales may also require you to recognize ordinary income if the lender cancels any of your outstanding mortgage balance and you’re ineligible for an exclusion.
Short Sales and Foreclosures
Both short sales and foreclosures are usually the result of a borrower’s inability to continue making mortgage payments.
A short sale is where your mortgage lender allows you to sell the home for less than your outstanding loan balance and cancels your obligation to repay the remainder of the loan.
With a foreclosure, the mortgage lender will take possession of the home if it doesn’t receive scheduled mortgage payments over an extended period