This is from Rob Chrisman’s daily mortgage-related email which I subscribe to…
According to the Wall Street Journal [General Growth Properties, which owns 200 malls nationwide] filed a [Chapter 11] plan in bankruptcy court [recently] to restructure $9.7 billion in mortgage loans… “The pact allows mortgage holders to report the loans as performing on their books at the end of the year rather than distressed at a time when delinquency rates on commercial mortgages are rising.” Wouldn’t it be nice if residential mortgage servicers could do the same?
You have to pay to access the online WSJ article, so see the Boston Globe online:
General Growth Properties’ “lenders have agreed to modify loan terms”
The mortgage lenders took cramdowns: with the stroke of a bankruptcy judge’s pen, GGP now owes less than $9.7 billion in mortgages on their malls, because those buildings are no longer worth $9.7B.
Cramdowns are allowed in commercial mortgages, and from what I hear they’re also OK for second and vacation homes and for boats and RVs.
This is going to be a political statement and we shy away from them purposely here at The Phoenix Agents, but I still don’t understand why a homeowner’s primary residence is the only big-ticket mortgage that can’t be crammed down.
You know, I take it back. Actually I do understand why: homeowners are not sending high-paid, pro-cramdown lobbyists to Washington to counter the high-paid anti-cramdown lobbyists sent there by the banks.