This falls in the “if you can’t beat them, join them” game.

Developers facing huge balloon payments are ready to ask Congress and the Executive Branch for a bailout. As their commercial loans come due they are fearful that banks are not going to be willing to refinance the projects.

The developers business plans are predicated on being able to roll over the debt on their projects. If banks are not willing to refinance the loans, then they will be forced to turn over the real estate to the banks.

Of course, it is this thinking that caused the run up in prices of the holdings and created the bubble we are fighting out of. The days of easy credit are over but everyone is hoping the government will bail them out.

In the end it is the taxpayer left holding the bag as the whole economy becomes nationalized. A truly scary thought if you ask me.

They’re warning policymakers that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed into defaults, foreclosures and bankruptcies. The reason: according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years — with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.

Unlike home loans, which borrowers repay after a set period of time, commercial mortgages usually are underwritten for five, seven or 10 years with big payments due at the end. At that point, they typically need to be refinanced. A borrower’s inability to refinance could force it to give up the property to the lender. via  WSJ.com.

Related posts:

1. Alert The Media – Banks Are Making Commercial Real Estate Loans
2. Trillion Dollars of Commercial Real Estate Loans Coming Due?
3. Quarter of All Commercial Loans Coming Due in Next 4 Years Underwater
4. Remember The AIG Bailout? It Should Be Called The Goldman Sachs Bailout