Although many analysts had hoped that the market for commercial mortgages could weather the housing market crash, it is apparent now that they may be at an even higher risk for major problems. The crumbling economy is affecting not only consumers, but businesses as well and many are starting to default on their commercial mortgages. The ones who may be hit the hardest are small banks that offered large loans and commercial mortgages over the past few years.“Smaller banks are directly or indirectly facing credit problems with consumer mortgages, similar to the largest 200 banks,” the report said. “But when disregarding the largest 200 banks, commercial real estate risk becomes the leading contributing factor to credit risk for mid-size and small banks,” A.M. Best said.Experts fully expect that banks that extended commercial mortgages to subprime candidates may start to experience the same problems affecting the regular housing market. Currently, many banks have shuttered their services, refusing to offer any new home loans. Analysts feel that a similar situation may soon affect the commercial mortgage market as well. For those with this type of loan, experts are urging them to seek refinancing if possible and do all they can to avoid foreclosure.
Related reading: Commercial Mortgages
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