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The Commercial Real Estate Bubble By: Adam Levitin & Susan M. Wachter

The Commercial Real Estate Bubble By: Adam Levitin & Susan M. Wachter


The Commercial Real Estate Bubble

Adam J. Levitin

Georgetown University Law Center

Susan M. Wachter

University of Pennsylvania – The Wharton School – Real Estate Department

February 7, 2012

Georgetown Law and Economics Research Paper No. 1978264

Georgetown Public Law Research Paper No. 1978264

Abstract:     
Two parallel real estate bubbles emerged in the United States between 2004 and 2008, one in residential real estate, the other in commercial real estate. The residential real estate bubble has received a great deal of popular, scholarly, and policy attention. The commercial real estate bubble, in contrast, has largely been ignored.

This Article explores the causes of the commercial real estate bubble. It shows that the commercial real estate price bubble was accompanied by a change in the source of commercial real estate financing. Starting in 1998, securitization became an increasingly significant part of commercial real estate financing. The commercial mortgage securitization market underwent a major shift in 2004, however, as the traditional buyers of subordinated commercial real estate debt were outbid by collateralized debt obligations (CDOs). Savvy, sophisticated, experienced commercial mortgage securitization investors were thus replaced by investors who merely wanted “product” to securitize. The result was a noticeable decline in underwriting standards in commercial mortgage backed securities that contributed to the commercial real estate price bubble.

The commercial real estate bubble holds important lessons for understanding the residential real estate bubble. Unlike the residential market, there is almost no government involvement in commercial real estate. The existence of the parallel commercial real estate bubble presents a strong challenge to explanations of the residential bubble that focus on government affordable housing policy, the Community Reinvestment Act, and the role of Fannie Mae and Freddie Mac. Instead, the changes in commercial real estate financing closely mirror changes in the residential real estate financing, which shifted from regulated government-sponsored securitization to unregulated private securitization. This indicates that changes in the securitization market contributed to the problems in both the commercial and residential real estate markets.

[ipaper docId=82373480 access_key=key-feg1rvbu1a2ucxa8oh3 height=600 width=600 /]

 

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Alert To Problems Of Grossly Inaccurate Documents Used In The Land Title Underwriting For Commercial Real Estate Financing – By: David E. Woolley

Alert To Problems Of Grossly Inaccurate Documents Used In The Land Title Underwriting For Commercial Real Estate Financing – By: David E. Woolley


Alert To Problems Of Grossly
Inaccurate Documents Used In The Land Title Underwriting For Commercial Real Estate Financing

By: David E. Woolley
Harbinger Analytics Group

[ipaper docId=82301082 access_key=key-5kdyqvzlns132e68ms1 height=600 width=600 /]

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Banks face crisis in bungled commercial mortgages

Banks face crisis in bungled commercial mortgages


Oh yes, MERS is in this rabbit hole as well: From a 10/10 post EXCLUSIVE | NYSC COMMERCIAL (CMBS), MERS and a $65 MILLION NOTE

If this doesn’t do them in then look for the Next Robo-Signing Scandal: RePOST: CHASE BANK v. GERGIS | NY Civ. Court “ROBO-TESTIMONY, WAMU, CREDIT-CARD DEBT” Dismissed w/ PREJUDICE

Either way the banks are screwed on these as well.

CBS-

The nation’s banks are looking at a robo-signing problem with commercial real estate which may dwarf the one for home mortgages, according to a new study.

Research by Harbinger Analytics Group shows the widespread use of inaccurate, fraudulent documents for land title underwriting of commercial real estate financing. According to the report:

This fraud is accomplished through inaccurate and incomplete filings of statutorily required records (commercial land title surveys detailing physical boundaries, encumbrances, encroachments, etc.) on commercial properties in California, many other western states and possibly throughout most of the United States.

[CBS NEWS]

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VIDEO: DYLAN RATIGAN, FORECLOSURE FRAUD & $45 TRILLION DOLLARS

VIDEO: DYLAN RATIGAN, FORECLOSURE FRAUD & $45 TRILLION DOLLARS


Source: The Dylan Ratigan Show- LINK
.
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Posted in assignment of mortgage, fannie mae, foreclosure, foreclosure fraud, foreclosures, Freddie Mac, securitizationComments (1)


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