Property Lenders to Shift From ‘Extend and Pretend’

Lenders will shift toward amending commercial mortgages next year instead of extending maturities, leading to increased sales of distressed real estate, according to a survey of almost 900 property professionals.

More than 63 percent of those surveyed said they expect maturing loans to be modified, while 7.1 percent said loans will continue without changes to defer losses, a practice known as “extend and pretend.” About 16 percent of respondents said real estate with maturing loans will be foreclosed on and put on the market, and almost 14 percent said properties will be sold by borrowers, PricewaterhouseCoopers LLP said in a report today.