As the state of Arizona continues to attempt to remedy the mortgage and foreclosure crisis at hand, many lenders continue to ignore that fact that the economy is troubled. According to the Arizona Republic, commercial real estate brokers use the phrase, “extend and pretend,”as a response to their bad lending and million dollar debts.
Currently, most lender in the Phoenix area are continuing to let their clients keep their properties by extending the terms of their loans, ultimately, letting them get deeper in debt and postponing an eventual foreclosure. Because of this, many property owners, both commercial and personal, are ultimately pouring more money into a property that they are likely to eventually loose.
As published in the Arizona Republic:
In areas where office vacancies exceed 30 percent, such as the Scottsdale Airpark, Phoenix-Mesa Gateway Airport and Glendale’s sports and entertainment district, it’s unlikely that the current owners of such properties will be able to hang on, according to local real-estate brokers, investors, contractors and analysts.
The experts said about 25 percent of outstanding commercial real-estate loans are in good shape, and another 25 percent are doomed to foreclosure. The remaining 50 percent could go either way. It’s the fate of those loans that concern analysts.
The fallout from widespread foreclosures could cause more bank failures and discourage out-of-state employers from coming to Arizona, experts said. The credit crunch on small businesses would worsen, and fewer companies would have the capital to grow.
If these lenders continue to ignore the fact that Arizona is in a foreclosure crisis, the states real estate market will continue to struggle in its attempts to recover. Unfortunately, these lenders have yet to realize the damage they are doing to the economy and the property owners they are lending to.
If you are currently struggling with your mortgage, there are many options available to you. Recently, the government has implemented a new foreclosure prevention plan to help distressed property owners. If you would like to research more about this plan, more information is available to you here.
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