Troubled Loans in Commercial Mortgage-Backed Securities Spike

CMBS Loans in trouble

The total dollar amount of distressed Commercial Mortgage-Backed Securities (CMBS) will skyrocket to double the current number to hit $60 billion this year if the current pace is kept, according to a Credit Suisse report today.

The overall CMBS market is $700 billion, so $60 billion in distress marks 8.5% of all of the market in trouble.

“U.S. Congressmen Paul Kanjorski and Ken Calvert last week urged regulators, including the Federal Deposit Insurance Corp, for a coordinated response to restore stability to the commercial real estate sector. However, the lawmakers said the industry does not need a bailout.” -via Fidelity

Although the industry is hurting and “does not need a bailout,” looking at CMBS as a leading economic indicator, this definitely spells trouble for 2010 and beyond, but with the residential sector stabilizing in many metro areas, do you think this CMBS crash will continue at the current pace?

I’m not convinced… this feels like a major financial servicer crying for a bailout which has preemptively been slapped down by Congress.