City's Development Arm Predicts Defaults by Affordable Housing Owners

PORTLAND-The nonprofit owners of low-income housing projects may soon begin defaulting on their loans if the economy continues to languish, according to a new report by the Portland Development Commission, holder of more than 800 outstanding loans with a balance of $115 million.

Without naming names, the six page report drafted by asset portfolio manager Louise Lauman predicts mergers and or dissolutions over the next several years due to “a compounded risk due to recession, layered on top of inherent risk in the type of deals we finance and past fallacies in deal structure assumptions.” Lauman’s report goes on to recommend the PDC improve its assumptions about per-room operating expenses, debt service and management costs.