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Issues in Focus January 2004

Untitled Document<!--.style1 {font-size: 26px;font-weight: bold;}.style2 {font-size: 18px}.style8 {color: #000000;font-weight: bold;}--> Workouts:…

By remstaff | Globe Street | | Updated on December 17, 2003

Workouts: Recovery’s Downside

There’s good news and bad news in the recovery. Fortunately, there’s more of the first than the second. By John Salustri

This feature originally appeared in Real Estate Forum. For further information, click on http://www.reforum.com/subscription.html .

One of the oddest facts of the recent recession was that, as the economy once again gets back on its feet, the number of defaults is likely to increase. Interest rates, at historic lows for a historically long time, are once again inching up, a natural upshot of the return to fiscal normalcy. The downside, of course, is that real estate, as always, is lagging behind the national economy, and rising rates are going to put the squeeze on those investors who are holding adjustable-rate paper on still-under-performing assets—especially if they entered their plays highly leveraged. They’re going to have to start paying the piper, and for those who come up short, defaults and the workouts they spawn are in the cards.

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