If at first you don't succeed, try, try again. An admirable adage, but one that has some potential consequences when dealing with CRE loans that borrowers can't manage to refinance. The practice, as the Financial Times noted, has led to a rise in double defaults. By the end of September has led to re-defaults being up 90% compared to 2023.

As properties ran into maturity or slid off the payment road and skidded toward the default curb, banks have managed problems with the so-called extend-and-pretend (or delay-and-pray for some of the more skeptical) strategy. Modify the loan, extend it, and hope for the Federal Reserve to cut rates fast enough so borrowers could refinance and the whole problem could be swept away without disturbing a bank's balance sheet.

Bank loan workouts have surged this year, according to CRED iQ, "placing 2024 squarely on a path to a record-setting year of loan modifications." In 2023, the total modifications were $16.8 billion. The average monthly volume of modifications was $1.8 billion, with April seeing the highest volume of $3 billion. As of the end of May 2024, about $22 billion in loans received modifications by lenders. Just in 2024, there were $9 billion in modifications,