The Lien Gangrene Acts Meanly on the Has-Been!

The Houston Chronicle reports: The logjam in lending inflicts pain.

The office is at the end of a nondescript hallway in one of the countless midrise office buildings that dot the Greater Houston area.

No receptionist sits inside, but it’s a small enough operation that the sound of the door opening brings one of the principals to the front. Two others join us in the windowless conference room, where they begin discussing the crisis they face.

Their company develops, builds and manages real estate, especially multi-family properties, and they feel it slipping away. In recent weeks, three of their projects were thrown into default, even though they say they’ve been current on all payments and had a 50  percent equity stake in the deal.

Their lender called for a new appraisal, and because the appraised value fell, the loan was deemed under-collateralized. The bank declared them in default and has refused offers for a compromise, they say.

The frustration of area builders and developers indicates a bigger problem in commercial real estate. Almost $500 billion in loans is coming due this year nationally, but the decline in property values and the tighter lending practices mean there’s only enough capital available to refinance 10 percent of them, Fish said.

“Losses in the commercial real estate sector for the most part have yet to be realized,” Fish said. “This is going to be an extended period of time that it takes for de-leveraging, and de-leveraging is just about as ugly a process as there is.”

In the 1980s, a wrenching revaluation of Texas’ real estate market took seven years to complete, and it may take years for the local market to fully recover this time, too, he added.

So you mean that borrowing a crapload a money is not the path to riches?

Shit, kid, wish you could've said something earlier!