Owner-occupied refinance options could get a lot more forgiving, if the votes go the right way on the Hill. In a letter from NAR President Gary Thomas to Senators Mary Landrieu (D-LA) and James Risch (R-ID), NAR support for a key commercial real estate bill is spelled out. The issue addressed by the bill, S.289 “Commercial Real Estate and Economic Development Act of 2013”, is the impending maturity of $1.3 trillion in balloon mortgages. Between 2013 and 2016, a wave of maturities is headed to holders of these instruments and market options for refinance being what they are, there’s a real risk of higher loan defaults, delinquencies and business failures. The bill doesn’t create a new program for such mortgageholders. Instead, it temporarily allows commercial real estate projects to be eligible for the already-existing SBA refinance program called 504/CDC. NAR President Gary Thomas continues:
Nearly $1.3 trillion of commercial real estate loans with balloon mortgages will mature between 2013 and 2016, with very limited options for small businesses and other commercial property owners to refinance. If not addressed, the swelling wave of maturities could result in higher loan defaults, delinquencies, and business failure – further endangering economic recovery.
An expansion of project types eligible for the SBA 504/CDC refinance program will alleviate some of that pressure by allowing small businesses to refinance certain owner-occupied commercial buildings. This helps ensure that small businesses successfully persevering through tough times will not suddenly fail for the lack of capital. Also, extending the 504/CDC refinance program’s eligibility to include commercial real estate properties for five yearswill provide more time for private capital to return to the market and help prevent commercial financing from becoming yet another drag on economic recovery.
NAR strongly encourages the timely passage of S. 289, a critical component to our nation’s economic recovery. REALTORS® thank you for your diligent work to bring confidence and strength back to our finance system.