Seller financing liquefies distressed defaults
Mortgage Banking
By Michael Sorohan, Michael Murray and Carolyn Kemp
...Some solvent financial institutions at risk from commercial real estate default employ seller financing as a method to "clean up" delinquent debt. "We are seeing seller financing," said Stan Ross, chairman of the USC Lusk Center for Real Estate at the University of Southern California (USC), Los Angeles. "It will be a partial refinancing and require equity on the part of the buyer. This is one way of doing it," he said.
Under this scenario, the investor or seller can assist in paying down the existing note and a third party can assume the loan. "The bank is not taking a discount because they have a paydown," Ross said. "It's a good way to clean it up. There is an incentive for these institutions to do it."...