September 15, 2009
Seller Financing Liquifies Distressed Defaults
MBA NewsLink
...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 Lusk Center of Real Estate at the University of Southern California. "It will be a partial refinancing and require equity on the part of the buyer. This is one way of doing it."
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 pay down," Ross said. "It's a good way to clean it up. There is an incentive for these institutions to do it..."