Double Warning: Fed Cautions on Office Space and Interest Rate Risks, Moody’s Flags $650B Crisis for US Banks

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Bloomberg’s report on the Fed’s apprehensions regarding US commercial office space and interest rates raises alarming flags. Moody’s staggering estimate of potential unrealized losses, reaching a colossal $650 billion within US banks’ securities portfolios, points to an imminent and deeply concerning crisis looming over the banking sector.

There’s a Big Warning Sign That Commercial Real Estate Is in Trouble

Commercial real estate is facing an exceptionally high number of foreclosures on high-risk loans, an indicator that the sector could face even more foreclosures in the future, according to The Wall Street Journal.

Lenders issued foreclosure notices for 62 high-risk loans in the commercial real estate sector for this year ending in October, double last year’s total and possibly the highest number ever, according to a WSJ analysis. Many of those foreclosures are from mezzanine loans, or high-risk property loans that allow for a shorter time to foreclosure and have higher interest rates, with the shorter time frame giving a more immediate pulse on the health of the sector and forecasting a possible wave of foreclosures in the future on more traditional loans.

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