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Hotels Owners Walk Out on Mortgages

By Kevin Spak, Newser Staff

Posted Aug 15, 2009 11:00 AM CDT

(Newser) – Homeowners aren’t the only ones walking away from their underwater mortgages. With the hotel market at its lowest point since the early '90s, many owners, who owe more on their money-losing properties than they’re worth, are simply walking away, the Wall Street Journal reports. Many say they have no choice; their loans were diced up into commercial mortgage-backed securities, or CMBS, making them impossible to restructure.

Unlike malls or office buildings, which are stabilized by their tenants' long-term leases, hotels can empty out overnight and, thanks to the recession, often have. That’s sent the delinquency rate soaring to 4.75% for CMBS-laden hotels, and one debt-rating agency predicts that’ll jump to 10-15% by year’s end. Making matters worse, many hotel owners leveraged their properties to go on buying sprees before the bubble burst, leaving them overextended and deeply in debt.

The site of the Robert DeNiro-backed Nobu luxury hotel-condo project at 45 Broad St., right, is shown, May 20, 2009, in New York City. The site has lost funding and is facing foreclosure. (AP Photo/Mark Lennihan)

Despite not making any loan payments since October, Resorts Atlantic City Hotel and Casino is trying to fight off foreclosure by arguing that its lenders don't have a casino license. (AP Photo/Mel Evans, File)

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Many struggling homeowners not covered in deal

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OTHER STORIES ON OUR RADAR

hotel • mortgage backed securities • mortgage delinquency • foreclosures

MOST POPULAR STORIES

[ By Views ]

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More Newser Stories

'Squatter' Who Claimed McMansion Gets the Boot

Texan's 'adverse possession' argument rejected

$26B Mortgage Settlement a 'Modest' Help: Experts

Many struggling homeowners not covered in deal

Giant Hotel Opening in North Korea, 23 Years Late

Ryugyong Hotel a longtime laughingstock

Banks Ink $26B Deal to Help 2M Homeowners

49 states sign on to deal with nation's top 5 banks

Bank Grabs OJ Simpson's Miami Home

JPMorgan Chase forecloses on 4 bedroom, 4 bath house

About Us

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Newser By Users

Community

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What is Newser?