What impact has the present market crisis had on real estate portfolios in general?
Tancredi: Generally, the market dynamic is forcing all constituencies to think creatively. We may see bifurcated mortgages, not unlike the kinds of structures that General Motors is talking about. Some mortgages may be converted to equity pieces. In the cases of properties that are woefully underwater or those in markets that are not likely to turn around anytime soon, a combination of the lack of equity that exists in these properties, the transaction costs associated with an effort to reorganize, and the real tough provisions of the bankruptcy code (particularly SAR or single asset real estate provisions) will drive that class of debtor to deed over the property to the lender rather than go through foreclosure. Editor: What has become of the proposal that bankruptcy judges be given the right to reset the terms of a mortgage? Tancredi: On the business side, the bankruptcy courts have always had the ability to reset rates on mortgages or to rewrite certain non-monetary covenants. The c
