Commercial Real Estate: The Next Shoe that Already Dropped

Jason Stipp: And moving to the commercial mortgage-backed real estate and the commercial real estate market in general, a lot of people have been saying this is going to be the other shoe to drop after we've seen some stability in housing. What's your 30,000-foot take on commercial real estate and how big of a problem that's going to be.

Sean Dobson: "Do we or don't we realize the losses," is the question. The current policies in place are about deferring the realization of loss. If you no longer have to sell an asset that has become in a negative equity position, then you won't present a supply problem to further decay prices.

For investors who already own the assets, it's a very tricky question to answer, because you're not quite sure what happens to your negative equity loan.

For commercial estate development, of course, there should be no capital available for it, there won't be any capital available for it. You have a tremendous backlog of failed projects in the regional banking system that have yet to have been realized.

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