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Commercial Mortgage Loans Inflated Income Data: Study

New academic research suggests that commercial mortgage borrowers may be falling behind on their loan payments in part because of lender behavior that overstated their payment ability. So reports The Wall Street Journal.

Two finance professors at the University of Texas at Austin reviewed almost 40,000 commercial mortgages originated from 2013 to 2019, totaling $650 billion. They found that the mortgaged properties’ actual net income fell short of the underwritten amount by 5% or more in 28% of the loans.

The Commercial Real Estate Finance Council said the study used the wrong methodology.

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