Foreclosure Ballooning Up

In four North Texas Counties the number of foreclosed commercial units has shot up by 39%. For several past years one has not seen the likes of it. Tarrant County has bagged more than half the numbers.

In August 2006, 101 foreclosed units were listed in the Counties of Tarrant, Dallas, Collin and Denton. But in August this year the number has gone up to 140 according to figures released by a Foreclosure listing service based in Addison. Tarrant County is the worst offender with a 69% high jump in the number of commercial units going for foreclosure as compared to 2006. The number this year is 76 against 45 of the previous year. It grabs attention!

In most of the cases the problem is that of cash flow. Owners of business concerns are finding it hard to meet up with loan commitments. Just like residential house owners business groups too borrowed more than they could digest. By commercial units’ apartment blocks, office and industrial buildings, retail centers and even churches, day-care establishments and convenience stores are included. Altogether properties worth about $83 million is involved under this business category.

Within this business circle the worst affected were retail centers and units. The figure of last August of 3 grew to 11 this year. Closely following on the heels are apartment blocks wherein the postings swelled from last year’s figure of 8 to 25 this year.

It is a bit out of the ordinary for business groups to face such a situation because by its very nature commercial borrowing and lending transactions are strict. Trends are being closely monitored.

For sometime apartment complexes have been trying to attract customers by offering generous concessions. The target was to push up occupancy rates. But once the grace period was over, the renters moved on to another community causing occupancy rates to drop. Rent became a trickle.

Real estate agents focusing on church matters said that congregations are failing to meet the required percentage (20% to 30%) for making down payments to qualify for a loan. So they take recourse to bonds, which do not require down payments but high interest rates. Churches depending on day-care and school operations find the going difficult when the numbers decrease. This is felt by their inability to pay the bonds. The whole thing starts off on the wrong footing.

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