Late payments on securitized commercial mortgages ticked higher again in July, for the same reason they did in June: a number of large loans fail to pay off at maturity.

Commercial mortgages typically have 10-year terms during which borrowers pay mostly interest; the bulk of principal is repaid at maturity. So if the value of the property does not appreciate very much over the term, or if underwriting tightens, it may be difficult to refinancing. That’s what is happening to a number of loans taken out during the frothy lending years of 2006 that are now coming due.

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