The Wall Street Journal reported this week that the largest sale of FDIC commercial mortgages will be taking bids through this Friday.  The bulk of the assets will include some of the highest profile unfinished condo projects in the country.  These commercial loans were at one point worth $5 billion but are now expected to sell for between 30 and 80 cents on the dollar.  With such a tremendous amount of real estate assets being priced, this may encourage an increase in the number of real estate transactions as investors begin to get an idea of how the market is pricing assets.
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With many real estate investors sitting on the sidelines, this may be impetus that they need in order to get onto the playing field.  One of the most common complaints I hear from real estate investors is that the bid and ask prices on real estate assets are still very far apart.  Now this one sale may not be the solution to this problem but it is definitely a step in the right direction.
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With these distressed mortgages being priced, it may also put banks in a better position to modify commercial loans because they will have a better idea as to what their next best alternative is, which would be to foreclose on the asset or sell the note.

Tags: FDIC auctions