And More bad news for JP Morgan Chase and the Banksters

by John Galt
May 10, 2012 19:10 ET


If Jamie Dimon was having a bad day before the conference call and 10Q release this afternoon, add this story from the Wall Street Journal to the mix:


Westin Loan Rattles CMBS Market Again After Nearly Four Years


Ouch. The money phrase from the article is what the bankruptcy judge did and the pain inflicted on the banksters which could trigger a wee bit of panic in the supposedly “safe” CMBS market:

A $207 million loan on a pair of Westin hotels has rattled commercial mortgage-backed securities investors after a bankruptcy court ordered that the loan’s maturity be extended by an unusually lengthy period and its interest-rate slashed to zero, according to analysts.

U.S. Bankruptcy Court Judge Eileen W. Hollowell in Tucson, Ariz., as part of a reorganization of borrower Transwest Resort Properties in December, ordered the troubled loan be extended by 15 years, to 2033, and increased the principal by $40 million. The judge also cut the interest rate to zero.

Bank of America analysts, based on a servicing document recently made available to bondholders, on Monday noted that the interest-rate cut, if finalized, would exacerbate shortfalls in interest payments already suffered in the two J.P. Morgan Chase & Co. CMBS that included the Westin loan. LNR Property, the firm servicing the loan for two CMBS trusts, is trying to appeal the modification, which sets a “truly bad precedent” for lenders, said Toby Cobb, LNR’s co-chief executive.


Ouch again. Perhaps, just perhaps, someone should wake up the Fed and advise them that QE∞ program underway.

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